Current Thinking

Supporting a Bill for Forming a Federal Retirement Commission

Sometimes legislation – especially at the national level – can get lost in the shuffle of competing bills and news cycles, particularly as the momentum for the 2020 presidential election continues to build. However, one bill, reintroduced back in the spring, deserves renewed attention.

Earlier this year, U.S. Senators Todd Young (R-IN) and Cory Booker (D-NJ) announced the reintroduction of their Federal Retirement Commission Act (FRCA), which would establish an agency to review private retirement benefit programs and, within two years of formation, submit a report to Congress on how to improve private retirement security in the U.S.

The commission would not review the Social Security program, and would be disbanded after the report is presented.

Specifically, the Federal Retirement Commission Act:

  • Calls for the creation of a commission comprised of the Secretary of Treasury, Labor, Commerce, two presidential appointees, six U.S. Senate appointees, and six U.S. House of Representatives appointees.
  • The commission will be charged with:
    • A comprehensive review of private benefit programs existing in the United States, with a particular focus on moving from defined benefit to defined contribution models.
    • A comprehensive review of private retirement coverage, individual and household accounts balances, investment trends, costs and net returns, and retention and distribution during retirement.
    • A comprehensive review of societal trends, including wage growth, economic growth, unique small business challenges, serial employment, gig economy, health care costs, life expectancy, and shrinking household size, that could lead future generations to be less financially secure in retirement compared to previous generations.
    • A comprehensive review of other countries’ retirement programs.
    • Submitting to Congress recommendations on how to improve or replace existing private retirement programs upon the affirmative vote of at least three-quarters of the members of the Commission.

With many individuals reaching retirement with little to no savings of their own, the proposed bill would take a serious look at our current retirement programs and would enact a commission to better understand how Congress can strengthen private benefit programs and ensure current and future generations have the tools necessary to plan for retirement.

The commission would also address the shortcomings that have resulted from the shift from defined benefit pensions to defined contribution plans like 401(k)s, advancing the conversation on individual retirement savings at a time when far too many have been left without the savings to enjoy the retirement they’ve planned for.

That the senators are continuing to push for the establishment of this commission is admirable. Young and Booker initially introduced the FRCA in April 2018, but it failed to gain traction; indications are that Senate Finance Committee Chairman Chuck Grassley (R-IA), one of the co-sponsors of the Retirement Enhancement Savings Act, may also push for the FRCA.

(Booker of course is also running for president, but please note that we are not endorsing him, or any candidate, for that office.)

Former Senator Kent Conrad and the Honorable James B. Lockhart III, co-chairs of the Bipartisan Policy Center Commission on Retirement Security and Personal Savings, have also voiced their support of the FRCA.

We believe it is time for Congress to lead on the issue of retirement security and make the important policy decisions necessary to ensure more Americans are ready for retirement. We believe this bipartisan legislation from Senators Young and Booker is a productive first step towards that goal. We applaud Senators Young and Booker – as well as those other legislators who have voiced their support – for sticking with the FRCA, and we encourage you to contact your own representatives in Congress to pass this important bill.

About the Author

Richard Rausser

Richard W. Rausser has over 25 years of experience in the retirement benefits industry. He is Senior Vice President of Client Services at Pentegra Retirement Services, a leading provider of retirement plan, fiduciary outsourcing and institutional investment services to organizations nationwide. Rausser oversees the consulting, marketing and communications, non-qualified plan and BOLI business development and  actuarial service practice groups at Pentegra. He is a frequent speaker on retirement benefit topics; a Certified Pension Consultant (CPC); a Qualified Pension Administrator (QPA); a Qualified 401(k) Administrator (QKA); and a member of the American Society of Pension Professionals and Actuaries (ASPPA). He holds an M.B.A. in Finance from Fairleigh Dickinson University and a B.A. in Economics and Business Administration from Ursinus College.