Many likely said, “Bravo!” upon hearing that President Obama had created the bipartisan National Commission on Fiscal Responsibility and Reform, whose sole job is to figure out how to slow the breakneck speed at which our nation is racking up debt.
However, after reading the commission’s draft report, leaders at The American Society of Pension Professionals & Actuaries cried, "Oh no!" instead.
In a press release responding to the draft report, Brian H. Graff, ASPPA executive director and CEO said, "We are deeply concerned that recommendations from the draft report … would eliminate tax incentives for retirement savings and negatively impact the ability of working Americans to effectively prepare for retirement."
Such a move, Graff said, would "decimate the savings rate by eliminating tax incentives for contributing to employer-sponsored retirement plans, such as 401(k) plans, likely triggering mass terminations of company retirement plans — directly impacting a worker’s ability to save for retirement."
I don’t think “directly impacting” quite covers it, since if nothing else, we all know three things are true: the sky is blue, the sun rises in the East and Americans will not save for retirement on their own.
If you don’t believe me, just ask the Employee Benefit Research Institute. Graff’s statement cited EBRI stats showing less than 5% of moderate income workers (earning $30,000 to $50,000 a year) save for retirement on their own, without an employer-sponsored plan. And we’re well aware that the 70% or so of workers who do participate in retirement plans — all together now — don’t. Save. Enough.
So, I think Graff is right when he says, “eliminating these tax incentives would strip [Americans] of critically important benefits and … the retirement security of American workers will greatly suffer if the Deficit Reduction Commission’s recommendations are enacted.”
But you’re the pros, so what do you think? If the commission has its way and eliminates the tax incentives to maintain 401(k)s, would you terminate your plan?
Do you think the recommendation is a good one, or are there plenty of better ways to help tamp down the national debt? Share your thoughts in the comments.
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