Incoming Senate Finance Committee Chair Sen. Orrin Hatch (R-Utah) said Monday there is a “pretty good chance” for pension reform to become law in the next session of Congress starting in January.
The committee is in charge of tax legislation in the Senate; the upper chamber’s counterpart to the House Ways & Means Committee.
Hatch’s package in the Securities Annuities for Employee (SAFE) Retirement Act includes barring the Department of Labor from imposing a fiduciary duty on advisors to pension plans and reducing obstacles to including annuities in 40(k)s.
The legislation would also allow for the establishment of Starter 401(k)s to encourage more small employers to offer retirement savings plans because of lower administrative costs than traditional 401(k)s.
Starter401(k)s would allow a participant to contribute $8,000 to $10,000 per year towards retirement, a little less than under tradition 401(k)s, but a higher limit than Individual Retirement Accounts.
Hatch said the legislation would revolutionize retirement savings for employees of small business and called the existing 401(k) system the greatest wealth creator for the middle class in the history of America.
Hatch called a veto by President Obama of the Republican-driven SAFE Act unlikely because it would be a signal to the public he doesn’t want to do anything about the retirement crisis.
Before and during a speech to the Financial Services Roundtable in Washington, D.C., he warned that serious public employee defined benefit pension problems in Detroit and Illinois are likely to spread around the country and “swallow up the government.”
He criticized state officials for inaction on the crisis, claiming they are expecting money from Washington to save their plans.
However, the powerful senator warned “a federal bailout should not be considered under any circumstances.”