Advisor Today - November/December 2015 - (Page 43)

NaiFa goVerNmeNt relatioNs By Gary Sanders NAIFA Continues Opposition to Mandatory State-Run Retirement Plans A vibrant private-sector market already exists, with affordable and comprehensive solutions for individuals and businesses. N AIFA continues to oppose legislation that would require employers to offer state-run retirement plans for employees who do not currently have access to a retirement plan through the workplace. In recent years, policymakers and the media have focused their attention on statistics showing that large percentages of persons nearing retirement age have done little to financially prepare for their retirement. Various studies show that half of those consumers between ages 50 and 64 have only enough savings to last 16 months or less in retirement, though they may well live one or two more decades. In response, an increasing number of states have considered legislation that would require employers to offer state-run retirement plans for employees who do not have access to a retirement plan through the workplace. NAIFA has vigorously opposed these proposals on the grounds that a vibrant, private-sector, retirementplanning market already exists, which offers affordable, comprehensive retirement solutions to individuals and businesses. Advisors and agents across the country are available and ready to work diligently with clients looking to secure a comfortable retirement. State-run plans would needlessly compete with existing, competitive, private-sector retirementplan markets and would cost states significant amounts of money in start-up, staffing and operations. Extensive national research shows that the obstacle to saving for retirement is not lack of access. Rather, it is job insecurity, the pressure to make ends meet and a lack of awareness of the need to save for retirement and of the saving options available. State budgets and residents would be better served by the states funding financial-literacy programs and educational campaigns about the existing options available to employers and employees, and providing incentives to encourage people to contribute to retirement plans. There is no need for the state to enter this highly competitive marketplace. employers who would be required to offer the plans, and on the state. Update on state proposals Over 20 states have considered some form of state-run, retirementplan legislation in the last several years. The NAIFA federation and its industry partners have largely been successful in stopping these well-financed efforts, either by defeating the legislation outright or by successfully pursuing amendments that convert the legislation into a "study bill" that sets up a state commission to study the broader issues of how best to provide for their residents' retirement needs. States currently studying this issue include Oregon, West Virginia, Minnesota, Vermont and Connecticut. To date, only two states- California and Illinois-have enacted laws establishing a mandatory state-run retirement plan for their residents. (Massachusetts enacted a similar law several years ago, but this law only applies to small nonprofit employers and has yet to be implemented.) Both the California and Illinois plans have not yet become operational. The California law requires additional legislation to be enacted to implement the plan, and both laws face serious questions about their plans' tax status and the applicability of the federal ERISA law to these state-operated plans. Coverage under ERISA could impose significant burdens and costs on both The Washington State model A more effective approach was taken in Washington State, which recently enacted new legislation creating a Washington small-business retirement marketplace. The marketplace will promote the need to save for retirement and help educate employers and employees about affordable private-sector retirement savings options without establishing a staterun retirement plan or requiring the participation of employers or employees. Unlike legislation being considered in several other states, the Washington law is voluntary for employers and employees, relies on private-sector retirement products instead of a staterun retirement plan and allows for the participation of all private-sector, financial-services firms that meet the marketplace conditions. The law also expressly calls for the marketplace to include appropriate life insurance products among the plans offered through the marketplace and provides that agents and advisers who help their clients enroll in a marketplace plan should receive market-based commissions for their services. NAIFAWashington worked closely with lawmakers and other organizations to help this proposal become law, and NAIFA commends the Washington legislature and Governor for the approach taken by the bill. We expect numerous states to consider state-run retirement plan bills in 2016, and NAIFA will continue to be actively engaged on this issue. Gary Sanders is Counsel and VP, NAIFA Government Relations. Contact him at 703-770-8192. November/December 2015 | ADVISOR TODAY 43

Table of Contents for the Digital Edition of Advisor Today - November/December 2015

From the Editor
New Products
In Step with a Winner
Finding Success in the Chinese-American Market
Dealing with Client Confidentiality
Hashtag Your Way to Social Media Relevance
Starting the LTCI Conversation
From Term to Perm
Protecting the Downside with Allocation Adjustment
Jules Gaudreau: A NAIFA Success Story
Helping Clients Cope with Market Volatility
NAIFA Government Relations
Working with Single Women
Financial Planning FAQs of Small-Business Owners
Three Retirement Conversations to Have with Clients Today
The Advent of Robo-Advisors
Moving into the Retirement Space with 401(k) and 403(b) Plans
Moving the Sales Process Forward
Cultivating the African American Market
The Lighter Side of LIfe
Advertiser Index
Back Page

Advisor Today - November/December 2015