SSGA Chief Ron O’Hanley Calls on Congress to Mandate Workplace Retirement Coverage for All Private-Sector US Workers
June 06 2016 - 8:54AM
Business Wire
Outlines Framework Guaranteeing Access to Workplace
Retirement Savings Plans That Could Reduce Savings Shortfall by up
to $740 Billion
Ron O’Hanley, president and chief executive officer of State
Street Global Advisors (SSGA), the asset management business of
State Street Corporation (NYSE:STT), today called on Congress to
enact a national framework that ensures workplace coverage for all
private-sector working Americans. In an open letter to congress,
O’Hanley proposed a framework that expands access to workplace
retirement savings plans and ensures coverage through
auto-enrollment, auto-escalation, tax incentives for small
employers, eliminates barriers to open Multiple Employer Plans
(MEPs). The framework could reduce the expected retirement savings
shortfall by up to $740 billion1.
“Today we face an access imperative,” said O’Hanley. “The
Government Accountability Office report on retirement security
finds that nearly 40 percent of working households lack access to,
or are not eligible to participate in, an employer-sponsored
defined contribution (DC) plan2. We applaud efforts by the White
House, Congress, and many states to expand workplace retirement
savings opportunities through auto-IRAs and open MEPs. However,
discrete initiatives will lead to a complex and inefficient set of
retirement savings programs that perversely could lead to lower
savings levels. It’s time for a national, bipartisan solution that
guarantees workplace coverage in a retirement savings plan.”
In his letter, O’Hanley urges Congress to enact a national
framework for helping Americans save for retirement. More
specifically, O’Hanley calls for federal legislation that includes
the following key elements for increased access and savings to
retirement savings in the workplace:
- Require private employers to
auto-enroll all workers into a defined contribution plan
- Require use of auto-escalation and
default investments such as target date funds to help employees
maximize retirement savings
- Enact tax credits for small
employers to cover the administrative costs of implementing these
plans
- Eliminate barriers to open MEPs to
allow businesses to band together and offer affordable retirement
savings plans
“By using existing programs that have already received
bipartisan support, we can act now. Every day we fail to act is
another day that Americans fail to save for the future,” continued
O’Hanley. “These solutions allow us to put aside our differences,
avoid making perfection the enemy of the good, and work toward a
common goal of greater retirement security for millions of working
Americans.”
The full text of O’Hanley’s letter and policy proposal is
available here: http://www.ssga.com/access
About State Street Global Advisors
For nearly four decades, State Street Global Advisors has been
committed to helping our clients, and those who rely on them,
achieve financial security. We partner with many of the world’s
largest, most sophisticated investors and financial intermediaries
to help them reach their goals through a rigorous, research-driven
investment process spanning both indexing and active disciplines.
With trillions* in assets, our scale and global reach offer clients
access to markets, geographies and asset classes, and allow us to
deliver thoughtful insights and innovative solutions.
State Street Global Advisors is the investment management arm of
State Street Corporation.
*Assets under management were $2 trillion as of March 31,
2016. AUM reflects approx. $32.6B (as of 3/31/2016) with respect to
which State Street Global Markets, LLC (SSGM) serves as marketing
agent; SSGM and State Street Global Advisors are
affiliated.
1: According to an analysis by the Employee Benefit Research
Institute (EBRI) of our proposal
2: Retirement Security: Low Defined Contribution Savings May
Pose Challenges: United States Government Accountability Office
report from May of 2016.
http://www.gao.gov/assets/680/676942.pdf
Definitions:
Multiemployer Plan- A multiemployer plan is an employee
benefit plan maintained under one or more collective bargaining
agreements to which more than one employer contributes. These
collective bargaining agreements typically involve one or more
local unions that are part of the same national or international
labor union and more than one employer.
Defined contribution (DC) plan- A defined contribution
(DC) plan is a type of retirement plan in which the employer,
employee or both make contributions on a regular basis. It has
become the dominant form of retirement plan for U.S. workers.
Auto- IRAs- The auto IRA would enable employees to use an
employer's payroll system to channel savings to an IRA, similar to
the way in which employees save through a 401(k). Employees would
initiate saving, using their own money and choosing how much and
where to save.
State Street Corporation One Lincoln Street, Boston, MA
02111-2900.
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CORP-2011
Exp. Date: 06/30/17
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State Street CorporationAnne McNally, +1
617-664-8576Aemcnally@StateStreet.com
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