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Bills by Rep. Richard Neal seek to prop up retirees’ pension plans

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BOSTON — Americans are living longer, spending more on health care and have less family support than past generations. Yet fewer Americans have pensions that offer a defined benefit each year.

The groups that need retirement benefits the most — women, who live longer, and low-wage workers, often minorities — are least likely to have savings to rely on after they retire.

U.S. Rep. Richard Neal, a Springfield Democrat who chairs the House Ways and Means Committee, has proposed several bills that aim to help prop up employer-based pension plans while encouraging people to save for retirement. He held a roundtable with 18 retirement professionals at the Statehouse Thursday, where they discussed the challenges facing retirees and potential ways to help people save.

“Half the people who get up and go to work every day in America are not in a retirement savings plan,” Neal said. “What we’re trying to do here is make people say let’s get people going early.”

One issue Neal hopes to address is the financial instability of multi-employer pension plans, which are plans that cover multiple companies, often run by a union. Many of these plans are severely underfunded and at risk of cutting benefits.

Payton Corbett, who works at an Anheuser-Busch distribution plant, is a member of the Central States Teamsters Pension Plan, one of the country’s most troubled plans. Younger workers like him, he said, “wonder if there’s going to be any pension for us when we retire.” Corbett said older workers do not know whether they should retire or keep working, while retirees are scared of losing their pension — and their homes.

Lincoln Andrews, who owns a brick manufacturing company, said he is the last company standing in a multi-employer pension plan. As a result, his 28 workers pay into a pension plan that covers 400 retirees. Over the last decade, his premiums have increased from $135 per member per month to $435.

Andrews said his choices are to close his business or keep borrowing money from his bank, but either way there is no way to keep the pension plan solvent.

“What we’re perpetrating on pensioners ... is a fraud,” he said.

Neal’s bill would establish a new agency within the Treasury that would issue bonds used to finance loans to failing multi-employer pension plans. Neal said this would not be a “bailout” since the plans would be required to repay the loans over a 30-year period. The interest rates would be low, and the infusion of money would allow pension plans to invest for the long-term.

Another bill Neal is championing, the Retirement Enhancement and Savings Act, or RESA, would make it easier for small businesses to band together to offer a retirement plan, which would lower their administrative costs. It would expand a tax credit that covers businesses’ costs in starting retirement plans. It would make several other changes to make it easier for businesses to offer retirement plans and for individuals to put money into retirement accounts. For example, a tax credit would incentivize automatic enrollment for retirement savings plans, where employees could opt out but would not have to opt in.

A separate bill would require businesses to allow part-time workers to participate in 401(k) plans.

Several experts who participated in the roundtable said while the current system of employer-based retirement plans works for many, too many people have no access to employer-based plans or choose not to participate.

“Too many workers lack access to a savings plan at work, particularly those that work for small business,” said Steve Dimitriou, managing partner at Mayflower Advisors and president of the American Retirement Association.

Joe Coughlin, of the MITAgeLab, said retirement savings is particularly important as people are living longer and have fewer family members to care for them. Many people have little access to public services. The fastest-growing population is over 85, he said, and the average American will spend one-third of their adult life in retirement. “Retirement has changed, but retirement planning has changed little,” Coughlin said.

The lack of retirement savings is particularly acute among certain demographics. Jennifer Brown, associate director of the economic policy project for the Hispanic rights group UnidosUS, said only 53 percent of Latinos have access to a workforce retirement savings plan.

Linda Stone, a fellow at the Women’s Institute for a Secure Retirement, said women live longer than men on average. They are more likely than men to spend years out of the job market or working part time due to caregiving responsibilities.

“They accumulate less money than men during the working years, and they have to make it last longer,” Stone said.

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