Obama: Make Retirement Accounts More Accessible, Portable-By Yuka Hayashi

White House proposes automatic IRA enrollment for some, urges steps to help part-timers, self-employed

President Barack Obama walks to his vehicle from Marine One helicopter after landing at Walter Reed National Military Medical Center in Bethesda, Md., Monday, Jan. 25, 2016, for a visit with wounded military personnel. (AP Photo/Pablo Martinez Monsivais)

WASHINGTON—The White House unveiled Tuesday a raft of proposals to make it easier for workers to save for their retirements, in part by pushing businesses and states to make benefits more portable.

President Barack Obama has been trying to overhaul the nation’s retirement savings systems as one of his legacies, and plans to include a number of steps in his 2017 budget, due out Feb. 9. The administration appears to be advancing a vital pocketbook issue during the election year in hopes of pushing it toward congressional approval.
The steps include a $100 million grant proposal to explore ways to provide benefits that are portable across employers and are available to workers who are self-employed, are part-timers or have multiple employers. Another proposal would require employers who don’t offer retirement benefits to automatically enroll their workers in individual retirement accounts. The administration also wants to fund a pilot program to help more states develop their own schemes to increase workers’ nest eggs.
“The president’s proposal will give 30 million additional Americans access to retirement savings accounts at their workplace, in a much needed step to a more portable retirement system that adapts to today’s economic realities,” Jeff Zients, director of the president’s National Economic Council, told reporters on a conference call. He added that Mr. Obama wants to make retirement benefits “just as mobile as everything else today,” as his government has made health insurance accessible to many workers who aren’t covered by workplace benefits through the Affordable Care Act.
One in three U.S. workers doesn’t have access to workplace retirement savings plans, including half of workers at companies with fewer than 50 employees, according to the White House.
As self-directed savings plans such as 401(k)s and IRAs have all but replaced traditional pension plans, the administration has a double-pronged strategy to encourage workers to save more. It aims to protect consumers saving for retirement and promote access to retirement plans, Mr. Zients said. He also said there are benefits to employers trying to retain workers by removing obstacles for smaller companies to offer retirement plans to their workers.
To protect consumers, the Labor Department is rushing to complete a landmark rule that would impose tougher regulations on financial advisers working with retirement savers. The so-called fiduciary rule would require brokers and financial advisers to act in the best interest of retirement savers, and it aims to lower the cost of savings by eliminating potential conflicts of interest between people who offer investment advice and companies that sell financial products.
Speaking on the same conference call, Labor Secretary Thomas Perez said his department is “neck deep right now” in the review of public comments submitted on the proposed rule and hopes to “reach a conclusion in the coming months.”
The financial industry has fought the proposal, fearing that the complex rule would add to its costs and make some of its products and services unprofitable.
Republicans have also opposed the proposed rule, and in recent months, some Democrats have joined them, expressing concerns that it would make financial advice unaffordable for small investors.

In addition to the steps unveiled Tuesday, the administration has pushed state governments to enroll their employees automatically in IRA accounts and recently rolled out a no-frills savings program dubbed “myRA” for those who are starting to save.

Culled from The Wall Street Journal