House GOP Savings Solutions Group Warns Secs. Geithner & Solis Against Gov't Takeover of Individuals' Savings Plans

Contact: Michael Steel, Kevin Smith, 202-225-4000

WASHINGTON, May 4 /Standard Newswire/ -- House Republican Leader John Boehner (R-OH) and members of the House GOP Savings Solutions Group sent a letter to Labor Secretary Hilda Solis and Treasury Secretary Timothy Geithner warning the Obama Administration that the government should keep its hands off of the retirement savings of Americans, and should reject proposals that would dismantle or nationalize the private 401(k) system in favor of a government-run retirement security regime.  Several Administration officials, including the Vice President, have voiced support for efforts to create so-called "Guaranteed Retirement Accounts" or impose new government mandates which would undermine 401(k) retirement savings plans and jeopardize employers' willingness to continue offering them to their workers.  Boehner issued the following statement:

"The American people are asking 'where are the jobs?'  They aren't asking for job-killing policies that jeopardize their retirement savings.  Unfortunately, Washington Democrats are pursuing policies that make it more difficult to offer 401(k) savings plans to their workers, and some are even advocating replacing them with government-run accounts and ending 401(k)s altogether.  That's unacceptable and not the solution Americans need at a time when they are still rebuilding their retirement, college, and personal savings.
 
"Republicans are committed to offering better solutions, and the proposal we have offered -- the Savings Recovery Act -- will help restore Americans' savings and ensure that Washington does not stand in the way of families' ability to save more.  It's time for Democrats to stop advocating policies that will destroy Americans' savings and work with Republicans on better solutions to help rebuild them."

NOTE: For more information on the Savings Recovery Act, the GOP plan to help Americans rebuild their retirement, college, and personal savings, click HERE.  The full letter follows and is attached HERE: 

May 3, 2010

The Honorable Hilda L. Solis
Secretary
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC  20210

The Honorable Timothy Geithner
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC  20210

Dear Secretaries Solis and Geithner:

As members of the Republican Savings Solutions Group, we write today to express our strong opposition to any proposal to eliminate or federalize private-sector defined contribution pension plans, such as 401(k)s, or impose burdensome new requirements upon the businesses, large and small, who choose to offer these plans to their employees.

In the Annual Report of the White House Task Force on the Middle Class, Vice President Biden discussed at length the creation of so-called "Guaranteed Retirement Accounts, (GRAs)" which would provide for protection from "inflation and market risk" and potentially "guarantee a specified real return above the rate of inflation" -- presumably at taxpayer expense.  In the Report, the Vice President recommended "further study of these issues."

The Vice President's comments are troubling, insofar as they come on the heels of testimony before Congress from supporters of GRAs proposing to eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary -- again, with a government subsidy.  These advocates would, essentially, dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan, the size and scope of which remain to be seen.  This despite data showing that 90 percent of households have a favorable opinion of the existing 401(k)/IRA system.

In light of these facts, we write today to express our opposition in the strongest terms to any effort to "nationalize" the private 401(k) system, or any proposal that would dismantle or disfavor the private 401(k) system in favor of a government-run retirement security regime.

Similarly, and more recently, the Departments of Labor and Treasury have jointly issued a "Request for Information" regarding the "annuitization" of 401(k) plans through "Lifetime Income Options."  While we appreciate the Departments’ seeking guidance and information from all parties and stakeholders in advance of regulatory activity, we strongly urge that the Departments not proceed with any regulation in this area before they have carefully and thoroughly considered all of the information received.

More specifically, we urge that the Departments take no action to mandate that plan sponsors -- often, small businesses -- include a "lifetime income" or "annuitization" option if they choose to offer a 401(k) plan to their employees, or that beneficiaries take some or all of their retirement savings in such an option.  Data shows that 70 percent of Americans oppose the concept of a mandated annuity or government payout of their 401(k) plan. On a more fundamental level, Congress should not be in the business of choosing "winners" and "losers" among retirement security stakeholders.  Instead, we urge the Departments to make it easier for employers to include retirement income solutions in their savings plans and to help workers learn more about the value of their retirement savings as a source of retirement income.  Finally, to the extent new mandates and bureaucratic red tape from Washington push small employers out of the business of offering these plans to their employees, we would submit such an effort weakens, rather than strengthens retirement security. 

We appreciate your consideration of our views in these important matters and stand ready to work with you and the Administration to promote secure and adequate retirement savings for all Americans. 

Sincerely,

House Republican Leader John Boehner (R-OH)

Rep. John Kline (R-MN)

Rep. Dave Camp (R-MI)

Rep. Sam Johnson (R-TX)

Rep. Dean Heller (R-NV)

Rep. Brett Guthrie (R-KY)

Rep. Michele Bachmann (R-MN)

Rep. Pat Tiberi (R-OH)

Rep. Bob Latta (R-OH)

Rep. Erik Paulsen (R-MN)

Rep. Lynn Jenkins (R-KS)

Rep. Ed Royce (R-CA)

Rep. Buck McKeon (R-CA)