Expanding Small Business Access to Retirement Plans

David Damschen
David Damschen

By David Damschen and Richard Mourdock

Minutes after taking the oath of office on Jan. 20, President Trump declared that the era of “transferring power from Washington, D.C.” back to the states and to the American people had officially begun.

The president’s speech made clear that Republican control of the White House and Congress meant that states — the great laboratories of democracy — would finally have greater leeway to solve problems the Washington bureaucracy has failed to solve for generations.

Richard Mourdock
Richard Mourdock

Unfortunately, recent actions in Congress make evident that some lawmakers really do believe the federal government knows best and will act to kill innovation occurring in the nation’s statehouses to appease business interests. In fact, these lawmakers aim to impede progress on one of America’s most pressing challenges: the retirement savings crisis.

More than 55 million Americans — one-half of the private-sector work force — do not have access to a way to save for retirement through an employer-based plan. Many of these are small businesses who do not offer plans because of the costs and complexities of today’s federal laws and regulations.

Today, almost one-third of households age 55-64 have no defined benefit or defined contribution retirement savings, leaving Social Security as their primary source of retirement income. More than one-third of workers have less than $1,000 in retirement savings and two-thirds have less than $50,000.

To address this challenge, the U.S. Department of Labor issued rules and guidance providing rare regulatory relief for states to create simple, low-cost, state-facilitated retirement plans for workers who do not currently have access to a retirement plan through their employer. These public-private partnerships would help small businesses and low- and moderate-income working Americans, who the private-sector retirement savings industry admits has not been profitable for them to help, save for retirement.

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