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The Automotive Service Association (ASA) reports that last week one part of the federal government took a closer look at some of your retirement accounts in efforts to see what might be done to say the tumbling accounts.
The U.S. House of Representatives Committee on Small Businesses heard testimony on the “Drop in Retirement Savings: The Challenges Small Business Face Funding and Maintaining Retirement Plans in a Struggling Economy.”
“As the economic downturn hits retirement funds, small businesses that provide these benefits are finding it even harder to stay afloat. Employers that tried to do the right thing and offer a secure retirement to their workers are being hit the hardest,” Rep. Nydia M. Velazquez, D-N.Y., chairwoman, stated in her opening remarks. “In today’s hearing, we will explore ways to help small businesses that have offered retirement plans, but are now in a difficult position because of poor decisions made on Wall Street.”
Velazquez proposed solutions for small business owners looking to maintain their retirement plans. Recognizing the urgency, she first suggested capping the amount of losses that small business owners are responsible for paying during market downturns, according to information from ASA. Another approach would allow small businesses to look further ahead for pension values when calculating how much they must pay to employee’s retirement funds.
Witnesses were Stephen L. Dobrow, CEO of Primark Benefits, on behalf of the American Society of Pension Professionals and Actuaries (ASPPA); Catherine Collinson, president of Transamerica Center for Retirement Studies; and Andrew Keeler, certified financial planner of Everhart Financial Group Inc. The witnesses testified in support of small business retirement funds.
Dobrow noted in his remarks the burden of the current economic and financial markets crisis on small businesses. He targeted two important areas where relief is significantly needed: defined benefit pension plan funding and 401(k) safe harbor plans. He pointed out that 11.7 million employees work for small business employers (less than 100 employees) that sponsor retirement plans. He called on the government to assist in regulatory relief for nonelective safe harbor 401(k) plans and funding relief for defined benefit pension plans.
Collinson provided data on the importance of small businesses in America. According to the U.S. Census Bureau, small businesses (fewer than 500 employees) represent 99.7 percent of the total firms and 50.9 percent of the work force in the United States. Collinson also revealed results from the Transamerica Center for Retirement Studies’ annual survey. Approximately 39 percent of small business workers expect their 401(k) and IRAs to be their primary source of income after retirement.
Keeler supported Velazquez’s sense of urgency by pointing out the investing public’s doubt in the value of saving for retirement due to retirement assets’ recent shrinking by nearly 40 percent.
To review testimony from the hearing, visit ASA’s legislative Web site, www.TakingTheHill.com.
