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KEYNOTEJuggling Risks:What Role Should Employers Play in Our Changing Retirement Landscape?
Roadmap
• Brief overview of Aspen FSP Portfolio• Is there an Elephant in the room? • Challenges for Employers• Policy Landscape
– How Will the States Fit In?• Is the Elephant an Opportunity?
Our Work
• The Retirement Savings Initiative (RSI)– Aspen Leadership Forum on Retirement Savings– State and Federal Savings Policy Innovation– Innovations to Expand Access
• The Expanding Prosperity Impact Collaborative (EPIC) – Income Volatility, Household Debt
• New Innovations in Financial Technology and Inclusion (NIFTI)
Who Brought the Elephant?
Challenges for Employers and Providers
• Changing nature of work• Headwinds facing families• Litigation risk
• Low interest rates and future returns
• New actors, new technology• Shifting policy landscape
The Changing Nature of Work“The percentage of workers engaged in
alternative work arrangements – defined as temporary help agency workers, on-call
workers, contract workers, and independent contractors or freelancers –
rose from 10.7 percent in February 2005 to 15.8 percent in late 2015.”
(Katz and Krueger)
Families Still Face Serious Headwinds
• Slow growth of median earnings
• Rising inequality• Income volatility• Housing• Uneven access to
retirement benefits
Wealth Inequality has Risen Dramatically
Litigation Risk
• Is it having a chilling effect on plan sponsors?
• Implications for innovation
Is the Era of Moderate Interest Rates and Strong Returns Over?
• Is the link between savings and investment unwinding?
• The role of financialization of the economy
• Implications for retirement security
%
New Actors, New Technology
• Ongoing shift to passive strategies• Robo-Advisors
– How disruptive will they be?• Other Fin Tech firms:
Will they gain a real foothold?
Shifting Policy Landscape
• Tax Reform: Is Rothification Dead?
• Fiduciary Rule• Prospects for Open
MEPs• State Plans• Automatic IRA?
State Plans
Potential Scope of State Programs
California7.8 million
Oregon1.0 million
VermontTBD
Connecticut 0.6 million
New Jersey 1.5 million*
Illinois2.4 million
Washington 1.7 million*
Maryland1.2 million
MARKETPLACESECURE CHOICEMEP
*number who lack access, can’t say if this many will gain access through Marketplace
Sources: http://www.commerce.wa.gov/growing-the-economy/business-services/small-business-retirement-marketplace/http://www.njleg.state.nj.us/2014/Bills/PL15/298_.PDFhttp://laborcenter.berkeley.edu/pdf/2017/Proposed-Repeal-of-Regulations-Supporting-State-Auto-IRAs.pdf
MassachusettsTBD
Is the Elephant an Opportunity?
• Will Secure Choice or other models create a new market for reaching SBs?
• Will requirement to offer plans take hold?
• Can open MEPs be a private alternative?
Time to Revisit Employer Roles?
• Growing interest in financial wellness
• Rising awareness of the breadth of financial needs of employees
• Hybrid financial solutions• New models for 3rd party
fiduciaries
Questions?
The Aspen Institute Financial Security Program
The Aspen Institute is an educational and policy studies organization based in Washington, DC. Its mission is to foster leadership based on enduring values and to provide a nonpartisan venue for dealing with critical issues.
The Financial Security Program is dedicated to solving the most critical financial challenges facing America’s households, and to shaping policies and financial products that enable all Americans to save, invest, and own.
To Learn More: AspenFSP.org Follow us on Twitter: @Aspen_FSP