Strengthening pension plans will require remedial legislation that focuses on long-term impacts, plus a bit of wisdom and courage, said NCPA Senior Fellow Brooks Hamilton in prepared testimony submitted before the House Ways & Means Subcommittee on Select Revenue Measures.
In his testimony, Hamilton suggested five ideas to consider that would strengthen pension plans:
- Barring the “highly compensated employees” group from participating in a 401k Plan unless the company also had a modest defined benefit plan.
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Providing an annual business tax credit of $100 per pension plan participants for the first hundred participants.
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Making a modest defined benefit plan mandatory.
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For any company with under 100 employees, doubling the company’s tax deduction for its pension plan contribution.
- Requiring the payment of pension benefits to be made in a life annuity contract.
“Various factors have combined to make the reexamination of direct benefit retirement plans both timely and vital,” said Hamilton. Now is a “beautiful opportunity to strengthen pensions in America.”