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Higher rates to have big impact on proposed cap

As many as one in 10 workers would find their savings limited by the cap, even at the current, albeit historically low, discount rate of 4 percent, the EBRI said.

By Dan Berman | Updated on August 26, 2013

President Obama’s proposed retirement cap will affect many more retirees than previously thought if interest rates rise to their historic higher levels, according to an analysis by the Employee Benefits Research Institute.

As many as one in 10 workers would find their savings limited by the cap, even at the current, albeit historically low, discount rate of 4 percent, the EBRI said. When its simulation was rerun with higher discount-rate assumptions, the percentage of 401(k) participants with no defined benefit accruals and no job turnover likely to be affected by the cap increases substantially, the organization said.

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