Will retirement reforms fall victim to political spite?

This week, the prospects for legislating retirement reforms gained steam with four new bills introduced in the Senate and a commitment from Republican leadership in the House of Representatives to push to make permanent the tax cuts for individuals passed last year.

Rep. Kevin Brady, R-TX, chair of the Ways and Means Committee, has said he intends to package a retirement reform bill astride legislation to extend the tax cuts beyond 2025, when they are scheduled to sunset.

By all accounts, extending the tax cuts will be a heavy lift. Last week, the White House Office of Management and Budget released its annual mid-year budget review, which showed deficits surpassing $1 trillion by 2019, more than $100 billion more than was previously projected. The Congressional Budget Office previously projected that trillion-dollar deficits wouldn’t come until 2020.

Related: After the ruckus over Rothification, experts say tax reform favors after-tax contributions

Extending the tax cuts could result in another $600 billion in deficits, according to analysis by the non-partisan Committee for a Responsible Federal Budget. Ultimately, 60 votes will be needed in the Senate to make the cuts permanent, a probability that falls somewhere between remote and unimaginable, given the enmity of Capitol Hill.

But will retirement reforms suffer the same fate and fall victim to political spite?

Retirement policy has long been regarded as a safe space for uncommon bedfellows. The best evidence of that may be found with the Retirement Enhancement Security Act, co-sponsored by Sen. Orin Hatch, R-UT, and Sen. Ron Wyden, D-OR.

A comprehensive bill that would facilitate open multiple employer plans for small employers, the use of annuities in 401(k)s, and incentivize automatic enrollment and escalation in defined contribution plans, RESA passed unanimously out of the Senate Finance Committee in 2016. The spread in political temperaments on the committee ranged from Sen. Pat Roberts, R-KS, to Sen. Sherrod Brown, D-OH.

RESA has been reintroduced in both chambers this year, as has other legislation that separates the largest components of Sens. Hatch and Wyden’s brainchild.

The last time Congress addressed retirement policy was in 2006, with the passage of the Pension Protection Act.

For defined contribution plans, PPA famously created safe harbors for automatic enrollment and qualified default investment alternatives.

Recently, Empower Retirement, the Denver-based record keeper that administers $534 billion in assets for more than 8.5 million plan participants, released data showing millennials are on track to replace nearly 80 percent of their income in retirement, a substantially higher level of retirement readiness than Gen Xers and Baby Boomers can claim.

Empower makes an unambiguous correlation between millennials’ level of readiness and the reforms passed in the PPA, which synced with millennials entering the workforce.

PPA undoubtedly benefited many savers in 401(k) plans. But data also shows a need to improve on it. Take automatic enrollment. Despite PPA’s safe harbor, only 29 percent of all plans used the feature in 2015, according to the Investment Company Institute. Large plans are more likely to auto enroll workers, but even among those sponsors, most don’t deploy the feature.

Then there is the access gap. When PPA was passed, 401(k)s claimed 48 million active participants. Now there are 55 million, according to ICI. While an improvement, tens of millions of workers remain without access to a workplace plan.

RESA, the other introduced bills, and ideas reportedly being considered in the House would address the access gap, and create new incentives for sponsors to use automatic features in their savings plans.

With reforms on the table, the question in the coming months will be whether retirement policy remains a last vestige of bipartisan possibility in Congress, or whether it too will succumb to Washington’s toxicity with midterm elections on the horizon.

BenefitsPRO put those questions to Ed Murphy, president of Empower. Here are excerpts of some of his thoughts.

BPRO: From Empower’s research, it is clear the innovations of the PPA have given Millennials an advantage on the road to retirement readiness, thanks to access to auto enroll, et. al. at the outset of their careers.

It’s taken 12 years to take a measurement of PPA’s benefits on millennials relative to older counterparts. Is there a lesson in that relative to the retirement policies being considered on Capitol Hill? What’s the risk in putting them off?

Ed Murphy: The Pension Protection Act of 2006 is a perfect example of something we need more of – well-grounded, evidenced-based reform that takes into account academic analysis and real-world market experiences. The PPA is an example of Congress allowing the market and research to take the lead in policy development. PPA was a broadly bipartisan achievement and the lesson we can take forward is that when Congress, industry leaders and academic researchers work together the outcome is better results.

BPRO: Some think new regs on open MEPs could be a game changer for small business adoption of 401(k) plans. Others are more skeptical of their ultimate impact, but virtually no one is opposed to facilitating their wider adoption.

If policies for open MEPs were passed tomorrow, how long would it take to materially affect the country’s overall retirement readiness?

Ed Murphy: It is very difficult to speculate. What we do know is that when there is official legislative and regulatory support for a series of best practices such as auto-enrollment and automatic savings escalation, there is a space created for innovation and effective ideas in the retirement markets.

BPRO: Is it not safe to assume that the market would need time to absorb the new policies, providers would need time to implement marketing and distribution for the policies, and the business community would need time to understand the policies, warm to them, and ultimately buy into them on a scale that would materially improve the number of small businesses that offer retirement plans?

Ed Murphy: Again, it’s difficult to speculate on how long it takes for policy to take hold and affect change. But if Congress and the industry continue to partner in policy development we would continue to see positive change.

BPRO: For workers without access to a plan though employers—and for those pre-retirees and Gen Xers with zero or little savings—have they passed the point of no return?

Ed Murphy: At different life stages any individual can employ any number of strategies to help them achieve a brighter financial future. The best opportunities come to those who save early in their careers and at a rate that helps them to achieve the income they made while working.

There is no doubt that we have a coverage gap – some 50 million Americans, mostly in small firms or working in the gig economy, have no savings option on the job. We are very much looking forward to continued work with lawmakers on retirement savings policy that results in positive outcomes for working Americans.