Legislation recently introduced by Rep. Richard Neal, D-MA,ranking member of the House Ways and Means Committee, proposes whatmay be the most aggressive retirement policy to date.

The Automatic Retirement Plan Act of 2017 requires all privatesector employers with more than 10 employees to offer a definedcontribution retirement plan.

While the idea may sound like a progressive pipedream, MelissaKahn, managing director of retirement policy at State Street GlobalAdvisors, says it is anything but.

“We are ripe for a comprehensive retirement bill,” Ms. Kahnsaid. “I think there’s a very good chance we’ll be debating majorlegislation next year.”

In the House, Neal has been a champion of retirementissues. In 2010, he introduced legislation, based off a proposal inPresident Obama’s budget, that would have established an auto IRAsaving program at the federal level.

That bill went nowhere—it was referred to committee days afterRepublicans gained control of the House.

But previous attempts to mandate retirement savings programsalso stalled when Democrats controlled the House.

Now, Neal is doubling down on prior IRA proposals in mandatingemployer sponsorship of 401(k)s.

“It’s definitely a bold proposal, but it’s time to be bold inthis area,” said Ms. Kahn. “The fact that states have been movingforward with their own plans shows a level of understanding forthis huge issue confronting the country. I think Congressman Nealfelt it was time to go beyond auto IRAs, which don’t really getpeople all the way to where they need to be.”

Last year, SSGA’s CEO, Ronald O’Hanley, penned an open letter toCongress, calling for bipartisan support for a new federal mandate.“Time is not on our side, and the cost of inaction is great,” wroteO’Hanley.

The framework he laid out largely resembles Rep. Neal’s bill,and not by coincidence. Ms. Kahn said State Street’s policy teamworked closely with Neal’s staff, and other lawmakers, over thecourse of the last year.

“Our view is you can’t throw a mandate out there without beingsensitive to the burdens on small employers,” said Ms. Kahn.

Rep. Neal shares that concern, which is why his bill goes so farto address employers’ burdens.

The bill does not require employer contributions, underscoredMs. Kahn. It sets an automatic enrollment deferral rate at 6percent, and includes 1 percent annual increases until participantshit a 10 percent savings rate. It also includes provisions tofacilitate open multiple employer plans, which allow smallemployers to pool assets under one plan, and transfer fiduciaryliability from employers to plan providers.

Employers with up to 100 workers would have as much as $5,000 intax credits for five years to cover the cost of planadministration. Neal sourced input from record keepers thatadminister small plans, and found average start up costs varybetween $2,000 and $3,000.

“It’s a thoughtful piece of legislation,” said Ms. Kahn. “Thetax credits, combined with the open MEPs, are designed to alleviatethe burdens for small employers. Our view is that if we can removethe obstacles for open MEPs, more providers will administer them,and employers will want to join.”

Mandate, a four-letter word

According to the Bureau of Labor Statistics, only half ofAmericans that work for an employer with fewer than 50 employeeshave access to a workplace savings plan; 33 percent of Americansemployed by companies with 50 to 100 workers are without access;and nearly 20 percent employed at companies with 100 to 500 workersare without access.

Convincing Congress to close those gaps with a mandate will be aheavy lift, concedes Ms. Kahn.

“Mandates are difficult to sell on both sides of the aisle,” shesaid. “Our country places a high value on individual freedom. But Ithink you reach a point in time where you say the voluntaryincentives of ERISA haven’t got us to where we need to be.”

The individual mandates of the Affordable Care Act of course cutat the core of conservative ideology, and proved to be a millstonefor some blue dog Democrats. Like initiatives at the state level,Neal’s bill allows participants to opt-out of savings plans.Technically, the mandate is on employers, not individuals.

Ms. Kahn says her team has reached out to members in bothchambers of Congress, in both parties.

“We’re working with high-level members in both parties that havebeen working on retirement issues for a long time,” she said, butwould not name the lawmakers. One Republican member in the Housewas close to co-sponsoring Neal’s bill, but was unable to commit intime for its introduction.

Other Republicans may be willing to consider a 401(k) mandate inthe context of Social Security and entitlement reform. While theTrump administration has vowed to leave Social Security alone,House Speaker Paul Ryan, R-WI, has signaled his intent to move onthe issue next year. Ms. Kahn said she has had conversations withsome Republicans that view a sponsor mandate more favorably whenpaired with entitlement reform.

There is also the prospect of leveraging tax reform. Thethousands of small businesses that don’t sponsor retirement planswill benefit from lower pass-through rates as early as next year,if reform is ultimately passed. A new retirement mandate could berationalized in light of the cash that will flow from Treasury backto business owners.

“The challenge will be making the burden so light for employersthat it’s not seen as a burden,” said Ms. Kahn. “It will all dependon what Republicans will want to do after tax reform. They couldjust rest on their laurels and go campaigning. But I think there’sa good chance we see hearings on retirement issues early nextyear.”