The U.S. Treasury Department on Tuesday announced the results of a project commissioned by Congress to advise on strategies to “promote consumer access to secure financial products and services.”
The Treasury Department’s report, National Strategy for Financial Inclusion in the United States, includes five focus areas and examples of efforts to improve each. Expanding access to savings and investments, one of the focus areas, relied heavily on the Treasury Department working to introduce and increase retirement savings initiatives under the SECURE Act 2.0 of 2022, such as Saver’s Match and the Emergency Savings Program. .
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“Access to financial products and services is essential to creating opportunity for all Americans,” Treasury Secretary Janet Yellen said in a statement. “For the first time, Treasury’s strategy provides a national roadmap to expand access to basic financial tools such as credit and investment, which are key to wealth creation.”
The report says Treasury’s five areas of focus and recommended initiatives are aimed at policymakers, industry employers and community organizations. The team leverages research and collaboration with experts, community leaders, industry representatives, other federal agencies, and public input through requests for information.
According to the Treasury Department, the United States has a “robust financial infrastructure,” but the report addresses “significant disparities in how different populations interact with and benefit from financial products and services.” It is said that the purpose is to
Five areas of focus:
Promoting access to transaction accounts that meet consumer needs, increasing access to safe and affordable credit, expanding equitable access to savings and investment, and increasing the inclusiveness of financial products and services provided or supported by governments. Promote trust in the financial system by improving and protecting consumers from illegal and predatory activities.
Regarding the third goal, expanding equitable access to savings and investments, Treasury noted that both the government and employers should work to expand Americans’ access to retirement savings accounts. . This includes “tools to encourage emergency savings” and benefits that “equitably support employees’ financial well-being and provide financial education to encourage employees to save and invest.”
Citing the U.S. Bureau of Labor Statistics, the Treasury Department said that as of March 2023, 73% of all civilian workers had access to a retirement benefit plan at work, and 56% of them were enrolled. However, when considering workers at the bottom of the pay scale, less than half (49%) had access and only 28% participated.
The Treasury Department noted that it encourages implementation of the provisions of the SECURE 2.0 Act to improve “equitable access” to tax-advantaged savings programs. Specifically, the Treasury Department pointed to the Saver’s Match program, which provides eligible low-income workers with a federal match of up to $1,000 in a workplace plan or individual retirement account. This program does not require employers to implement it. The Treasury Department noted that SECURE 2.0 requires the department to promote the Sabers Match to the public.
Other programs cited by the Treasury Department include emergency savings accounts tied to retirement savings and the ability for employers to match student loan repayments with contributions to retirement accounts. Both programs have so far been met with skepticism from some industry watchers because they are optional and plan sponsors and recordkeepers have many obligations and needs beyond these provisions.
“The Department of the Treasury is working on multiple guidance projects related to the SECURE 2.0 Act, including guidance on emergency savings and student loan payment matching,” the department wrote about further dissemination.
The department also cited state-sponsored IRA programs that mandate or encourage retirement savings. Countries without such programs should “consider creating retirement savings programs for workers who do not have access to employer-provided retirement benefits,” the Treasury Department wrote.
The report highlighted the need for employers to provide financial education and advice to workers, stating that employers are “well placed to provide impartial financial advice and education”.
Regarding impartial advice, Treasury also expressed support for the U.S. Department of Labor’s Retirement Security Rule, which was passed to establish fiduciary standards for the provision of retirement investments such as annuities and one-time rollovers. However, the rule was left in place by two federal courts in Texas earlier this year. The DOL is appealing this decision.
Kate Griffin, program director of the Aspen Institute Financial Security Program, defended the program in a statement, noting that the Aspen Institute has been working with the Treasury Department on this effort.
“The National Strategy for Financial Inclusion, the first of its kind, establishes the foundations for comprehensive financial policy and makes household economic security a national priority,” she wrote. “This is a bold plan that leverages the strengths of the public and private sectors and enacts a shared vision for how policies, products and business models can build a financial system that supports an inclusive and sustainable economy. is.”
As a follow-up beyond its own actions, the Treasury will measure benchmarks to measure progress on financial inclusion. It also referred to returning to the report as a “foundation document” that should be “reviewed and built on over time.”
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