The U.S. financial industry is applauding a proposal for a new type of guaranteed retirement account put forward by U.S. president Barack Obama, in his State of the Union address Tuesday night.
In his speech, Obama called for more action to help workers save for retirement. To that end, he said that he will be directing the U.S. Treasury to create a new way for workers to start their own retirement savings, to be called MyRA.
While details in the speech were scarce, Obama described the new vehicle as a “savings bond that encourages folks to build a nest egg,” which will, “guarantee a decent return with no risk of losing what you put in.”
The financial industry has come out in support of the initial proposal. Asset management giant BlackRock, Inc. said that it “applauds” the effort to improve financial preparedness, and it called on “businesses and policymakers to join a national dialogue on how to help Americans at all income levels become better prepared for retirement.”
“Longevity is creating a retirement crisis in America that is growing more severe each year. So I am tremendously encouraged that the president has focused on retirement in his State of the Union,” said BlackRock chairman and CEO Laurence Fink.
“I’m hopeful that President Obama’s focus on this critical issue will help kick off a much-needed national conversation — a conversation that Congress needs to join — on what must be done to ensure that all Americans have sufficient income to support themselves in retirement,” he said. “This is a responsibility that must be borne not just by government, but businesses and individuals as well.”
Additionally, Chip Castille, BlackRock U.S. head of retirement, called on the government to “reduce regulatory burdens so more companies can provide retirement plans, and to allow employers the option to offer a wider array of investment options.”
The Securities Industry and Financial Markets Association (SIFMA) also released a statement from its president and CEO, Kenneth Bentsen, Jr., in favour of the proposal.
“SIFMA supports the creation of the MyRA savings bond as mentioned in tonight’s address as a tool to promote retirement savings. Given the vast numbers of baby boomers who reach retirement age every day, retirement savings incentives are needed more than ever to help people ensure their retirement security,” he said.
“SIFMA also applauds the president’s commitment to cybersecurity as this is a top priority for the financial services industry, one that our members are dedicating significant resources to in order to protect clients and firms from this growing threat,” he added.