As Washington starts addressing the large and complex health care reform issue, there are other pieces of the employee benefits pie worthy of attention.

In the retirement savings arena, President Obama’s budget includes a proposal that would require employers that don’t presently offer a retirement plan to automatically enroll workers in a direct-deposit Individual Retirement Account (IRA).

While employees could opt out, as they are able to do in 401(k) plans, the majority of people would likely passively accept enrollment and make contributions. While many companies that have chosen to adopt automatic enrollment have viewed it as a good thing for employees, there has been somewhat of a backlash against those whose default option is a target-date fund, which have experienced heavy losses recently. This, of course, raises the question of what would qualify as a default option for automatic enrollment in an IRA, but details of the proposal haven’t been released.

The Profit Sharing Council of America (PSCA) urges Congress to carefully scrutinize the Automatic Workplace Pension proposal, pointing to a 2007 study by AARP that raises concerns about the effectiveness, cost, and complexity for both employers and the government that might result from the proposal. A one-size-fits-all approach isn’t optimal, according to PSCA President David Wray. “A government-mandated program is very different from an employer proudly sponsoring a retirement plan to attract and retain employees and personally encouraging workers to participate,” he writes.

Another related issue for employers deals with federal wage reporting. The annual W-2 form will no longer be enough. According to a Workforce report, the budget includes a proposal to increase the frequency for reporting wages to the Social Security Administration. “The administration says that more frequent reporting would improve tax administration and make it easier to implement their proposal to institute automatic enrollment into retirement savings accounts. The administration says that it will work with states so that the overall reporting burden on employers is not increased,” the report states. ###