Legislation calls for employers with 10 or more employees that do not offer retirement plans to open IRAs for employees and contribute 50 cents per hour worked per employee.
Legislation creating universal retirement accounts for American workers was introduced Wednesday by Rep. Joe Crowley, D-N.Y.
The proposed SAVE UP — Secure, Accessible, Valuable, Efficient Universal Pension accounts — bill calls for employers with 10 or more employees that do not offer retirement plans to open individualized retirement accounts for employees and contribute 50 cents per hour worked per employee. Employers with qualified retirement plans in place can keep contributing to those plans.
Mr. Crowley, vice chairman of the Democratic Caucus, said in a statement that “every American should be able to retire with peace of mind.”
His bill comes on the heels of one seeking universal retirement coverage introduced by Sen. Jeff Merkley, D-Ore., in January.
Mr. Merkley's American Savings Account Act would establish a new universal savings account — called an American Savings Account — for all working Americans, regardless of whether they are full-time or part-time employees or the size of their employers.
The retirement plan created by the bill would mirror that of the Federal Thrift Savings Plan, the defined contribution plan for federal employees and the largest defined contribution plan in the country, Mr. Merkley said at the time.
That legislation would enable employees without access to a workplace plan to automatically enroll at a 3% contribution rate, allowing for pre-tax and Roth contributions, and would be portable across employers.
Mr. Merkley's bill has not yet seen action in the Senate.
The bills come amid a broader push to strengthen retirement security. States such as Illinois and Oregon have passed legislation creating automatic-enrollment retirement plans for individuals without access through the workplace. The Department of Labor, at the direction of the president, has provided guidance for other states to proceed with similar actions.
President Obama also has created a voluntary starter savings account called myRA, which is available through employers.
Hazel Bradford is a reporter with InvestmentNews' sister publication, Pensions & Investments. InvestmentNews reporter Greg Iacurci contributed reporting to this story.
