Congress is ready to boost the access for millions of small business employees to workplace savings plans, two key Senators said today.
“We need to encourage a level playing field so that workers at small businesses throughout the country have equal access to retirement plans just like workers at Fortune 500 companies,” said Senate Finance Committee Chair Chuck Grassley.
The Iowa Republican said he is hopeful the House will come to him this month with a companion to a bill he and the leading Democrat on the committee, Oregon’s Ron Wyden have sponsored to do just that: Retirement Enhancement and Savings Act (RESA).
Wyden went beyond “hopeful” to say the bill will become law.
“I don’t make predictions lightly,” said the Oregonian.
The bill is designed to lure more small businesses to offer workplace savings plans by cutting administrative costs in part by making it easier for them to join together to offer the programs and take advantage of economies of scale.
In addition, RESA would open the door to letting more employers give employees the ability to invest in life-time income vehicles like annuities.
RESA would also improve pension portability and to help employees add retirement savings each year through automatic increases in contributions to 401(k) plans
The legislation came close to becoming law last year.
There originally was a “not invented here” attitude in the House, said Brookings and Wharton scholar Mark Iwry. Iwry was the Obama Administration’s top retirement go-to at the Treasury Department.
During the latter part of 2018, the House developed its own version of RESA and after several iterations converged with the Senate bill.
RESA and the House bill, called SECURE, were reintroduced this spring and SECURE was unanimously approved by the House Ways & Means Committee under the chairmanship of Massachusetts Democrat Richard Neal .
Iwry noted the two bills aren’t very different and stand a very good chance of merging and passing this year.
While pushing for legislation that would make more workers eligible to participate in workplace retirement savings plans, Grassley said it’s not generally clear that there is a “retirement savings crisis.”
To buttress his claim, the Senator pointed out there are over 60 million participants in over half a million 401(K) plans.
At the same time, he noted $27 trillion was held in retirement funds, including over $5 trillion in private sector defined contribution plans at the end of the year.
Both Grassley and Wyden said if and when RESA is passed, which saw its beginnings in 2006, there will be a follow-up effort in the near future for additional retirement savings reforms.
A flashpoint for the next round would be to try to give access to workplace retirement savings to the 27 million part time workers in America.
“This is especially important for older workers and caregivers who often shift from full-time to part-time work or return to the workforce less than full-time due to caregiving responsibilities,” AARP Board Chair Joan Ruff told the Senate committee.
She pointed out women are far more likely to work part-time than men–two-thirds of part-time workers are women.
However, Grassley balked employers have told him the compliance costs for providing workplace savings plans for part-time staff would be excessive.