June 11, 2021
In a new op-ed for Fortune, Senator Portman highlights the opportunity in front of Congress right now to help more Americans achieve a financially secure retirement.
Even before the pandemic, a Government Accountability Office (GAO) report found that nearly half of all near-retirees over age 55 have no retirement savings at all. The Bureau of Labor Statistics’ National Compensation Survey shows that while 67 percent of private-sector workers have access to an employer-sponsored plan, that number drops to 49 percent for individuals working for the smallest businesses and 39 percent for part-time workers. Actual participation rates in workplace plans lag even further behind, especially for those individuals in the bottom quartile of wage earners. Among those lowest-paid workers, only about one in five earn retirement benefits, with just 22 percent of low-income workers participating in a retirement plan. The final challenge is the lack of adequate lifetime savings as Americans are living longer post-retirement.
In his op-ed, Portman argues that we can solve these challenges through bipartisan Retirement Security & Savings Act (S. 1770), a broad set of reforms designed to strengthen Americans’ retirement security. The bill addresses four major opportunities in the existing retirement system: (1) allowing people who have saved too little to set more aside for their retirement; (2) helping small businesses offer 401(k)s and other retirement plans; (3) expanding access to retirement savings plans, including for low-income Americans without coverage; and (4) providing more certainty and flexibility during Americans’ retirement years. The measure includes more than 50 provisions to accomplish these objectives.
Excerpts of the op-ed can be found below and the full op-ed can be found here.
People Still Aren’t Saving Enough for Retirement. Congress Can Help.
By U.S. Senator Rob Portman
It’s good to encourage everyone to save more for their own secure retirement. More private retirement savings is good for the economy, and it is key to people’s standard of living in their later years, particularly as people are living longer lives. Right now, Congress has the opportunity to provide everyone more peace of mind in retirement through similar bipartisan legislation in the House and the Senate.
Last December, I chaired a bipartisan Senate finance subcommittee hearing focused on this opportunity. The consensus in our hearing was that we have the common ground needed between the Senate and the House to pass bipartisan retirement reform that will make a real difference. Recently, I reintroduced the Retirement Security and Savings Act (Cardin-Portman) alongside my colleague Sen. Ben Cardin, Democrat from Maryland, to do just that.
Cardin-Portman contains dozens of provisions designed to help more Americans achieve a safe and secure retirement by addressing four major challenges in our retirement system. First, it will help low-income and part-time workers save more for retirement. Before the pandemic, only one in four American workers in the lowest income bracket participated in a workplace retirement plan, and among part-time workers in the private sector, only 22% had access to a savings plan. Experts believe that these low levels of retirement savings for these groups were even further eroded during the COVID-19 pandemic.
Our bill expands the Saver’s Credit tax credit to help more low-income Americans increase their retirement savings and makes the credit directly refundable into a retirement account. It also increases the credit amount available for many low-income savers, and requires employers to allow part-time workers who have completed two years of service to participate in 401(k) plans. This means that the single mother working part-time to support herself and her children will have a chance to sock away some retirement savings.
Cardin-Portman will help these near-retirees to more quickly build up their nest eggs by increasing the catch-up retirement plan contribution limits after age 60, letting workers save more money in less time. The law will also encourage employers to make larger contributions to their employees’ retirement funds through both tax credits and regulatory improvements. More Baby Boomers will be able to have the kind of financially secure retirement their parents enjoyed.
Our bill will help small businesses offer plans by strengthening the tax credit they receive for starting a new retirement plan and creating a tax credit and legal relief for small business plans that do things to get more workers covered, like automatic enrollment features and a minimum 3% employer match. It also includes another credit for small business plans with automatic re-enrollment every three years.
Cardin-Portman provides a strong base for overhauling our private retirement system to provide more savings opportunities to those who need it the most. I’m pleased to say that 25 of its provisions are included in the leading retirement bill in the House of Representatives, Neal-Brady, which has already cleared the House Ways and Means Committee with strong bipartisan support.
I look forward to working with my Senate colleagues to do the same and help more Americans have a safe and secure retirement.