Legislation ensures workers get minimum savings contributions of 50 cents per hour, $20 per week, roughly $1000 per year
WASHINGTON – Today, U.S. Senators Amy Klobuchar (D-MN) and Chris Coons (D-DE) introduced the Saving for the Future Act, landmark legislation to address a looming retirement savings crisis and help ensure that Americans are able to afford emergency expenses. Like the minimum wage, the Saving For the Future Act establishes a minimum employer contribution to a savings plan of 50 cents per hour worked, which equals $20 per week and more than $1000 per year.
“Hardworking families in America often don’t have enough money in their savings account for an emergency—let alone retirement down the road. The Saving for the Future Act will help close the wealth gap, prepare families in case of an emergency, and set workers up for a successful retirement,” Klobuchar said.
“Right now, a full third of non-retirees have zero retirement savings, and four in ten adults don’t have enough cash savings to meet a $400 emergency expense. That’s a crisis, and it’s proof that while parts of our economy are strong, many Americans are still being left behind,” Coons said. “By establishing a minimum savings contribution for the American worker, we can ensure that Americans working hard to pay their bills have savings in place to eventually retire and to deal with emergency expenses along the way. We need big, bold proposals to make our economy work for everyone – not just a few wealthy people at the top – and I believe this bill can not only create that change, but also has a chance of actually becoming law.”
At a time when three in ten American workers lack access to workplace retirement plans, and 45% do not participate in one, the Saving for the Future Act would help guarantee that all Americans – even those working part time – have some savings put away for retirement and emergency situations.
Under the Saving for the Future Act, men and women who work at a company with ten or more employees would be entitled to an employer savings contribution of at least 50 cents per hour worked into a savings plan, which could include existing plans, such as a 401(k). Employees at smaller companies would be able to save through federally provided “UP Accounts,” modeled after the popular Thrift Savings Plan for federal workers. UP Accounts would have low fees, could easily be transferred from job to job, and would be tailored to the employee’s age and savings needs.
Businesses of all sizes complying would receive tax credits to help fund these contributions, and small businesses with 15 or fewer employees would receive credits covering a full half of the required contributions. Independent workers and employees at the smallest companies would receive access to UP Accounts and an individual tax credit to help them contribute.
Read a summary of the bill HERE:
The legislation is supported by the AARP, SEIU, the National Urban League, Prosperity Now, Third Way, and LISC. Companion legislation will be introduced in the House today by Representatives Scott Peters (D-CA), Lucy McBath (D-GA), and Lisa Blunt Rochester (D-DE).
Support for the Saving for the Future Act:
“55 million Americans lack access to a workplace retirement savings plan. AARP applauds Senators Coons and Klobuchar’s efforts to promote automatic enrollment and escalation in retirement plans, and their broad support of state efforts to increase retirement savings opportunities,” said David Certner, Legislative Counsel, AARP.
“As the nation's oldest and largest civil rights and direct services organization, the National Urban League strongly supports the Saving for the Future Act. Helping our constituents attain economic self-sufficiency has been our mission since 1910. The Saving for the Future Act allows American workers to do just that. The bill allows low- to moderate-income Americans to save for everyday emergencies and their retirement, with the financial support of their employers. Passage of the Saving for the Future Act would help American families get a leg-up in today’s economy,” said Marc H. Morial, President and CEO of the National Urban League.
“The Saving for the Future Act will do more to reduce wealth disparity and improve the fortunes of working wage Americans than any single piece of legislation in Congress. This bill is bold, far-sighted, affordable, and pragmatic,” said Jim Kessler, Executive Vice President for Policy, Third Way:
“Americans are woefully unprepared for financial emergencies in the short term, let alone their retirement years. Forty percent of Americans are one emergency away from financial ruin and almost 30 percent of households ages 55 and over do not have retirement savings or a pension. Households of color are especially vulnerable. On average, White families had about six times more in retirement savings than Black and Hispanic families. Government and employers need to work together to give Americans access to savings supports through workplace retirement plans and also to help bolster them through the financial emergencies that inevitably hit every family. The Saving for the Future Act will build upon promising research on retirement and emergency savings, allowing employers to help their workers successfully save for the long and short term,” said Andrea Levere, President of Prosperity Now.
“The Local Initiatives Support Corporation (LISC) supports The Saving for the Future Act, which builds financial security, strengthens retirement preparedness and reduces wealth inequality through employer-led workplace savings. We believe that allowing people to tackle facets of their financial life like saving for a rainy day or supporting retirement goals, as well as to build a buffer to protect against financial hardships, will improve one’s long-term economic security and financial well-being,” said Matt Josephs, Senior Vice President for Policy, LISC.
“The Saving for the Future Act takes important steps to help address the country’s looming retirement crisis. It enables workers that lack access to save in a high-quality retirement plan and pushes all employers to contribute towards their employee’s retirement so that workers don’t have to do it on their own,” said David Madland, Senior Fellow, Center for American Progress Action Fund.