Lawmaker Introduces Bill to Create Universal Retirement Plan

The plan would mandate employer contributions and automatically enroll employees into retirement accounts.

U.S. Representative Joe Crowley (D-New York), vice chair of the Democratic Caucus, introduced the Secure, Accessible, Valuable, Efficient Universal Pension Accounts (SAVE UPs) Act.

The new legislation would universalize retirement savings accounts so every American worker would have an opportunity to generate tax-advantaged assets. The SAVE UPs bill would require employers with 10 or more employees that do not already offer a retirement plan to open individualized retirement accounts for every employee and contribute to those plans 50 cents per hour worked, per employee. Alternately, if an employer has an existing retirement plan that qualifies, they can keep contributing to that plan for their employees.

In addition to the employer contribution, once enrolled, employees would automatically begin contributing 3% of their pre-tax income, which would increase gradually over time, unless they opt-out.

To help with the cost of contributing to these plans, smaller employers can receive a tax credit worth the value of contributions to 10 employee accounts. For small businesses with fewer than 10 employees, while they are not required to contribute, this tax credit will make it financially possible for them to do so voluntarily.

SAVE UP accounts will have built-in protections to cushion against dramatic losses like those seen after the market crash of 2007-2008, giving some reassurance to workers nearing retirement. Additionally, similar to the Thrift Savings Plan currently offered to federal employees, SAVE UP accounts will enjoy government oversight, private management, and a limited number of low-fee index fund options.

Last year, Crowley unveiled his “Building Better Savings, Building Brighter Futures” plan to address the savings and retirement security crisis in the U.S. The plan will make Americans more financially secure throughout their lifetimes by creating new financial options that encourage personal saving, expand employer-provided retirement plans, and strengthen Social Security. Details of the plan can be read here.

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