Senate Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Patty Murray, D-Washington, has reintroduced legislation “to address some of the challenges families face as they plan for retirement,” especially women.
According to Senator Murray, the Women’s Pension Protection Act of 2018 (WPPA) includes a set of solutions to help strengthen women’s retirement security by addressing some of the challenges that disproportionately affect women as they plan for their financial futures.
“The legislation would strengthen consumer protections to safeguard retirement savings, improve access to retirement savings plans for long-term, part-time workers, help increase women’s financial literacy, and give support to low-income women and survivors of domestic abuse seeking the retirement benefits they are entitled to following a divorce,” Murray says.
The legislation is divided into key sections, including an introduction highlighting the fact that approximately 29% of households headed by individuals aged 55 through 74 have no retirement savings and 34% of the private sector workforce lack access to a workplace retirement plan. Senator Murray further warns that women often lag significantly behind their male counterparts in preparing for retirement—as their median retirement income in 2014 was 54% of men’s retirement income.
To address these challenges, the Women’s Pension Protection Act would extend the spousal protections that are currently available for defined benefit (DB) plans to defined contribution (DC) plans. Specifically, this provision requires a spouse’s consent for certain distributions made from a defined contribution plan as well as any designation or change of beneficiary. The provision also explicitly outlines the rights of participants and beneficiaries to bring a civil suit for violations of these new requirements—rights which Murray says are currently available for participants and beneficiaries of defined benefit plans.
The bill would further amend the minimum participation standards for certain long-term part-time workers. This provision would “allow employees to participate in a plan once they have reached the current minimum participation standards (age 21 or the completion of one year of service defined generally as 1,000 hours of service during a 12-month period) or once they have completed at least 500 hours of service for two consecutive years, if earlier.” This provision would not apply to employees that are covered by a collective bargaining agreement provided that retirement benefits were the subject of good faith bargaining. The provision further provides that plans that fail to permit participation for these long-term, part-time workers may be subject to a civil penalty of $10,000 per year per employee.
The legislation would establish, “in any offer for the sale of a retirement financial product or service,” that financial providers “shall provide a link to the Consumer Financial Protection Bureau (CFPB) website where the consumer shall be able to access information and resources produced by the CFPB and/or other federal agencies relating to retirement planning or later life economic security.”
Additionally, there is a provision that provides the Secretary of Labor, acting through the Director of the Women’s Bureau, to award grants of at least $250,000 to “established community-based organizations on a competitive basis in order to improve the financial literacy of women who are of working or retirement age.”
Finally, the Women’s Pension Protection Act provides the Secretary of Labor, again acting through the Director of the Women’s Bureau and in conjunction with the Assistant Secretary of the Employee Benefits Security Administration, to award grants of at least $250,000 to “established community-based organizations on a competitive basis to assist low-income women and victims of domestic violence in obtaining qualified domestic relations orders to ensure that these women actually obtain the benefits to which they are entitled through those orders.”
Read the full text of the bill here.