Senate bill would help employees participate in retirement savings plans

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Many employers automatically enroll their employees in retirement savings plans when they start working, but many employees initially decide to opt out.

A bill introduced in Congress would encourage those who opt out of a retirement savings plan to reconsider their choice every three years as their career progresses and their financial situation changes.

U.S. Senator Tim Kaine (D-VA) and Rep. Kathy Manning (D-NC-06) announced the introduction of the bicameral Automatic Re-Enrollment Act of 2022, legislation aimed at increasing worker participation in pension plans. employer-sponsored pensions by encouraging pension plans to automatically re-enroll workers in those plans, with the ability to opt out.

“Employer-sponsored retirement plans are an important part of retirement for millions of Americans,” Kaine said. “However, far too many workers lack the money that can greatly contribute to financial stability during their retirement years by not participating in their employer’s matching contribution. This common sense legislation will build on the success of automatic enrollment and help put families in Virginia and across the country on a more secure financial footing for the future.

“Nearly half of all workers in the private sector do not enjoy the benefits of their employer-sponsored pension plan and employer matching contributions. The years that employees work without earning these savings could have a big impact on their retirement,” said MP Manning. “I introduced this bill with Senator Kaine to ensure that all Americans receive their benefits while saving for their future.”

Employer-sponsored retirement plans are an essential part of retirement security for Americans, supplementing Social Security and other sources of retirement income. However, only 51% of private sector workers participate in employer-sponsored retirement plans. Millions of workers have access to these plans but do not participate in them, often leaving matching employer contributions on table – not only saving less than they could, but also not receiving the full compensation to which they are entitled.

Many Americans who don’t enroll in retirement plans when they start out with their employers never go back on that decision, even if their financial situation changes, contributing to a estimated 17.5 million Americans leaving free retirement funds on the table. By encouraging automatic re-enrolment, this bill would help address this problem.

Specifically, the Auto-Re-enrollment Act of 2022 would improve auto-enrollment plans by changing the exemption rules of the Employees Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code). to encourage plan sponsors to re-enroll non-members at least once a year. three years, unless the person withdraws again.

To read the text of the invoice, click on here.

augusta free press
augusta free press

Norman D. Briggs