Vice Chair Crowley Unveils New Legislation to Create Universal Pension Program
As Private Sector Pensions Increasingly Disappear, SAVE UPs Act Will Help Put a Secure Retirement Back in Reach for American Workers
(Washington, D.C.) – To help combat the savings and retirement crisis in the U.S., today, Rep. Joe Crowley (D-Queens, the Bronx), Vice Chair of the Democratic Caucus, announced the introduction of the Secure, Accessible, Valuable, Efficient Universal Pension Accounts (SAVE UPs) Act, new legislation that establishes universal pension accounts so every American worker has this vital asset after a lifetime of hard work. With one-third of workers, and nearly two-thirds of workers earning less than $35,000 a year, not saving for retirement, and private-sector pensions dwindling, the retirement security picture in the U.S. is bleak. Crowley’s SAVE UPs Act will help put a secure retirement back in reach for American workers.
“Every American should be able to retire with peace of mind and enjoy their golden years after a lifetime of working. Unfortunately, with fewer private-sector workers being offered pensions, as well as other challenges facing potential retirees, the dream of a secure retirement is slipping out of reach for too many Americans,” said Rep. Crowley. “The equation for retirement security is Social Security, plus pensions, plus personal savings – and that’s why we need to make sure all three legs of the stool are strong. With SAVE UPs, workers will see a much more stable retirement picture – and that’s good news for American families.”
While many employers already offer retirement plans to their employees, too many workers find themselves falling through the gaps. In many cases, they are not aware of their employer-provided plans or encouraged to enroll, while in other cases the employer may not be offering a plan at all. Crowley’s SAVE UPs bill addresses this problem by directing employers with 10 or more employees who 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 will automatically begin contributing 3% of their pre-tax income, which increases gradually over time, unless they opt-out.
“We know that automatic enrollment dramatically increases participation, and it also sends a strong message about the importance of saving,” continued Crowley.
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 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.
Statements of support for Crowley’s SAVE UPs Act can be found here.
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. Crowley released a detailed blueprint for the plan, which can be found here.
As outlined in his “Building Better Savings” plan, last fall, Crowley introduced legislation to create a new savings program called USAccounts, a long-term savings account to help every American child start their financial future on the right foot. Earlier this year, Crowley introduced legislation to codify into law myRA (my Retirement Account), a program created by President Obama and the Treasury Department to help American workers save for retirement. Recently, Crowley spearheaded a letter urging President Obama to issue an Executive Order to require government contractors auto-enroll employees in retirement plans.