Rep. Joseph Crowley, D-N.Y., said he will introduce legislation in July that would require employers with at least 10 workers to offer a retirement savings plan.

Crowley announced his intention today at a retirement forum on Capitol Hill hosted by the Aspen Institute’s Financial Security Program. Also addressing the retirement forum were Edmund Murphy III, president of Empower Retirement, and Rep. Jared Polis, D-Colo.

Crowley's plan would require employers with at least 10 employees that don’t already offer a plan to provide what Crowley called Save Up Accounts. Employers would be required to contribute 50 cents for every hour worked into the account of each employee.

The mandatory employer contribution would be adjusted annually for inflation, Crowley said in an address to the forum.

And once enrolled, employees would automatically have 3 percent of pre-tax income deferred to the accounts, a rate Crowley said would also increase under the program’s design.

Employees will not have the option to opt-out of the plan, Crowley said.

In order to offset the new cost borne by small businesses, Crowley’s plan would offer tax credits worth the value of employer contributions to 10 accounts.

While employers with fewer than 10 workers would not be required to offer a savings plan, the tax credit would be extended to those employers to encourage them to offer a plan on a voluntary basis.

“The dream of a secure retirement is slipping away for millions of Americans,” Crowley said in his address.

But there is a “small bright spot,” he said. “Americans want to save, but they need the right tools.”

Looming retirement crisis

Crowley said the program would combine government oversight with “private management,” and would limit investment options to low-fee index funds.

“These accounts will make a big difference to employees,” said Crowley. “After 45 years of work, someone only employed in a low-wage job would have $380,000 saved up.” The savings accounts would be portable, said Crowley, who compared his proposal to the Thrift Savings Plan available to federal employees.

Crowley also called for making President Obama’s MyRA retirement saving plan permanent by codifying it into law.

The Aspen Institute’s event was held to commemorate the 10th anniversary of the passage of the Pension Protection Act in 2006.

In a survey conducted by Aspen Institute leading up to the event, nine in 10 respondents said retirement security should be higher on the agenda this political season, and two in three said Congress should be doing more to improve the country’s overall retirement security.

Polis, the representative from Colorado, also addressed the forum, citing a $14 trillion retirement savings shortfall nationwide, calling that a “looming crisis.”

In advancing the cause of automatic enrollment and escalation, and creating target-date funds as a qualified default investment alternative, the 2006 PPA offered “common sense solutions to real world problems,” said Polis.

“Without the Pension Protection Act the state of affairs would likely be far worse today,” he said. “We need to be here now because it is time to take action again.”

In his address to the forum, Murphy of Empower Retirement, called the nation’s shift from defined benefit to defined contribution plans a “mass investing experiment” that has been conducted for over a generation.

“The results are in and we know what works,” Murphy said, calling PPA’s endorsement of automatic enrollment and escalation and the law’s safe harbor for sponsors “the most beneficial factors that lift retirement readiness.”

Murphy said assuring Social Security’s solvency should by any retirement policy’s top priority. “We must all foster the political will to make Social Security solvent,” he said.

Without Social Security, tens of millions of Americans would become destitute, and many millions more would be severely impacted.

“All of us who care about retirement policy should urge our political leaders to make Social Security solvency a high priority, because the system is under threat and time is not on our side,” said Murphy.

Murphy also came out in support of any federal initiative that would address the nation’s access gap to workplace retirement savings plan.

“At Empower, we believe that everyone who pays mandatory FICA tax should also have the option to set aside part of their paycheck for retirement,” he said.

“Having nearly 70 million Americans outside the defined contribution system is a scandal,” he added.

The collective goal of lawmakers and industry stakeholders should be to create a retirement system that makes success easy and failure hard, said Murphy.

“We will actively support legislative and regulatory efforts to do that through Auto-IRAs, multi-employer plans, starter or simplified 401(k)s — whatever,” he added.

Murphy called on regulators and legislators to “guide, nudge or even mandate” automatic enrollment and escalation features in all defined contribution plans.

An Empower representative said the firm’s longstanding position has been for a federal mandate for automatic enrollment with an option for workers to opt out.

Instant Insights /

Rep. Crowley to introduce legislation mandating retirement plan access

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