Another lawmaker is proposing new retirement policy that would require employers with 10 or more employees offer a defined-contribution type savings plan.
But the proposal Rep. Joseph Crowley, D-New York, unveiled yesterday at the Center for American Progress, a progressive think tank, takes previous proposals further.
Not only would employers be required to provide access to a plan; they'd be required to contribute to it as well.
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Crowley said the "SAVE UP" accounts (Secure, Accessible, Valuable, Efficient Universal Pension accounts) would be established at the federal level and resemble the Thrift Savings Plan available to government workers, featuring a limited selection of low-fee index funds.
The mandatory employer contributions to the plan would be based on a defined amount per hour worked for every worker.
In an accompanying document, Crowley, who serves on the House Ways and Means Committee, said an employer contribution level of 50 cents per hour worked—less than $1,000 annually for a 40-hour work week—would provide $160,000 after a 45-year career, based on average equity and bond market returns.
Employees would be defaulted into a 3 percent deferral rate, with the opt out clause.
The plan would manage market risk by pooling all participants' assets, setting aside earnings into a separate account after years of strong returns to offset years of loss.
Payout levels wouldn't be guaranteed, but the plan would offer workers near retirement greater stability if the economy were to go into recession, according to Crowley.
The mandated employer contributions would be offset by tax credit equaling $10,400 a year for five years, available to businesses with less than $5 million in revenue.
Crowley also wants legislation that would make President Obama's MyRA savings program, rolled-out at the end of last year, permanent.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
