If workers had their say, they would readily vote in favor of the Retirement Savings for Americans Act, a bill that is expected to ignite fierce industry debate. The proposed legislation would require all employers across the land to enroll their workers in a federal retirement savings program if they don't have a savings plan to offer their employees.
The envisioned American Worker Retirement Plan would be open to all full- and part-time workers without access to a workplace sponsored plan. Workers would be enrolled at a deferral rate of 3% of their salary and would be able to choose from a mix of investments, including fixed income and stock index funds as well as a life cycle or target-date fund. Low- and medium-income workers would also receive a federal matching contribution in the form of a refundable tax credit of up to 5% of their income, which would be deposited directly into their retirement accounts.
Such a plan would meet the retirement-plan fantasy wish list of American workers who in a recent survey said they favored government mandates requiring employers to offer retirement plans and make matching contributions. The survey of 736 U.S. workers conducted by Natixis Investment Managers in January and February showed that 81% believed that employers should be required to offer workplace plans and 78% supported requiring employers to make matching contributions. More than 2 in 3 workers (67%) said they believed the government should provide universal access to retirement plans.
While the Retirement Savings for Americans Act parallels workers' wishes, it is facing skepticism and industry opposition, with early critics saying it will drive business away from providers serving private-sector plans.
The bipartisan, bicameral bill was introduced in December by U.S. Sens. John Hickenlooper (D-Colo.) and Thom Tillis (R-N.C.) and U.S. Reps. Terri Sewell (D-Ala.) and Lloyd Smucker (R-Pa.), but has been largely overshadowed by the SECURE 2.0 Act, the landmark retirement security legislation that was signed into law on Dec. 29. Mr. Hickenlooper is planning to reintroduce the bill, his press secretary Kaitlin Hooker said.