Senators Propose Requiring Employers to Contribute to Workers’ Savings Accounts
The Saving for the Future Act would require employers to contribute 50 cents to a savings account for each worker for every hour worked, or more than $1,000 a year, with the goal of helping workers prepare for emergencies and retirement.
Senators Amy Klobuchar (D-Minnesota) and Chris Coons (D-Delaware) have introduced the Saving for the Future Act, a bill designed to ensure that Americans have savings for an emergency and, possibly, help with their retirement savings. Like the minimum wage, the bill would require employers to contribute 50 cents for every hour their employees work. This amounts to $20 a week and $1,040 a year.
The Senators note that 30% of Americans do not have access to a workplace retirement plan, and among those who do, 45% do not participate. They say that the Saving for the Future Act would help all Americans, even those working part-time, have some savings put away for retirement and emergency situations.
The law would apply to companies with 10 or more employees and direct the employer’s contribution to a retirement plan such as a 401(k). Employers that do not offer a retirement plan would direct the money to federally provided “UP Accounts,” modeled after the Thrift Savings Plan for federal workers. UP Accounts would have low fees, be easily transferable from job to job and be tailored to the employee’s age and savings needs.
Businesses of all sizes would receive tax credits for their contributions, with companies of 15 or fewer employees receiving credits covering half of their required contributions. Independent workers and employees at the smallest companies would have access to UP Accounts and an individual tax credit to help them contribute.
“Hardworking families in America often don’t have enough money in their savings account for an emergency—let alone retirement down the road,” Klobuchar said. “The Saving for the Future Act will help close the wealth gap, prepare families in case of an emergency and set workers up for a successful retirement.”
Coons added that one-third of Americans who have not yet retired have no retirement savings at all, and 40% of adults don’t have enough cash savings to meet a $400 emergency expense. “We need big, bold proposals to make our economy work for everyone—not just a few wealthy people at the top—and I believe this bill can not only create that change, but also has a chance of eventually becoming law,” Coons said.
A summary of the bill can be viewed here.
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