“America is in a retirement crisis” is a common refrain from academics and financial experts, and two U.S. lawmakers are looking to challenge that by introducing a new bill aimed to automatically enroll American workers in an employer-based retirement plan. This is according to a press release issued by the office of Sen. Tim Kaine (D-Va.), one of the legislation’s co-sponsors.
The “Auto-Enrollment Act” seeks to automatically enroll employees in a workplace retirement plan unless the workers consciously choose to opt-out and either remain out of such a plan or take a different approach to retirement planning. The legislation has been introduced by Rep. Kathy Manning (D-N.C.) and Kaine, who was the 2016 Democratic nominee for Vice President of the United States.
“Employer-sponsored retirement plans are an important part of retirement for millions of Americans,” Kaine said in a statement as reported by the Times-Dispatch. “However, far too many [workers] are missing out on money that can go a long way toward financial stability in their retirement years by failing to participate in their employer matching contribution.”
While many employers make the enrollment into retirement plans available, oftentimes employees will either opt-out or simply not avail themselves of the option, says Rep. Manning.
“Nearly half of all private-sector workers are missing out on the benefits of their employer-sponsored retirement plan and employer matching contributions,” Manning said in a statement. “The years that employees are working without earning these savings could have a large impact on their retirement. I introduced this bill with Sen. Kaine to ensure that all Americans are getting their earned benefits while saving for their futures.”
According to data from the U.S. Bureau of Labor Statistics, 51% of private-sector workers participate in employer-sponsored retirement plans, but as many as 17.5 million Americans leave matching employer contributions — essentially “free” retirement plan money — on the proverbial table, according to a MagnifyMoney survey reported on by CNBC in 2021.
This bill aims specifically to “[amend] safe harbors in the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code) to encourage plan sponsors to re-enroll non-participants at least once every three years, unless the individual affirmatively opts out again,” according to Sen. Kaine’s press release.
“This common-sense legislation will build on the success of auto-enrolment and help put families in Virginia and across the nation on a safer financial footing for the future,” Kaine added.
