WASHINGTON – Sen. Sheldon Whitehouse, D-R.I., last week introduced legislation that would require some employers, who do not provide retirement plans, to automatically enroll its employees in Auto-IRAs.
An Auto-IRA, or automatic payroll deduction individual retirement account, allows an employer to automatically take a portion of an employee’s pay and put it toward a retirement account without contributing any company money. Whitehouse’s legislation would mandate employers with more than 10 employees and that don’t offer an alternative retirement savings benefit provide this service unless the employee specifically opted out.
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Whitehouse said the bill would help people save for retirement, which he sees as a major issue right now in the United States.
“Only half of American workers are able to save for retirement through their work,” he said in a statement. “That means the other half is missing out on an important way to grow their nest egg.”
Citing financial planners, Whitehouse said an estimated 30 million full-time year-round workers don’t have employer-provided retirement plans or an opportunity to save through workplace contributions. Seth Magaziner, Rhode Island general treasurer, lauded the legislation in a statement.
“Too few Rhode Island workers have access to a workforce retirement plan that offers the convenience of payroll deductions,” he said. “The Auto-IRA legislation has the potential to increase retirement security for working families across our country.”
Whitehouse referenced a Pew Charitable Trusts survey that shows nearly 90 percent of small- to midsize employers not offering retirement savings plans in support of Auto-IRA programs.
“This bill … would let more Rhode Islanders and people across the country enjoy greater financial freedom and security in their golden years,” Whitehouse said.
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.
