[Congressional Record Volume 153, Number 72 (Thursday, May 3, 2007)]
[Senate]
[Pages S5580-S5581]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself, Mr. Conrad, Mr. Kerry, Mr. Bingaman, 
        and Ms. Snowe):
  S. 1288. A bill to amend the Internal Revenue Code of 1986 and the 
Employee Retirement Income Security Act of 1974 to increase the 
retirement security of women and small business owners, and for other 
purposes; to the Committee on Finance.
  Mr. SMITH. Mr. President, today I am introducing the Women's 
Retirement Security Act of 2007. This measure has the potential to make 
a significantly positive impact on the ability of Americans to save for 
their retirement years. This is a truly bi-partisan bill and I am 
pleased to be joined today in introducing this important legislation 
with Senators Conrad, Kerry, Bingaman and Snowe.
  Preparing for retirement and achieving financial security are 
daunting tasks for all Americans; however, women face many unique 
challenges. Women are more likely to work part-time or work in 
industries where employers are less likely to offer retirement 
benefits. And many women have significant gaps in their work histories 
due to caring for children or elderly parents.
  As a result, women receive substantially less income during 
retirement than men. What makes this trend even more disturbing is the 
fact that women generally live longer. So if anything, women should be 
entering retirement with more income.
  The Women's Retirement Security Act of 2007 works to narrow the 
retirement income gap between men and women. For example, because women 
are more likely than men to work part-time, the bill will require 
employers to allow long-term, part-time employees to make elective 
deferrals to their 40l(k) plans. In addition, the bill expands the 
Saver's Credit, which is a tax credit for certain low and moderate-
income individuals, so that more Americans will benefit.
  The bill also creates automatic IRAs. Over 75 million Americans work 
for an employer that does not sponsor a retirement plan. This is almost 
half of all working Americans. The Women's Retirement Security Act will 
allow those employees not covered by a qualified retirement plan to 
save for retirement through automatic payroll deposits to IRAs. Under 
the bill, employers with more than 10 employees that don't sponsor a 
retirement plan would be required to offer an option for their 
employees to make regular payroll deposits to IRAs. This concept is 
very similar to direct deposit of paychecks to employees' bank 
accounts, which many employers already do.
  Another key component provides incentives for lifetime payments. 
Since women generally live longer than men, they must be particularly 
concerned with protecting against the risk of exhausting their 
retirement income. Life annuities help ensure that older Americans will 
not outlive their retirement savings, adding stability and security in 
retirement years. The Women's Retirement Security Act encourages 
annuitization by allowing individuals to exclude from taxation a 
portion of payments from qualified or nonqualified annuities that last 
a lifetime.
  I look forward to working with my colleagues to narrow the pension 
gap between men and women by enacting the important reforms in this 
legislation.
  I ask unanimous consent that a copy of this legislation be printed in 
the Record. I also ask unanimous consent that my statement be included 
in the Record next to the bill.
  Thank you.
  Mr. KERRY. Mr. President, I am pleased to join my colleagues Senators 
Smith, Conrad, Snowe, and Bingaman in introducing the Women's 
Retirement Security Act of 2007. This legislation comes on the heels of 
the passage of the Pension Protection Act of 2006, which makes 
improvements to the defined benefit pension plan system.
  The legislation that we are introducing today builds upon that 
legislation and focuses on defined contribution plans. Our pension 
system has shifted away from defined benefit plans to defined 
contribution plans. We should make it easier for employers to offer 
defined contribution plans and for individuals to participate in these 
plans.
  At a time when we have a negative savings rate that is the lowest 
since the Great Depression, we should provide appropriate incentives to 
help individuals save for retirement. In an effort to achieve this, the 
Women's Retirement Security Act of 2007 focuses on increasing 
retirement savings, the preservation of income, equity in divorce, 
improving financial literacy, and encouraging small businesses to enter 
and remain in the employer retirement plan system.
  This legislation increases savings by allowing employees to 
contribute a portion of their paycheck to an individual retirement 
account (IRA) if their employer does not offer a pension plan. 
Automatic IRAs will help the 71 million workers that do not have 
employer-sponsored plans. It is a low-cost, sensible solution that 
provides a stepping stone toward employer-sponsored retirement plans. 
More workers are likely to contribute to an IRA if the contribution is 
deducted from their payroll. Automatic IRAs will help combat the 
inertia that is a factor in our low savings rate. The bill also 
provides a tax credit to help small businesses with the cost of 
implementation.
  The Pension Protection Act of 2006 increase made the tax credit for 
contributions to qualified pension plans permanent, commonly referred 
to as the saver's credit, permanent. Our legislation builds upon this 
provision by making this credit refundable and making it 50 percent of 
the contribution for all eligible taxpayers. The annual contribution 
eligible for this credit is $2,000. In 2005, five million households 
benefited from this provision. These changes will help many more 
benefit from this important credit. Making the credit refundable will 
help those who are struggling and do not have enough income to save.
  Women are often placed at a disadvantage in our retirement system 
because they cycle in and out of the work force. The Women's Retirement 
Security Act of 2007 addresses this issue by requiring employers that 
offer defined contribution plans to cover part-time employees that meet 
specific requirements.
  Pension coverage needs to improve, particularly for small businesses. 
In

[[Page S5581]]

2004, only 26 percent of workers at firms with fewer than 25 employees 
participated in pension plans. Progress has been made on providing 
coverage to small businesses. Currently, more than 19 million workers 
are covered by small business retirement plans, but more than 36 
million Americans work for firms with less than 25 employees.
  The Women's Retirement Security Act of 2007 provides a start-up 
credit for new small business retirement contributions. In addition, it 
removes rules that discourage small employers from adopting deferral 
only plans.
  I look forward to continuing to work with my colleagues to help 
improve the retirement of mothers, sisters, daughters, and wives. We 
should work together to provide incentives that encourage participation 
in retirement plans and remove barriers preventing employers from 
offering them.
  Thank you.
                                 ______