[Congressional Record Volume 156, Number 118 (Thursday, August 5, 2010)]
[Senate]
[Pages S6904-S6905]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mr. Kerry):
  S. 3760. A bill to amend the Internal Revenue Code of 1986 to expand 
personal savings and retirement savings coverage by allowing employees 
not covered by qualified retirement plans to save for retirement 
through automatic IRAs, and for other purposes; to the Committee on 
Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce the Automatic 
IRA Act of 2010. When fully phased in, this bill will give nearly 42 
million Americans nationwide an easy, effective way to take 
responsibility for their financial futures and plan for a secure 
retirement. The act incorporates the President's call, in his proposed 
fiscal year 2010 and fiscal year 2011 budgets, for Congress to enact 
automatic IRA legislation.
  Currently, about half of American workers have no opportunity to save 
for retirement at work. In my home State of New Mexico, that share is 
nearly 60 percent. Among those lacking coverage at work, only 1 in 10 
contributes annually to an individual retirement account, IRA; the rest 
generally make no dedicated savings for retirement. The result? An 
alarming number of American workers are woefully unprepared for a 
financially secure retirement. According to Boston College's Center for 
Retirement Research, ``in 2009 half of today's households will not have 
enough retirement income to maintain their pre-retirement standard of 
living, even if they work to age 65, which is above the current average 
retirement age.'' Especially in this period of economic uncertainty, it 
is imperative that Congress focus on this retirement savings crisis. My 
bill takes a commonsense approach to doing so.
  Under this bill, most private sector employees working in 
establishments of 10 or more employees who are not currently covered by 
a workplace retirement plan would be given the opportunity to save 
through regular payroll deposits that continue automatically, unless 
they elect out. The savings will be deposited into the worker's

[[Page S6905]]

own IRA, which will be subject to the laws already in place governing 
IRA accounts. Employers' administrative functions will be minimal. And 
the arrangement is market oriented; other than the smallest of 
accounts, automatic IRAs will be provided by the same banks, mutual 
funds, insurance carriers, and other institutions that currently 
provide them.
  The automatic IRA approach is intended to help these households 
overcome the barrier of inertia. It builds on the successful use--
encouraged by reforms I strongly supported the Pension Protection Act 
of 2006--of automatic features in 401(k) plans that encourage employees 
toward sensible decisions (while allowing them to make alternative 
choices). We have already seen evidence that automatic 401(k) 
enrollment can dramatically boost employee participation rates, from 
seven in ten eligible workers to nine in ten. And in the 401(k) 
context, the gains are even more striking for population groups least 
likely to save, including women, Latino, and low-income workers.
  Of the 75 million American workers who now are not covered by 
employment-based retirement plans, an estimated 42 million would be 
eligible to save and enroll under automatic IRA legislation. This 
includes more than 250,000 in my home State of New Mexico. Many of 
these individuals are familiar with IRAs. But when asked why they have 
not used the existing program, about half point to issues relating to 
setup and decisionmaking as the key barriers. The automatic IRA would 
eliminate these barriers, and the Retirement Security Project estimates 
that automatic IRA legislation could increase net national saving by 
nearly $15 billion annually.
  This is the third consecutive Congress in which I have introduced 
automatic IRA legislation. The concept was initially developed by 
scholars at the Brookings Institution and Heritage Foundation. Indeed, 
the automatic IRA concept has long enjoyed broad support across the 
political spectrum. For instance, Martin Feldstein, chief economic 
advisor to President Reagan, has described himself as ``a great 
enthusiast of automatic enrollment IRAs'' who thinks ``as a policy, 
it's a no-brainer'' and ``can't imagine why there would be any 
significant opposition from political players on either side of the 
aisle.''
  Finally, this bill seeks to send a strong signal of preference for 
employers to offer qualified retirement plans, like 401(k)s. Among 
other features, it doubles the credit for employers that newly 
establish qualified plans and it directs the Secretaries of the 
Treasury and Labor to implement final regulations and establish a model 
plan for Multiple Employer Plans.
  I am grateful that my colleague on the Senate Finance Committee, 
Senator Kerry, is joining me in introducing this bill. I am also 
pleased to note the broad range of stakeholders supporting the 
automatic IRA concept, including AARP; the American Society of Pension 
Professionals & Actuaries; Aspen Institute's Initiative on Financial 
Security; the Business and Professional Women's Foundation; CFED; 
Consumers Union; FINRA; the Minority Business Roundtable; New Economics 
for Women; the United States Black Chamber; the United States Women's 
Chamber of Commerce; Women Impacting Public Policy; and the Women's 
Institute for a Secure Retirement.
  Ensuring easy access to a retirement account and the ability to have 
part of their wages go directly from their paycheck into this account 
are proven strategies to encourage retirement savings. I call on the 
Senate to take up this bill in the fall and to include it in 
legislation extending the 2001 and 2003 tax cuts.
                                 ______