[Congressional Record Volume 163, Number 105 (Tuesday, June 20, 2017)]
[Senate]
[Pages S3651-S3652]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself and Mr. Nelson):
  S. 1383. A bill to amend the Internal Revenue Code of 1986 to modify 
safe harbor requirements applicable to automatic contribution 
arrangements, and for other purposes; to the Committee on Finance.
  Ms. COLLINS. Mr. President, ensuring that more Americans are better 
prepared financially for their retirement is one of my top priorities.
  That is why I rise to reintroduce with my colleague, Senator Nelson, 
the Retirement Security Act of 2017. Our bill would encourage more 
small employers to offer retirement plans, provide incentives for 
employees to save more for retirement, and make it easier for low- and 
middle-income taxpayers to claim tax benefits for retirement savings 
already authorized in law.
  According to the non-partisan Center for Retirement Research, there 
is an estimated $7.7 trillion gap between the savings American 
households need to maintain their standard of living in retirement and 
what they actually have. A recent Gallup poll found that only 54 
percent of working Americans believe that they will have enough money 
to live comfortably in retirement. We must continue to work to ensure 
that more Americans will have the resources they need to enjoy their 
``golden years.''
  The Social Security Administration's most recent report noted that 61 
percent of all beneficiaries rely on Social Security for more than half 
of their income. Many seniors in my State rely almost entirely on 
Social Security to cover their monthly expenses, despite the fact that 
the average annual benefit is only about $16,000 per year. It is hard 
to imagine stretching those dollars far enough to pay the bills--
certainly a ``comfortable retirement'' is out of the question.
  Sadly, they fare no better when it comes to savings: a survey by the 
Federal Reserve found that nearly half of individuals do not have 
enough savings to cover an emergency expense of $400. That is not even 
enough to buy new tires for a car. For this reason, among others, 
Americans need to increase their personal savings so that we can better 
weather financial emergencies without raiding our retirement accounts.
  There are many reasons why Americans have struggled to save for 
retirement, including the shift away from employer-based ``defined 
benefit'' plans, or pensions; the severity of the recent financial 
crisis; rising health care costs; the need for expensive long-term 
care; and most of all, the fact that Americans are living far longer 
than they did in the past. Many Americans reaching retirement age also 
have more debt than retirees of previous generations.
  Another contributing factor is that employees of small businesses are 
much less likely to participate in employer-based retirement plans. 
According to a study by the PEW Charitable Trusts, more than 30 million 
U.S. workers lack access to a work-based plan to save for retirement.
  Making it easier for smaller businesses to offer retirement plans for 
their workers would make a significant difference in the financial 
security of many Americans. That is why the bill we are introducing 
today focuses on reducing the cost and complexity of retirement plans, 
especially for small businesses, and on encouraging individuals to save 
more for retirement. Let me describe the provisions of the bill:
  First, our bill would make it easier for businesses to enter into 
multiple employer plans, known as MEPs, to offer retirement programs to 
their employees. MEPs permit small companies to share the 
administrative burden of a retirement plan, which helps lower costs. 
Current law discourages the use of MEPs because it requires a 
connection, or ``nexus,'' between unrelated businesses in order to join 
a MEP, such as membership in the same trade association. Our bill would 
waive the nexus requirement for businesses.
  Second, our bill makes joining a MEP a more attractive option for 
small businesses. Under current law, if one employer in a MEP fails to 
meet the minimum criteria necessary for retirement plans to obtain tax 
benefits, all employers and their employees could lose these tax 
benefits--which are substantial. For employees, benefits include 
delaying the taxation of income contributed to a plan until funds are

[[Page S3652]]

withdrawn. For employers, plan disqualification could result in limited 
deductions and a higher tax burden. Our bill would address this 
uncertainty, and protect members of a MEP from the failure of one bad 
apple to meet its obligations.
  Third, our bill would reduce the cost of maintaining a retirement 
plan. Current law requires that participants in a retirement plan 
receive a variety of notices. Our bill would direct Treasury to 
simplify, clarify, and consolidate these required notices to lessen 
costs.
  Fourth, the Retirement Security Act would encourage those still in 
the workforce to save more for retirement. Retirement plans are often 
designed to comply with existing safe harbors to prevent the IRS from 
challenging the tax benefits that flow to employees and employers. The 
existing safe harbor for so-called ``automatic enrollment'' plans 
effectively caps employee contributions at ten percent of annual pay, 
with the employer contributing a ``matching'' amount of up to six 
percent. Our bill would create an additional safe harbor for these 
plans that would allow employees to receive an employer match on 
contributions of up to ten percent of their pay. Employees would be 
able to contribute more than ten percent, albeit without an employer 
match for contributions above ten percent.
  I recognize that businesses that choose to adopt a plan with this new 
optional safe harbor may face additional costs due to the increased 
employer match. That is why our bill would also help the smallest 
businesses--those with fewer than 100 employees--offset this cost by 
providing a new tax credit equal to the increased match.
  I should note that the new retirement plan options for businesses 
included in our bill are just that--options. No business, large or 
small, would be required to offer its employees a retirement plan under 
the Retirement Security Act.
  Finally, our bill would ensure that current measures to encourage 
savings are functioning as they were intended. One such measure is the 
so-called ``saver's credit,'' which reduces the tax burden on low- and 
middle-income individuals who contribute to retirement plans, including 
IRAs and 401(k) plans. Yet the credit cannot be claimed on a Form 
1040EZ, which is frequently used by these individuals. A 2013 
Transamerica Center for Retirement Studies survey found that only 23 
percent of people with household incomes of less than $50,000 per year, 
the group most likely to qualify, were aware of the saver's credit. To 
address this, our bill directs Treasury to make the credit available on 
Form 1040 EZ.
  Mr. President, during my time as chairman of the Senate Aging 
Committee, I have heard countless stories of retirees whose savings did 
not go as far as they anticipated. Adequate savings reduce poverty 
among our seniors. As the HELP Committee noted in a July 2012 report, 
poverty among our seniors also increases Medicare and Medicaid costs 
and strains our social safety net. Giving those not yet at retirement 
age more opportunities to save, and to save more, would help ease this 
additional burden on entitlement programs that already are projected to 
be unsustainable.
  In light of the positive effects this bill would have in 
strengthening retirement security for millions of Americans, I urge my 
colleagues to join Senator Nelson and me in supporting the Retirement 
Security Act of 2017.
  Thank you, Mr. President.
                                 ______