[Congressional Record (Bound Edition), Volume 153 (2007), Part 8]
[Extensions of Remarks]
[Page 11342]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   INTRODUCTION OF AUTOMATIC IRA BILL

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                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                         Thursday, May 3, 2007

  Mr. NEAL of Massachusetts. Madam Speaker, I rise to offer bipartisan 
legislation to create additional savings opportunities for workers who 
do not have access to qualified retirement plans through their 
employers. I am pleased to be joined by Representative Phil English in 
offering ``The Automatic IRA Act of 2007,'' along with several other 
cosponsors, which will increase retirement savings for millions of 
workers.
  Over the years, Congress has improved incentives for employer-based 
retirement and pension plans by providing more flexibility, increasing 
the limits, and lessening the administrative burdens. Still, about one 
in four employees who have access to these successful retirement 
vehicles do not take advantage of them.
  What is a much more difficult group to reach, though, are the 
estimated 75 million workers who do not have access to these employer-
based plans. That is why today we are filing legislation to create 
automatic payroll deposit Individual Retirement Accounts, or IRA's, for 
workers who do not have access to employer-provided qualified pension 
plans. Our bill would require employers to automatically enroll 
employees in an ``auto IRA'' unless the employee opts out. These are 
``set it and forget it'' payroll deposit accounts. The non-partisan 
Retirement Security Project has estimated that this proposal could 
raise net national savings by nearly $8 billion annually.
  We are, of course, sensitive to any increased burden on small 
businesses, so the bill provides for a temporary tax credit for 
employers with less than 100 employees in order to offset the upfront 
administrative cost of establishing this program. Only employers with 
at least 10 employees, which have been in business for at least two 
years, would be covered by the bill. Further, the bill does not mandate 
any matching contributions by employers or any fiduciary responsibility 
for the management of the accounts. It is our sincere hope that once 
employers start participating, they will decide to convert these 
arrangements to the broader 401(k) plans. The IRA contribution limits 
are much lower than the 401(k) limits, so business owners may see 
incentives to switch to the bigger plans.
  Employers have the option of choosing a private sector manager for 
the auto IRA's, but allowing each employee the right to transfer, or 
simply allowing the employee to designate the provider at the outset. 
As a default, an option similar to the successful and popular Thrift 
Savings Program would be established.
  The automatic enrollment feature is not new. It builds upon the 
success of 401(k) auto enrollment, promoted by the Pension Protection 
Act of 2006. Many of the workers who will benefit from our bill will 
likely be moderate to lower-income workers. The proposal, which was 
jointly developed by Brookings Institution and Heritage Foundation 
scholars, has garnered widespread support, including AARP and the 
Minority Business Roundtable, and has been endorsed in New York Times 
editorials and by the Washington Times' lead political correspondent.
  Of the 75 million American workers who have no access to an employer 
plan, over 40 million work for employers of at least 10 employees. And, 
only 10 percent of these workers actually seek out their own IRA's or 
other retirement savings vehicles. The auto IRA bill that we are 
proposing will reach this critical group of workers and hopefully help 
them start on the road to retirement security. We urge our colleagues 
to join us in supporting ``The Automatic IRA Act of 2007.''

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