Washington, DC - Eleni Constantine, director of the Pew Health Group's financial security portfolio, issued the following statement in support of legislation creating an “automatic IRA,” S. 3760, introduced by Sen. Jeff Bingaman (D-NM) and H.R. 6099, introduced by Rep. Richard Neal (D-MA). Under these bills, employees who do not have a 401(k) plan with their present employer would be enrolled in an Individual Retirement Account (IRA) unless they decide to opt out. The research and analysis of Pew's grantee, the Retirement Security Project, identified the automatic IRA as a key solution to the gap in Americans' retirement savings.
“We applaud Senator Bingaman and Congressman Neal for their leadership in introducing this important legislation. These bills represent a significant move towards strengthening retirement security for workers across the nation. An automatic IRA can provide a simple, low-cost way for working Americans, even those without 401(k) plans, to save for retirement. By combining two familiar and well-tested savings vehicles, the IRA savings account and the opt-out model of the 401(k) savings plan, the passage of this legislation will vastly increase access to retirement savings programs.
“Roughly half of all working Americans (78 million people) are employed by companies that offer no retirement plan. The Auto IRA will allow 90 percent of all employees the opportunity to save for retirement through tax-deferred payroll deductions, substantially increasing their savings capacity, according to the Retirement Security Project.
“The concept of automatic IRA has repeatedly received bipartisan backing – now is the time for both parties to again put their support behind this common-sense proposal and provide access to retirement savings for millions of Americans.”