WASHINGTON – Americans would be able to save more for retirement and have more control over their savings under new pension legislation introduced today by Rep. Benjamin L. Cardin (D-MD).  The Cardin bill “follows the Portman-Cardin tradition by giving Americans new savings opportunities, strengthening and expanding the employer-sponsored retirement system, and offering important new protections to workers participating in retirement savings plans.”

            Rep. Cardin stressed: “I want to continue the progress we've made since the 2001 pension reform bill.   This new bill provides Americans with even greater savings opportunities.  It’s a win-win for everyone,” said Rep. Cardin, a member of the Ways & Means Committee.

            In 2001, Reps. Cardin and Portman had enacted into law their Comprehensive Retirement Security and Pension Reform Act.  The measure made it easier for Americans to save for retirement and removed many of the barriers making it difficult for small businesses to create and administer private pension plans.

            The Pension Preservation and Savings Expansion Act of 2005, HR1961, would:

∙           Improve the “savers” tax credits for low- and moderate-income Americans by making the credit refundable, permanent, and expanded.  The credit, used in both 2002 and 2003 by 5.3 million Americans, would be available to Americans regardless of income tax liability;

∙           Make pension improvements made in 2001 permanent, including the availability of catch-up contributions for individuals over 50, increased contribution limits, and increased portability of retirement savings; 

∙           Enable tax refunds to go directly to retirement accounts.  It would allow Americans to contribute some or all of their federal income tax refund directly into their Individual Retirement Account (IRA) through electronic means.  This will enable individuals and families to boost their retirement savings at a time when they can often afford to save;

∙           Provide incentives for employers to include automatic enrollment and automatic increase designs in their retirement plans.  When an employer-sponsored retirement plan includes automatic enrollment, employees will automatically save unless they opt out.  Some plans also have an “auto increase” feature that automatically increases employee contribution levels each year (unless workers opt out).  Automatic enrollment has been repeatedly shown to dramatically increase retirement plan participation and savings, particularly among low- and moderate-income workers; 

∙           Give workers greater protections over their retirement plan. The bill also provides workers with new protections for their 401(k)-type plans and gives them better access to retirement planning services.  The bill would empower workers with new rights to diversify company stock, and it provides new tax incentives to employees to help them pay for retirement advice and counseling.  Under the legislation, companies also would be required to provide workers with an explanation of accepted investment principles (such as diversification) in their 401(k) plan;

∙           Exempt individuals with less than $100,000 in savings from requirements that they must begin to take their Minimum Distribution at age 70½.  The excise tax for those who fail to take their proper distributions would also be reduced from 50% to 25% – enough to deter gaming while avoiding draconian penalties on seniors who make innocent mistakes. 

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