Reps. Huffman and Bonamici Introduce the American Savings Account Act to Help Every Worker Save for Retirement

Washington, D.C.- With studies showing that over half of all households age 55 and older have no retirement savings, Congressman Jared Huffman (D-CA) and Congresswoman Suzanne Bonamici (D-OR) today introduced the “American Savings Account Act” to provide American workers with a new tool to help them save for a strong and secure retirement. The legislation would create a new American Savings Account (ASA), a personal, tax-advantaged retirement savings plan modeled after the high-quality plan offered to federal workers since 1986, and make it available to every private sector American worker currently without access to an employer-sponsored savings plan such as a 401(k) or 403(b) plan.

Currently, 68 million Americans in the workforce are not offered retirement savings plans through their employer. In the 21st century economy, more workers switch jobs frequently and are less likely than in the past to be covered by a traditional employer-sponsored retirement savings plan, according to a recent study based on Census data.

“We’re in the midst of a serious retirement savings crisis with too many American workers unable to save enough to meet their retirement goals and enjoy financial security,” said Rep. Huffman.  “After working for a lifetime, all Americans have the right to retire in dignity. Our legislation, modeled after the great progress in California and Oregon, would ensure that every worker in America has access to high-quality savings options to provide them an income in retirement.”

“For the millions of Americans without retirement savings, the future can be uncertain,” said Rep. Bonamici. “Oregon leads the nation in helping all workers save for retirement and carry their savings from job to job. The American Savings Act will help working families around the country be more secure in their retirement by giving them the tools necessary to invest in their future, regardless of where they work.”

“The Thrift Savings Plan is a high-quality retirement plan because it offers simple, easy-to-understand, and sensible investment options that have very low fees,” said David Madland, senior fellow at CAP Action and senior advisor to CAP Action’s American Worker Project. “It is used by millions of federal employees, including members of Congress, and has a proven track record of helping people achieve a secure retirement. Too many workers do not have access to a retirement plan at their workplace, either because their employer does not offer one or because of the nature of their work.  Expanding access to a TSP-style plan, as Representatives Huffman and Bonamici’s American Savings Act would do, could help shore up our private retirement system–which is currently failing to meet the needs of a significant part of our workforce–and offer a more secure retirement to millions of Americans.”

Specifically this legislation would:

·        Automatically enroll private sector workers whose employers do not currently provide qualified retirement savings plans in an American Savings Account;

·         Ensure that all private sector workers, including full-time, part-time, and contract, have immediate access to a retirement savings account no matter the size of their employer;

·         Enable workers to discontinue their participation, or to change their contribution level between 2% and 10% to be deposited in the ASA from each paycheck;

·         Permit employers to provide tax-advantaged matching or non-matching contributions to employee ASA accounts; and 

·         Allow, but not require, self-employed individuals and 1099 independents to enroll in an ASA.

States like California and Oregon have already recognized the need to support their citizens’ ability to save for retirement and have moved forward with plans to establish state-wide retirement funds for all workers. In March 2016, the California Secure Choice Retirement Savings Investment Board recommended that the State Legislature establish the California Secure Retirement Plan, a 401(k)-like retirement plan managed by the state and available to private sector workers who do not have access to retirement savings plans through their employer. Oregon has taken similar steps to establish an Oregon Retirement Savings Plan. Congressman Huffman and Congresswoman Bonamici’s legislation includes many of the innovative policy recommendations currently moving forward in the two states.

The Senate version of the “American Savings Account Act” was introduced by Senator Jeff Merkley (D-OR) on January 28, 2016.

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