U.S. Sens. Bill Cassidy (R-LA) and Tim Kaine (D-VA) introduced legislation designed to help 18-to-20-year-olds access employer-sponsored retirement plans.
The Helping Young Americans Save for Retirement Act would look to remove barriers that discourage companies from offering these benefits to younger employees.
“Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement,” Cassidy said. “This legislation empowers American workers, giving them more opportunities to plan for a secure retirement.”
Specifically, the bill would lower the participation age of ERISA-covered defined contribution (DC) plans to 18 years old under certain circumstances. This would provide access to retirement savings plans for eligible workers in this age range who currently don’t have access to their employers’ plans. Covered plans would still be able to set a minimum age threshold up to 18 years old.
“Contributing to a retirement plan early on sets people up for financial security in the future,” Kaine said. “I’m proud to introduce this bipartisan bill that would ensure younger workers have access to their employer-sponsored retirement benefits when they are starting out in their careers.”
This legislation also removes provisions that would otherwise make covering younger workers expensive. Specifically, the bill delays ERISA provisions that require businesses to undergo mandatory audits if they allow employees under the age of 21 to start contributing to their pension.
Further, the bill would exempt 18-to-20-year-old employees from testing related to retirement funds that would otherwise increase the cost of administering retirement plans for these employees.
The Helping Young Americans Save for Retirement Act is supported by BPC Action, Edward Jones, the American Benefits Council, LPL, Insured Retirement Institute, the National Rural Electric Cooperative Association, TIAA, and Transamerica.
“The Helping Young Americans Save for Retirement Act will expand the opportunity for more younger workers to start saving earlier for retirement by allowing them to participate in their employer-sponsored workplace plans,” Paul Richman, chief government and political affairs officer at the Insured Retirement Institute, said. “This measure will not only help younger workers get into the habit of contributing to their retirement savings, but it will also provide additional years for their savings to grow to ensure a more secure financial future.”