Minnesota Public Radio (MN) January 11, 2020
The
most powerful way to get people to save for retirement in recent decades has
been through benefits offered at their job. But a lot of people - about half
the American workforce - don't get that from their employers.
"Over
50 million workers right now don't have access to any retirement plan at
all," says David Certner, legislative counsel for AARP.
Small
employers are the biggest segment lacking coverage, he says. That's because
many small businesses lack time and money to set such programs up, he says.
The new
law, called the Secure Act, aims to help with that in part by allowing smaller
employers to band together to share the administrative burden - making it
cheaper and easier to offer retirement benefits. How many will do so and expand
their retirement benefits is far from clear, because the program is optional.
And,
Certner says, the law won't apply to many other workers who aren't classified
as employees. That's because they're contractors or gig workers who aren't
eligible for those benefits.
The
Secure Act also gives people more flexibility to save for longer periods of
time and delay withdrawing funds. It also allows employers to offer other
investment options like annuities.
The
fact that the measure passed with overwhelming bipartisan support last month is
significant, says Alicia Munnell, director of the Center for Retirement
Research at Boston College. But she says the changes are modest.
She notes
that the government has tried - and largely failed - to encourage more small
businesses to offer retirement benefits through programs like the Treasury
Department's now-expired myRA program.
She
expects it will be the same with this latest law.
"I
don't really think they're really going to move the needle much at all,"
Munnell says.
The new
law requires employers offering retirement benefits to include part-time
workers who've been on the job at least three years. That could help about 4
million workers, Munnell says.
Much
bigger changes to retirement law have been occurring at the state level,
experts say. Ten states - including Oregon, California and Illinois - recently
started requiring private employers to enroll their workers in individual
retirement accounts if the employers don't offer their own benefits. Those
state programs are expected to expand retirement savings to 15 million more
people.
"Without
a mandate, without somebody saying, 'Mr. Small Businessman, you have to do
something for your employees,' I don't think we're going to see much
change," Munnell says. That's why she says she'd like to see such rules
extend to all 50 states.
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2020 NPR. To see more, visit https://www.npr.org.
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