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.
Copyright 2020 NPR.
To see more, visit https://www.npr.org.
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