Bill would require employers to contribute to employee retirement funds
Congressional Democrats are proposing a Saving for the Future Act, which would require employers to contribute to a retirement fund for workers.
A sponsor of the Senate version is Amy Klobuchar, Minnesota’s senior senator and also a presidential candidate. Sen. Chris Coons (D-Del.) is a co-sponsor.
The plan would require employers to contribute a minimum of 50 cents per hour worked to an employee savings plan.
“Hardworking families in America often don’t have enough money in their savings account for an emergency -- let alone retirement down the road,” Klobuchar said in a statement. “The Saving for the Future Act will help close the wealth gap, prepare families in case of an emergency, and set workers up for a successful retirement.”
A fact sheet projects substantial nest eggs under the plan: “The large majority of workers will receive at least $1,000 per year of employer savings contributions,” it states. “Under the law, a high school-educated worker is projected to build more than $600,000 in wealth.”
It would not affect 401(k) plans or defined benefit pensions, the plan’s backers say.
Small businesses may be wary of the idea, but employers with 10 or fewer workers may opt out of employer contributions. (Their workers could set up individual plans.)
Businesses with fewer than 100 workers could contribute through payroll into Universal Private retirement accounts (“UP Accounts”) run by the federal government, the sponsors state. “Employers would receive a generous tax credit worth 50 percent of their minimum contributions to their first 15 workers, and 25 percent of their minimum contributions to their next 15 workers.”
Those tax credits will cost an estimated $200-250 billion over 10 years, according to the fact sheet estimate. To offset that, the Saving for the Future Act would increase the corporate tax from 21 to 23 percent and the top tax on ordinary income from 37 to 39.6 percent.
The legislation is unlikely to have a chance in the 116th Congress. No Republicans have announced an intention to co-sponsor the proposed bill. Democratic representatives Scott Peters (Calif.), Lucy McBath (Ga.) and Lisa Blunt Rochester (Del.) are backing a House version of the measure.
But this is good politics for Klobuchar.
As The New York Times has reported, Klobuchar “has presented herself to voters as a seasoned pragmatist who could bridge political divides to get policies passed in Washington.”
One such policy is infrastructure, where President Trump proposed a major program (“...$200 billion in Federal funds to spur at least $1.5 trillion in infrastructure investments….”) So Klobuchar countered with “a bold, trillion dollar plan,” claiming the president’s was a “mirage.”
She also spoke to The Atlantic about her desire to advance “(h)eartland economics...bread-and-butter, commonsense economics.”
Perhaps Klobuchar’s backing of the Saving for the Future Act is a nod to the growing progressive tone in the Democratic presidential race. If so, she is in the vanguard of an idea that may gain traction.