Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Ms. COLLINS. Mr. President, Ensuring that more Americans are better prepared financially for retirement is one of my top priorities.

That is why I rise today to introduce the SIMPLE Plan Modernization Act with my colleague from Virginia, Senator Mark Warner. Our legislation will provide greater flexibility and access to both employees and their employers seeking to utilize the popular SIMPLE plans as an option for saving for retirement.

According to the non-partisan Center for Retirement Research, there is an estimated $7.7 trillion gap between the savings American households need to maintain their standard of living in retirement and what they actually have. A recent Gallup poll found that only 51 percent of working Americans believe that they will have enough money to live comfortably in retirement. Though this is the highest percentage of confidence in nearly a decade, we must continue to work to ensure that even more Americans will have the resources they need to enjoy their ``golden years.''

Another contributing factor is that employees of small businesses are much less likely to participate in employer-based retirement plans. According to a study by the PEW Charitable Trusts, roughly 30 million U.S. private-sector full-time workers continue to lack access to a work-based plan to save for retirement.

SIMPLE retirement plans were established in 1996 to encourage small businesses to provide their employees with retirement plans that are less costly and easier to navigate. A business with 100 or fewer employees can create a SIMPLE retirement savings account so long as it does not offer another employer-sponsored retirement plan.

The SIMPLE Plan Modernization Act would help to expand access to SIMPLE plans by increasing the contribution limit for most small businesses. This would achieve two important goals, Mr. President: first, it would encourage more small businesses to offer a retirement savings benefit to their employees; and second, it would allow employees of small businesses to save even more for retirement each year on a tax-deferred basis.

This legislation is a win-win proposition for retirement security. There are many small employers that simply cannot afford a 401(k) plan. For them, this legislation would provide enhanced savings opportunities. At the same time, the legislation is carefully constructed to prevent employers with a 401(k) plan from dropping that plan to adopt a SIMPLE plan. And the legislation preserves strong incentives for small businesses that become more successful to move from a SIMPLE plan to a 401(k) plan. We believe our approach will encourage businesses and their employees to take steps to save for retirement, and eventually move towards a more substantial retirement package, like a 401(k) plan.

In my home state of Maine, the vast majority of businesses are eligible to sign their employees up for SIMPLE Plans. Financial advisors from Presque Isle to Portland have shared their concerns that neither employees nor their employers are in a good position to save for retirement. We must give small businesses and employees a better opportunity to save for retirement and this legislation will provide such an opportunity. I urge my colleagues to join Senator Warner and me in supporting the SIMPLE Plan Modernization Act. Thank you, Mr. President.

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