Keystone XL Pipeline Act

Floor Speech

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Ms. COLLINS. Mr. President, today Senator Nelson and I rise to
discuss S. 266, the Retirement Security Act, legislation we filed
earlier this week and first introduced last year. Our bill would
encourage more small employers to offer retirement plans that would
provide incentives for employees to save more for retirement and would
ensure that low-income and middle-income taxpayers are able to claim
tax benefits for retirement savings that are already authorized in law.

Our bill is the product of the work that Senator Nelson and I did
together on the Special Committee on Aging. In the fall of 2013, the
committee conducted a hearing on retirement security where we heard
from witnesses that far too many American seniors have real reason to
fear they will outlive their savings. According to the nonpartisan
Center for Retirement Research at Boston College, there is an estimated
$6.6 trillion gap between the savings that American households need to
maintain their standard of living in retirement and what they actually
have. The group that was surveyed were those Americans between ages 32
and 64.

Nationally, one in four retired Americans has no source of income
beyond Social Security. In the State of Maine the number is one in
three. While 4 in 10 rely on this vital program for 90 percent of their
retirement income, Social Security provides an average benefit of just
$1,294 per month--less than $16,000 per year.

It is hard to imagine stretching those dollars far enough to pay the
bills. Certainly a comfortable retirement would be out of the question
for most Americans.

A recent Gallup poll shows there is an increase in concern among the
American people about their standard of living in retirement. This has
gone up over time. Two decades ago 34 percent of Americans were
concerned. Now 60 percent of Americans are worried about their standard
of living in retirement.

Sadly, they are right to be concerned. Projections published in 2014
by the Employee Benefit Research Institute showed that nearly half of
``early boomers''--those between ages 56 and 62 when the study was
conducted--are at risk of not having enough money to pay for basic
costs in retirement, including health care costs not covered by
insurance.

There are many reasons for the decline in retirement security facing
American seniors, including the demise of many defined-benefit pension
plans in the private sector, the severity of the financial crisis we
recently endured, rising health care costs, the greater and expanding
need for long-term care, which is so expensive, but most of all the
fact that Americans are living far longer than they did in the past.
Many of us are also reaching retirement age with far more debt than
retirees of previous generations.

Another contributing factor we found is that employees of small
businesses are much less likely to participate in employer-based
retirement plans. According to a July 2013 GAO study, more than half of
the 42 million Americans who work for businesses with fewer than 100
employees lack access to a work-based plan to save for retirement. Cost
and complexity are among the reasons that plans are not more widely
offered by smaller employers.

These employers would very much like to offer plans, but oftentimes
the cost and the complexity make the plans out of reach. Therefore,
making it easier for smaller businesses to provide access to retirement
plans for their workers would make a significant difference in the
financial security of many retirees. That is why the bill that we
reintroduced earlier this week focuses on reducing the cost and
complexity of retirement plans, especially for small businesses, and on
encouraging individuals to save more for retirement.

Let me now go into detail about the provisions of our bill.

First, our bill would allow small businesses to enter into multiple
employer plans, MEPs, to offer retirement programs jointly to their
employees. This allows small companies to share the administrative
burden of a retirement plan, which helps lower costs. Current law
discourages the use of MEPs because it requires a connection, or
``nexus,'' between unrelated businesses in order to join a MEP, such as
membership in the same trade association. Our bill would waive the
nexus requirement for businesses with fewer than 500 employees. So as
not to discourage growth, our bill provides a long phase-out under
which businesses are not automatically disqualified from a MEP when
they hire their 500th employee.

Second, our bill makes joining a MEP a more attractive option for
small businesses. Under current law, if one employer in a MEP fails to
meet the minimum criteria necessary for retirement plans to obtain tax
benefits, all employers and their employees could lose these tax
benefits, which are substantial. For employees, they include delaying
the taxation of income contributed to a plan until funds are withdrawn.
For employers, plan disqualification could result in limited deductions
and a higher tax burden. Our bill directs Treasury to issue regulations
to address this uncertainty, and protect members of a MEP from the
failure of one bad apple to meet its obligations.

Third, our bill reduces the cost of maintaining a retirement plan.
Current law requires that participants in a retirement plan receive a
variety of notices. Our bill would direct Treasury to simplify,
clarify, and consolidate these required notices, to lessen costs.

Fourth, the Retirement Security Act encourages those still in the
workforce to save more for retirement. Retirement plans are often
designed to comply with existing safe harbors to prevent the IRS from
challenging the tax benefits that flow to employees and employers. The
existing safe harbor for so-called ``automatic enrollment'' plans
effectively caps employee contributions at 10 percent of annual pay,
with the employer contributing a ``matching'' amount of up to 6
percent. Our bill creates an additional safe harbor for these plans
that would allow employees to receive an employer match on
contributions of up to 10 percent of their pay.

I recognize that businesses that choose to adopt a plan with this new
optional safe harbor may face additional costs due to the increased
employer match. That is why our bill helps the smallest businesses--
those with fewer than 100 employees--offset this cost by providing a
new tax credit equal to the increased match.

Finally, our bill ensures that current measures to encourage savings
are functioning as they were intended. One such measure is the so-
called ``saver's credit,'' which reduces the tax burden on low- and
middle-income individuals who contribute to retirement plans, including
IRAs and 401(k) plans. Yet the credit cannot be claimed on a form
1040EZ, which is frequently used by these individuals. A 2013
Transamerica Center for Retirement Studies survey found that only 23
percent of people with household incomes of less than $50,000 per year,
the group most likely to qualify, were aware of the saver's credit. To
address this, our bill directs Treasury to make the credit available on
Form 1040 EZ.

I do want to emphasize in closing that is there is nothing in our
bill that would force a small business to offer a 401(k) plan. That may
be impractical for some small employers. What we are trying to do is to
provide incentives for them to do so, to reduce the cost, and to make
it possible for them to join together with other employers to offer
retirement plans. We are trying also to provide incentives for
employees to save more for their retirement.

During my time on the Special Committee on Aging, I have heard
countless stories of retirees whose savings did not go as far as they
had anticipated. Adequate savings reduce poverty among our seniors in
what should be their golden years. As the HELP Committee noted in a
July 2012 report, poverty among the elderly also increases Medicare and
Medicaid costs and strains our social safety net. Giving those not yet
at retirement age more opportunities to save--and to save more--would
help ease this additional burden on entitlement programs that are
already projected to be unsustainable.

In light of the positive impacts this bill would have in
strengthening retirement security for millions of Americans, I urge our
colleagues to join Senator Nelson and me in supporting the Retirement
Security Act of 2015. This bill has been endorsed by the Maine State
Chamber of Commerce, the American Benefits Council, the American
Council of Life Insurers, Fidelity Investments, Lincoln Financial
Group, the National Association of Insurance and Financial Advisors,
the Plan Sponsor Council of America, the Principal Financial Group, the
Society for Human Resource Management, TransAmerica, and the U.S.
Chamber of Commerce.

I ask unanimous consent to have printed in the Record these as well
as other letters of support.

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