Chairman Neal Opening Statement for Subtitle B at Markup of the Build Back Better Act
(As prepared for delivery)
We now turn to Budget Reconciliation Legislative Recommendations Relating to Retirement which will make investments to improve Americans’ long-term financial security. I’m proud of this Committee’s bipartisan record of accomplishment in the area of retirement policy, and we have an opportunity here to build on those achievements and further enhance workers’ opportunities to save.
Our country currently faces a retirement income crisis. Nearly one-third of Americans have no retirement savings at all, and about half of working-age households risk being unable to maintain their current standard of living after retiring.
We know that having an employer-sponsored retirement plan is key to preparing for retirement, but nearly half of American private sector employees work for an employer that doesn’t offer a retirement plan.
This subtitle includes an automatic IRA proposal that requires employers that have been in existence for at least two years, do not sponsor a retirement plan, and employ five or more people to automatically enroll those employees in IRAs or 401(k)-type plans. To offset administrative costs, employers would receive a tax credit.
Current law includes a nonrefundable tax credit – called the Saver’s Credit – for eligible taxpayers who make elective deferrals to tax-favored retirement plans or contributions to IRAs. The investments we’re considering would make the Saver’s Credit refundable, so that those without any income tax liability receive a benefit. The proposal also would require the credit amount to be contributed directly to a tax-favored retirement account, in effect, acting as a matching contribution for savers.
Automatic IRAs and Saver’s Credit enhancements would dramatically expand retirement savings in the United States. According to recent analysis commissioned by the American Retirement Association, implementing these proposals could add up to $7.0 trillion in additional retirement savings over a 10-year period – and create more than 62 million new retirement savers.
These investments would also help address inequities in retirement saving. Automatic IRAs would particularly benefit Hispanic, Asian, and Black populations in the United States, as they are less likely to have access to work-sponsored retirement plans. It’s estimated that the Auto IRA and Saver’s Credit enhancements would result in 7.0 million new Black savers and 10.8 million new Latino and Latina savers. Over 98 percent of new savers make less than $100,000 per year.
Now is the time to confront these issues head-on – the longer we wait, the worse the crisis will become, and millions more Americans will find themselves in untenable circumstances in their later years.
I urge all of you to vote in favor of these impactful retirement provisions.
I now recognize the gentleman from Texas, Mr. Brady, for purposes of an opening statement.