A new bill introduced Monday by a bipartisan pair of senators would lower the minimum age for participating in workplace retirement plans from 21 to 18.
The lead sponsors of the legislation are Sens. Bill Cassidy, R-La., who chairs the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Tim Kaine, D-Va. They are calling the bill the Helping Young Americans Save for Retirement Act.
“Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement,” Cassidy said in a statement. “This legislation empowers American workers, giving them more opportunities to plan for a secure retirement.”
Kaine noted that contributing to a retirement plan early on sets people up for financial security in the future, adding that he is “proud to introduce this bipartisan bill that would ensure younger workers have access to their employer-sponsored retirement benefits when they are starting out in their careers.”
Specifically, the bill would lower the participation age of ERISA-covered defined contribution plans to 18 years old under certain circumstances. The legislation also removes what the lawmakers called “costly provisions” that would otherwise make covering younger workers expensive. It does this by delaying ERISA provisions that require businesses to undergo mandatory audits if they allow employees under the age of 21 to start contributing to their pension.
Finally, the legislation also exempts 18 to 20-year-old employees from “nondiscrimination testing.”
The legislation quickly earned endorsements from a number of retirement planning and financial services organizations, including Edward Jones, the American Benefits Council, LPL, the Insured Retirement Institute, the National Rural Electric Cooperative Association, TIAA and Transamerica.
“The Helping Young Americans Save for Retirement Act will expand the opportunity for more younger workers to start saving earlier for retirement by allowing them to participate in their employer-sponsored workplace plans,” said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. “This measure will not only help younger workers get into the habit of contributing to their retirement savings, but it will also provide additional years for their savings to grow to ensure a more secure financial future.”
TIAA shared a similar statement with ThinkAdvisor.
“TIAA supports this bill to increase access to retirement savings to more Americans, including young adults,” a spokesperson said. “As outlined in the TIAA Retirement Bill of Rights, we believe every American worker has the right to achieve a financially secure retirement.”
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