Sep 13 2018
Washington – Yesterday, Senator Dianne Feinstein (D-Calif.) and Patty Murray (D-Wash.), introduced legislation to address some of the challenges families face as they plan for retirement—especially women who are more likely than men to face poverty in retirement.
The Women’s Pension Protection Act of 2018 (WPPA) includes a set of solutions to help strengthen women’s retirement security by addressing some of the challenges that disproportionately affect women as they plan for their financial futures. The legislation would strengthen consumer protections to safeguard retirement savings, improve access to retirement savings plans for long-term, part-time workers, help increase women’s financial literacy, and give support to low-income women and survivors of domestic abuse seeking the retirement benefits they are entitled to following a divorce.
“Ensuring economic equality, opportunity, and security for women means not only tackling the barriers they face in the workforce, but those they face in retirement as well. We know that unfortunately women are more likely to face poverty in old age, which is why I’m reintroducing the Women’s Pension Protection Act to help address some of the challenges that disproportionately impact women as they plan for their financial futures,” said Senator Murray.
- Strengthen consumer protections to safeguard retirement savings by expanding existing spousal protections for defined benefit plans to defined contributions plans to prevent one spouse from making decisions that might undermine a couple’s retirement resources without the other’s knowledge and consent;
- Expand access to retirement savings plans by changing the minimum participation standards for long-term, part-time workers—most of whom are women;
- Increase financial literacy by providing grants for community-based organizations to improve the financial literacy among women who are of working or retirement age;
- Support low-income women and survivors of domestic abuse seeking retirement benefits by providing grants for community-based organizations that assist them in obtaining qualified domestic relations orders, the legal instruments that allow for the division of retirement benefits—assuring they receive the retirement benefits they are entitled to following a divorce or legal separation.
In addition to Feinstein and Murray, the bill is cosponsored by Senators Elizabeth Warren (D-Mass.), Jeanne Shaheen (D-N.H.), Tammy Baldwin (D-Wis.), Heidi Heitkamp (D-N.D.), Mazie Hirono (D-Hawaii), Debbie Stabenow (D-Mich.), Maria Cantwell (D-Wash.), Amy Klobuchar (D-Minn.), Maggie Hassan (D-N.H.), Catherine Cortez-Masto (D-Nev.), Tammy Duckworth (D-Ill.), Tina Smith (D-Minn.), Claire McCaskill (D-Mo.), Kamala Harris (D-Calif.), and Kirsten Gillibrand (D-N.Y.).
The legislation has also been endorsed by AARP, the National Women’s Law Center, the Society for Financial Education and Professional Development, and the Pension Rights Center.
Click HERE for text of the Women’s Pension Protection Act.
Women’s Pension Protection Act of 2018
Sec. 1 - Short Title; Sec. 2 - Findings
The bill is named the “Women’s Pension Protection Act of 2018.” Approximately 29 percent of households headed by individuals aged 55 through 74 have no retirement savings and 34 percent of the private sector workforce lack access to a workplace retirement plan. This bill aims to address certain issues for a critical group within the larger retirement crisis.
Women often lag significantly behind their male counterparts in preparing for retirement as the median retirement income in 2014 was 54 percent of men’s retirement income; women are also 80 percent more likely to face poverty in retirement. Women make up the majority of low-wage and part-time workers and accordingly are less likely than others to participate in a workplace retirement plan. Further, women are more likely to leave the workforce to become caregivers, which has a considerable and long-term impact in terms of lost wages and Social Security benefits.
This Act takes steps to extend critical protections to women’s retirement security and provides enhanced tools to ensure women can better prepare for retirement.
IMPROVING RETIREMENT SECURITY
Sec. 3 – Increasing Spousal Protections Under Defined Contribution Plans
This provision extends the spousal protections that are currently available for defined benefit plans to defined contribution plans. Specifically, the provision requires a spouse’s consent for certain distributions made from a defined contribution plan as well as any designation or change of beneficiary. This provision also explicitly outlines the rights of participants and beneficiaries to bring a civil suit for violations of these new requirements – rights which are currently available for participants and beneficiaries of defined benefit plans.
Sec. 4 – Improving Coverage for Long-Term, Part-Time Workers
This section would amend the minimum participation standards for certain long-term ,part-time workers. This provision would allow employees to participate in a plan once they have reached the current minimum participation standards (age 21 or the completion of one year of service (generally 1,000 hours of service during a 12-month period) or once they have completed at least 500 hours of service for two consecutive years, if earlier. This provision would not apply to employees that are covered by a collective bargaining agreement provided that retirement benefits were the subject of good faith bargaining. The provision further provides that plans that fail to permit participation for these long-term, part-time workers may be subject to a civil penalty of $10,000 per year per employee.
Sec. 5 – Effective Dates
The increased spousal protections under defined contribution plans provision would become effective for distributions and rollover contributions six months following the enactment of the bill.
The improved coverage for long-term part-time workers provision would apply to plan years beginning after December 31, 2016. It is important to note that any 12-month period beginning before January 1, 2014, in which an employee worked at least 500 hours would not be counted for purposes of this provision.
IMPROVING FINANCIAL LITERACY
Sec. 6 – Access to Independent Consumer Information and Understanding
In any offer for the sale of a retirement financial product or service, financial providers shall provide a link to the Consumer Financial Protection Bureau (CFPB) website where the consumer shall be able to access information and resources produced by the CFPB and/or other federal agencies relating to retirement planning or later life economic security. The Financial Literacy and Education Commission will determine and publish such links to the CFPB’s website as well as other related materials.
Sec. 7 – Grants to Promote Financial Literacy for Women
This provision provides the Secretary of Labor, acting through the Director of the Women’s Bureau, to award grants of at least $250,000 to established community-based organizations on a competitive basis in order to improve the financial literacy of women who are of working or retirement age. The provision authorizes the appropriation of such sums as would be necessary to carry out this section.
IMPROVING ACCESS TO RETIREMENT SAVINGS
Sec. 8 – Grants to Assist Low-Income Women and Victims of Domestic Violence in Obtaining Qualified Domestic Relations Orders
This provision provides the Secretary of Labor, acting through the Director of the Women’s Bureau in conjunction with the Assistant Secretary of the Employee Benefits Security Administration, to award grants of at least $250,000 to established community-based organizations on a competitive basis to assist low-income women and victims of domestic violence in obtaining qualified domestic relations orders to ensure that these women actually obtain the benefits to which they are entitled through those orders. The provision authorizes the appropriation of such sums as would be necessary to carry out this section.