Congress Could Jeopardize Retirement Security for Millions

By Marisabel Torres, Senior Policy Analyst, Wealth-Building Policy Project, NCLR


An upcoming vote in the Senate will determine whether states can help their residents prepare for a time that all workers should have the right to enjoy: retirement. While that seems like a goal Congress should support, the House and Senate already voted to block the Department of Labor (DOL)’s rule allowing cities to establish their own retirement plans. Now, they’re looking to put state plans in jeopardy with a vote on S.J. Res 32.

Many workers recognize that pensions, which used to be a common employee benefit in supporting a robust retirement, are not a guarantee in today’s labor market. And increasingly, neither are employer-sponsored retirement plans like a 401k. Currently, more than 45 percent of working-age households in the United States do not have access to a retirement savings plan through their employer. For Latinos, 60 percent do not have access to an employer-sponsored retirement plan. The city and state plans proposed would provide auto-enrollment Individual Retirement Accounts (IRAs) for private sector workers who tend to be lower-income, and don’t have access to such benefits through their employers. This would also benefit employees of small businesses, where 50 percent of employers don’t offer retirement plans. Workers who participate are automatically opted in to a retirement savings account that takes out a predetermined amount from their monthly paychecks and saves it in an IRA. Workers also have the option to opt out at any time.


State-established retirement plans for workers who otherwise don’t have access to a retirement savings account make sense for millions of individuals. In states like Pennsylvania and Nevada, where nearly 50 percent of Latino workers don’t have access to an employer-sponsored plan, these accounts could be a lifeline to an economically secure future. In California, Secure Choice, a state retirement program which was passed into law last year could give nearly four million Latino workers access to a retirement account—but only if Congress doesn’t vote to jeopardize the implementation of the program by blocking the DOL rule.

It’s not just individual workers who would benefit from the establishment of these plans—many smaller nonprofits without the infrastructure to offer an employer-sponsored plan could also remain competitive in attracting employees if workers could access a retirement plan through their state. Eastmont Community Center in Los Angeles is a nonprofit that fully supported passage of the California Secure Choice Retirement Program. Teresa Palacios, Executive Director at Eastmont, says that, “having a low-risk and low-cost retirement plan accessible to all employees would benefit everyone in our community. It is not uncommon to see children taking care of their elder parents because they cannot support themselves with their fixed Social Security benefit.

Secure Choice would provide the opportunity for younger people to start thinking now about the future and how to better plan for their retirement. Currently we don’t have that opportunity.” While she would like to offer retirement accounts to her own employees, their budget is currently only able to support allocating funds to programming expenses. “Secure Choice was the perfect solution for our organization to provide access to a low-cost retirement savings plan that would help employees save for their future. It would also secure my own retirement.”

As many households continue to live paycheck to paycheck, opportunities to save for a secure retirement are crucial. Congress should not jeopardize the long-term economic security of millions of workers, and should oppose S.J. Res 32.

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