Wednesday, December 16, 2015

Women's Pension Protection Act

Without much fanfare, on September 30, Senator Patty Murray (D-WA) introduced the Women's Pension Protection Act of 2015. Thus far, all of the co-sponsors are Democrats (or caucus as Democrats) and until Senator (and Democratic Presidential hopeful) Bernie Sanders (I-VT) signed on, all of the co-sponsors were women.

The bill is intended to address what a fairly large number of us view as an issue, that women are often not as prepared for retirement as men. And, there is no real thought here that this is because women choose to not prepare, but instead that their life circumstances (women bear children and men don't) are often different.

With no Republicans signing on, it seems unlikely that this bill will become law on a stand-alone basis, but it could become a negotiating point and get tossed into another bill of type or another that has broader support.

Generally, the bill would make two key changes:

  • Require spousal consent for lump sum distributions from defined contribution plans unless those distributions are made as part of a direct rollover (to another plan or IRA)
  • Change the coverage rules of ERISA Section 202 and analogously Code Section 410 to require broader coverage under qualified retirement plans for part-time workers who customarily work at least 500 hours per year
Fundamentally, what this bill would attempt to do is a step in the right direction. However, the implications of this bill from an employer standpoint would be to increase the cost of employing part-time workers. For many businesses that do employ such low-hour (10-20 hours per week or seasonal) workers, their choices would seem to come from among these:
  • Absorb the additional costs of employing these part-timers
  • Employ fewer part-time workers
  • Not have a qualified retirement plan
Two of those three options are not good for women (or for men, for that matter). And, this appears to be part of a trend in legislation that increases the cost of part-time, seasonal, and temporary labor.

Proponents of the bill would say that something needs to be done and that this would be a good start. They would tell you that minimum wages need to be raised and there needs to be a place in the workforce for less than full-time workers who will eventually be able to retire.

As I said, I would be very surprised if this bill were to move anywhere on a stand-alone basis, but it could be a bargaining chip as part of a larger piece of legislation.

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