Two US senators from the state of Washington have introduced a bill aimed at tackling the challenges that disproportionately affect women when saving for retirement.
The Women’s Pension Protection Act of 2018, introduced by Democratic Sens. Patty Murray and Maria Cantwell, includes provisions to extend spousal protections for defined benefit plans to defined contributions plans, expand access to savings plans by changing the minimum participation requirements for part-time workers, the majority of whom are women; and provide grants for community-based organizations to improve the financial literacy among women.
“We know that unfortunately women are more likely to face poverty in old age,” Sen. Murray said in a release, “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.”
Murray previously introduced a pension protection bill for women in 2015 that stalled in Congress.
According to the reintroduced bill, women lag far behind men in terms of retirement preparedness, which resulted in a median retirement income that was just 54% of men’s retirement income in 2014. It also said that women are 1.5 times as likely as men to live in poverty after the age of 65, and that despite making up less than half of all workers, women account for two-thirds of low-wage workers. The bill cited estimates that the wages and Social Security benefits lost when women leave the workforce early to become caregivers amount to $324,044 in lost retirement savings.
While traditional defined benefit retirement plans have spousal protections, defined contribution retirement plans currently don’t provide similar spousal protections. However, the bill includes a provision that requires a spouse’s consent for certain distributions made from a defined contribution plan, as well as any designation or change of beneficiary. It would also give participants and beneficiaries the right to bring a civil suit for violations of these requirements, something only defined benefit plan participants are currently able to do.
The proposed legislation would also provide for community-based organizations that help spousal abuse victims obtain qualified domestic relations orders, which are legal documents that help ensure they receive the retirement benefits they are entitled to after a divorce or legal separation.
Additionally, the bill would amend the minimum participation standards for certain long-term, part-time workers to allow employees to participate in a plan once they have reached the current minimum participation standards, which it says is typically 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.
The legislation has been endorsed by AARP, the National Women’s Law Center, the Society for Financial Education and Professional Development, and the Pension Rights Center.