Kaine pushes change in retirement law to encourage savings

U.S. Sen. Tim Kaine, D-Va., wants to change federal law to push employees to save for their retirement.

Kaine and Rep. Kathy Manning, a North Carolina Democrat, introduced the Auto Enrollment Act in both chambers of Congress on Friday to encourage employers to automatically enroll employees in workplace retirement plans unless the workers choose to opt out.

Many employers already use automatic enrollment to provide a retirement savings plan to new employees, but workers often opt out, even if their employer offers to match their contributions.

The proposed legislation would amend federal retirement law to let employers automatically enroll employees every three years with the opportunity to opt out to encourage them to save for retirement.

“Employer-sponsored retirement plans are an important part of retirement for millions of Americans,” Kaine said. “However, far too many workers are missing out on money that can go a long way toward financial stability in their retirement years by failing to participate in their employer matching contribution.”

He and Manning estimate that 51% of private sector workers participate in the retirement plans their employers offer, often not taking advantage of matching contributions.

Their proposal would amend the Employment Retirement Income Security Act and the IRS code to encourage employers to automatically re-enroll employees who aren’t participating every three years unless they again choose to opt out.

“This common-sense legislation will build on the success of auto-enrollment and help put families in Virginia and across the nation on a safer financial footing for the future,” Kaine said.