Iowa Senator Tom Harkin has introduced a retirement savings proposal for workers who don’t receive employer-funded retirement plans. The Democrat says the country is in the midst of a “retirement crisis,” noting that half of working-age Americans had less than $10,000 in savings in 2012.
Harkin says his U.S.A. Retirement Funds Act will help workers save if they are self-employed or do not have a retirement fund set up by their employer. “What this is designed to do is provide for a big pool of participants…so if there’s a large downturn of the economy, you won’t lose your shirt,” Harkin told reporters in a teleconference Thursday.
Only one in five U.S. workers receive a traditional benefits and pension plan. And Harkin says workers investing in individual retirement funds were hit hard during the recession. “A lot of times they lost a lot. Under my proposal, a person could pick a fund, but that fund would invest that money along with a lot of other people in that pool,” Harkin said.
The U.S.A. Retirement Funds Act would automatically enroll workers in a private pension fund with a six-percent annual rate. Employers would have the option to contribute, and a savings credit would be available to match contributions for low-income workers.