U.S. SENATE — U.S. Senators Steve Daines (R-Mont.) and Elizabeth Warren (D-Mass.) and today introduced the bipartisan Retirement Savings Lost and Found Act to protect hard-working Americans’ retirement savings.
As employers have shifted from defined benefit pensions to individualized retirement plans such as 401(k)s, workers have become responsible for tracking, managing, and consolidating multiple retirement accounts as they move from job to job. But moving accounts from job to job is not easy. A 2014 Government Accountability Office (GAO) report found that many Americans leave their jobs each year without giving their employers directions with what to do with their retirement accounts.
And a survey by the investment management firm TIAA found that 30 percent of Americans have left an account at their previous employer, resulting in tens of millions of Americans with one neglected account and millions more with two or more accounts.
GAO found that the increase of 401(k) plans, the frequency of auto enrollment into these plans as permitted by the Pension Protection Act of 2006, and shorter job tenures among younger workers contribute to multiple inactive accounts for individuals.
“Working Americans are losing hard-earned dollars up until the time when they need it most – their retirement. When an employee leaves a job, its often hard for them to keep track of their retirement accounts during these transitional times,” Daines stated. “This is a commonsense approach that will empower individuals to take control of their retirement future.”
“Our country faces a retirement crisis, and it’s important that all workers have a real chance to build retirement security. But today, millions of Americans are losing critical savings when they move between jobs,” Warren said. “This bipartisan bill will help protect the retirement savings employees have earned.”
The Retirement Savings Lost and Found Act uses the data employers are already required to report to create a national, online, lost and found for Americans’ retirement accounts. This means that with the click of a button, any worker can locate all of their former employer-sponsored retirement accounts.
The Retirement Savings Lost and Found Act also:
- Allows employers to more easily invest abandoned accounts into target date funds rather than money-market funds. According to the GAO, $1,000 in a target date account was projected to grow to $2,700 over thirty-years whereas a $1,000 in a money market account was reduced to $0.
- Allows for “orphaned” funds with balances less than $1,000 to be transferred to Treasury securities, such as the myRA, so that balances earn a positive return.
The bill is supported by AARP and the Pension Rights Center.
The text of the senators’ bill is available here, and a fact sheet is available here.