WASHINGTON, DC— Today, Congressman Jim Himes (CT-04) introduced the Personal Retirement and Investment Account (PRIA) Act. The current retirement savings system is not working for most Americans. It is too reliant on employers and leaves too many people behind. Most accounts are employer-sponsored, but not every business offers a plan and more often than not, part time and contract employees are not eligible for these accounts. We need reforms to the system that offers universal and portable options to all Americans to retire with dignity and security.
“Millions of Americans are not properly prepared for retirement,” said Himes. “We need a mechanism that makes it easier to save throughout their lives regardless of employment status. PRIA is the solution. It’s an account that’s created when you’re born and stays with you from job to job and in between. Employers can contribute just like in legacy plans when you have a job, but individuals can contribute whenever they have the resources.”
The need for a new retirement-savings vehicle is real:
- According to the Bureau of Labor Statistics, 49% of Americans have access to a retirement account and contribute to it, while 35% have no access and 17% have access but don’t contribute, meaning more than half the country is not saving any money in a retirement account. Instituting a system that allows individuals to start saving from birth will help remedy this situation.
- While 81% of full-time workers have access to retirement savings accounts, only 39% of part-time workers have access.
- According to a 2016 study by the Minneapolis Fed, nearly 40% of Americans will be working outside of traditional full-time jobs, including in the gig economy, by 2020.
- The Federal Reserve calculates that half of Americans have not saved enough to retire at their current standard of living.
PRIAs will be administered by an independent board and managed by selected financial institutions. After the creation of the initial account, account holders will have the option to move the PRIA to a qualified financial institution of their choice and select from a wide variety of investment options like those offered to federal employees.
“The idea behind PRIA is to create an account that is personalized and independent of your employment situation and managed the way you want by the people you want,” continued Himes. “For Americans who want to stick with 401ks, IRAs and other savings plans with which they are familiar, that will remain an option. As individuals change jobs, they can easily roll their accounts into their PRIA so at retirement they have just one vehicle to manage, invested the way they have chosen. PRIA adds a new, flexible and portable plan that’s going to be very desirable for millions of Americans.”
The PRIA Act was developed over the course of several months of discussion with major stakeholders in the financial-services, senior-advocacy and retirement-planning fields. The bill introduced today represents a first step, designed to encourage discussion, draw out criticism and ideas and develop the best possible plans.
“We need to enshrine strong, ERISA-like protections for workers, mirror effective auto-enrollment and escalation policies to help Americans to save, set contribution levels correctly, and ensure that PRIA is satisfying an unmet need in the market,” continued Himes. “Today’s introduction is a call to partnership for all interested parties who know our system isn’t working and are committed to fixing it.”
For more information, contact Patrick Malone at [email protected].