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Retirement Security

The NASE Position:

 The NASE backs new incentives for personal savings and new small-business pension plans that are simpler and more financially attractive to micro-business owners.

Background:
As the population of the U.S. becomes increasingly older and the ‘baby boom’ generation begins to reach the age of retirement, the need for reforming pension plans to ensure retirement security becomes critical.

A large majority of owners and employees of America's micro-businesses do not have access to retirement plans and are financially unprepared for retirement, according to a 2007 survey by the National Association for the Self-Employed (NASE). The survey found that an overwhelming percentage of the nation's micro-businesses – 80% – do not offer retirement plans of any type for either owners or employees. The greatest barrier, reported by 62 percent of respondents, is the cost of administering and contributing to a retirement plan. More than one-third of micro-business owners acknowledged they were not saving for retirement at all.

Over three-quarters of micro-business owners are relying on the federal government as their primary source for financing retirement. Many of the self-employed and small-business owners are discouraged at the costly and complicated burdens they currently must comply with to start up and maintain retirement plans for themselves and their employees.

Legislative Activity:
The NASE will continue its efforts to promote savings and participation in retirement plans amongst the self-employed and micro-businesses through our efforts with the Savings Coalition of America.

In 2001, the Economic Growth and Tax Relief Reconciliation Act of 2001 (H.R. 1836) become law. It contained provisions that increased from $2,000 to $5,000 the limit on annual contributions to traditional and Roth IRAs by 2008. The limit will be raised to $3,000 in 2002, $4,000 in 2005 and $5,000 in 2008. After 2008, the limits on IRA contributions will increase with inflation in $500 increments.

In the 110th Congress, the Automatic IRA Act (S. 1141/ H.R. 2167) was introduced , but was not passed. In the current Congress, a number of bills have been introduced to help increase retirement security. The Securing Medicare and Retirement for Tomorrow Act of 2009 “SMART Act of 2009” (H.R. 107) would establish a Personal Social Security Savings Program. The Protecting Seniors’ Nest Egg Act of 2009 (H.R. 424) would extend the temporary waiver of required minimum distribution rules for certain retirement plans and accounts through 2010.