Merkley introduces retirement savings plan

WASHINGTON – Sen. Jeff Merkley, D-Ore., on Thursday unveiled the American Savings Act, major new national retirement security legislation.

He said the American Savings Act would give every worker without access to a retirement savings plan through their employer the ability to save for retirement through their own, personal retirement savings account modeled on the same high-quality retirement savings plan already used by federal workers and members of Congress.

As our economy has changed and workers switch jobs more frequently over the course of their careers, fewer and fewer workers now have access to a traditional company-sponsored pension, the senator noted.

Retirement savings must make up the difference, but 68 million Americans currently do not have access to a retirement savings plan through their employer, and these trends will only intensify with the rise of the sharing economy.

The American Savings Act would give any worker not currently covered by an employer-sponsored retirement savings plan access to a new type of retirement savings account that would be universal, portable, simple and personal: the American Savings Account.

“It shouldn’t matter whether you work part-time or full-time, as an employee or as a contractor, or for a huge corporation or a tiny business: every American worker deserves access to a financially secure retirement,” said Merkley.

“With private-sector pensions becoming rarer and rarer, Social Security and retirement savings are more important to retirement security than ever, which is exactly why we must strengthen Social Security and expand high-quality retirement savings options to all workers.

“This plan helps millions of American workers to save easily and automatically for retirement with tax benefits, rock-bottom fees and the same types of high-quality investment options already enjoyed by federal workers and members of Congress,” he said.

The Center for American Progress Action Fund also released a report Thursday detailing the tremendous impact that a retirement savings system similar to the one proposed in the American Savings Act could have on Americans’ financial security. A full copy of that report can be found here.

“The Thrift Savings Plan is used by millions of federal employees, including members of Congress, to help ensure a secure retirement–and with good reason. The TSP offers simple, easy-to-understand, and sensible investment options, and low fees,” said David Madland, senior fellow at CAP Action and senior advisor to CAP Action’s American Worker Project.

“When workers do not have access to a retirement plan at their workplace, either because their employer does not offer one or because of the nature of their work, they are unlikely to save for retirement. Expanding access to a TSP-style plan could help shore up our private retirement system–which is currently failing to meet the needs of a significant part of our workforce–and offer a more secure retirement to millions of Americans,” Madland added.

Because employers using ASAs would simply need to send employees’ ASA savings to the federal government alongside the employee tax withholdings that they already process, the American Savings Act offers a high-quality option for small businesses without added paperwork or hassle.

“The Main Street Alliance member businesses applaud Senator Merkley’s leadership on this important issue,” said Amanda Ballantyne, National Director, The Main Street Alliance. “We look forward to working together to ensure that the American Dream of retiring comfortably after a lifetime of work is within reach for small business owners and their employees.”

The legislation is also supported by AARP and UNITE HERE.

AARP Oregon State Director Jerry Cohen said, “AARP applauds Senator Merkley’s introduction of the American Savings Act, because this legislation recognizes the serious gap in retirement readiness facing this nation, as well as the many important efforts underway in many states, including Oregon, to ensure tens of millions of workers who have no access to a workplace retirement savings plan can begin to save for their retirement.”

Details of the American Savings Act

The American Savings Act would establish a new universal savings account plan?—?the American Savings Account?—?giving all working Americans who don’t have an employer-sponsored plan access to the same types of retirement savings investments that are already available to federal employees.

How Would It Work?

If your employer doesn’t already offer a retirement plan, you’ll automatically be given your own American Savings Account (ASA). Initially, your employer will put 3% of your earnings into your account with each paycheck, but you can choose to adjust your contribution to as low as 2% of your income, or as high as $18,000 per year, or to opt out entirely. 

ASAs will have the same investment options as federal employees get through the TSP plan, with similar rock-bottom costs. ASAs are simple for employers, who simply need to send employees’ ASA savings to the federal government alongside employee tax withholdings. Workers will control their own accounts directly through a website.

Contributions to an ASA would be tax-deductible, and participants would be able to rollover any previous IRAs into their ASA or roll their ASA funds into an employer-sponsored 401(k) or 403(b) plan. An independent board of directors will manage the investment of the funds.

What Are the Benefits of an American Savings Account?

  1. Universal: It doesn’t matter whether you work part-time or full-time, how many employers you have, whether you work as a contractor, whether you work for a tiny company or a huge corporation: everyone can get a retirement account.
  2. Portable: You have one ASA for life. It will follow you when you change jobs or move with no extra steps or paperwork.
  3. Simple: Small businesses can offer retirement accounts without hassle or added cost.
  4. Personal: You get to decide how much to put in the accounts and choose among a number of straightforward investment options, to make sure your ASA is right for you.

For more information on the American Savings Act, visit