Butler, Pa.    -  Today, U.S. Rep. Phil English (R-Pa.) touted H.R. 5543, the Women’s Retirement Security Act of 2008, bipartisan legislation to ensure women in the workforce can easily save for retirement and achieve a lifetime of financial security.

“Although women have fought and won the battle in achieving greater equality in the workplace, statistics still show that women are still at a distinct disadvantage compared with men when it comes to retirement,” said English, a senior member of the House Ways and Means Committee, which has jurisdiction over tax policy.   “Today, I am delighted to announce a new initiative that will move to fix this inequity and provide women peace of mind that their savings will be there throughout their retirement years.”

Last fall, the Government Accountability Office (GAO) released a report on the status of women's retirement security (http://www.gao.gov/new.items/d08105.pdf) that found women have less retirement income than men and higher rates of poverty in their retirement years.  According to the report, this discrepancy is caused mainly by lower workforce participation and lower income.  Women's median Social Security income is 70 percent of men's, and the value of pensions held by women is half that of pensions held by men. 

This Congress, English teamed up with U.S. Rep. Tom Allen (D-ME) to introduce H.R. 5543, the Women’s Retirement Security Act of 2008, legislation to assist women with their retirement by helping them increase their retirement savings preserve their income and save for the future.

By making targeted changes to pension and tax laws, the Women's Retirement Security Act creates new opportunities for women to invest and save for retirement. Specifically, the English-Allen initiative strengthens and expands automatic 401(k)'s for small businesses; bolsters eligibility for the saver's credit and make it refundable; boosts participation for part-time workers; allows workers to transfer unused health plan benefits to qualified retirement accounts; and allows the self-employed to deduct pension contributions.
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“By creating targeted incentives for eligible part-time workers, the self-employed, and small business employees, this legislation will effectively close the loopholes that have prevented many women from saving adequately for retirement,” English continued. 

H.R. 5543 also contains major tax incentives to prepare for long-term health needs through the purchase of long term care insurance. The measure permits individuals or their caregivers to take up to a $3,000 tax credit to help cover long-term care expenses, such as medical supplies and home nursing care.  In addition, H.R. 5543 allows long-term care insurance to be included in cafeteria plans and flexible spending arrangements so that premiums on selected plans could be paid for on a pre-tax basis.

“With more than 77 million baby boomers prepared to retire in 2008, Congress needs to begin to adopt policies that will address the current challenges of retirement security,” English said.  “This is a common-sense, bipartisan initiative that will put many more Americans, particularly women on a path to a secure retirement.”

As a member of the Ways and Means Committee and co-chair of the Savings and Ownership Caucus, English has long been active in developing measures to improve the use of savings vehicles.  He is an original cosponsor of H.R. 1514, the Savings for Workings Families Act, which would expand Individual Development Accounts (IDAs) to make it easier for low-income families to save and build assets.  English also recently introduced the Automatic IRA Act of 2007, which would make it easier for workers to save for retirement by requiring employers to establish an automatic payroll deduction to an Individual Retirement Account (IRA).

  *Summary of the legislation follows:

H.R. 5543, the Women's Retirement Security Act
Introduced by Reps. Allen (D-ME), English (R-PA), and Berkley (D-NV)
Section by Section Summary

Title I: Provisions to Increase Retirement Savings

• Automatic IRA: Employers with more than 100 employees (with certain other exceptions) who do not offer a qualified retirement plan would be required to set up automatic deductions to IRA accounts for their employees.  Employees may opt out of contributing otherwise deductions are made by the employer from the paycheck automatically.   Tax credits are established for small businesses (up to $250) to defray the cost of getting the payroll deductions up and running.

• Saver's Credit: Makes the Saver's Credit refundable and requires recipients of the refund to deposit it into a qualified retirement account and expands the upper limit of eligibility (adjusted gross income) for the Credit to up to $50,000.  Makes the credit equal to 50% for all qualifying income levels. 

• Expands pensions for long-term, part-time workers by requiring employers maintaining a 401(k) plan to have a dual eligibility requirement under which an employee must complete either a one year of service requirement (equal to 1,000 hours) or three years of service where the employee completes at least 500 hours of service.  Employers are not required to match contributions for part-time employees even if they provide a match for full-time employees. 

• Expands Access to IRAs for people on disability and those who have taken a short time off from the workforce by amending the definition of "compensation" for IRA purposes to include disability income, unemployment compensation, workers' compensation and other "wage replacement" income. 

Title II: Provisions Providing for Preservation of Income

• Lifetime annuities: allows individuals to exclude from taxation a portion of payments from qualified (retirement plan or IRA) and nonqualified (after-tax) annuities that last a lifetime.  The exclusion is equal to 50 percent of payments which would otherwise be included in an individual's gross income.  The limit of the exclusion is $20,000 in any taxable year, adjusted for inflation beginning in 2009. 

• Longevity Insurance: Encourages the purchase of longevity insurance (generally, an annuity that begins at the end of life expectancy, usually age 85, and has no cash surrender value) by providing that the value of such insurance held in a plan or IRA would be disregarded in applying the applicable minimum distribution rules until the date that annuity payments begin.  (Minimum distribution rules dictate the amount to be taken out of a retirement account each year after age 70 and 1/2.) 
Title III: Provisions Ensuring Equity in Divorce

• Segregates half of the assets in a retirement account as soon as divorce proceedings begin (under a "qualified domestic relation order"); some plans already place such holds on assets.  Provides for penalties for non-compliance but allows the Secretary of the Department of Labor to use such measures at his/her discretion. 

Title IV: Provisions to Improve Financial Literacy

• Provides grants of up to $25 million annually to community tax preparation sites for infrastructure development and retirement savings counseling. 
 
• Allows employees to exclude up to $1,000 from their taxable income for qualified retirement planning services until 2013. 

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• Retirement handbook and Retirement readiness checklist: the Social Security Administration would be authorized to develop a financial planning handbook with a
      basic explanation of financial terms and retirement planning choices and a list of            questions to consider regarding retirement. 

Title V: Incentives for Small Businesses to Establish and Maintain Retirement Accounts for Employees

• Provides a start-up credit for new small business retirement plan contributions, including defined benefit plans, defined contribution plans, SIMPLE IRA and SEPs.  The credit is available for the first three years of the plan and would be equal to 50 percent of contributions for non-highly compensated employees.  In general, employers with fewer than 25 employees are eligible. 

• Encourages self-employed individuals to save for retirement by extending to them the same tax treatment that most people enjoy in employer sponsored plans. 

Title VI: Provisions Relating to Long-term Care Insurance

• Long-term care insurance tax deduction: an individual may deduct the cost of their long-term care insurance premiums, or the premiums they pay on behalf of a spouse or dependent.  The amount of the deduction is phased in over a four year period (in 2011 reaching 100 percent).  The maximum deduction allowed is $3,000. 

• Allows long-term care insurance to be included in cafeteria plans and flexible spending arrangements so that premiums on selected plans could be paid for on a pre-tax basis.
 
• Allows individuals or their caregivers to take up to a $3,000 tax credit to help cover long-term care expenses, such as medical supplies, home nursing care and other expenses incurred while caring for family members with disabilities.

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