From stagnant wages to crushing medical expenses, employee net income has plummeted, preventing American workers from saving adequately for retirement. Pending legislation seeks to alleviate this crisis while a growing number of employers are boosting retirement benefits by reducing health care costs.
The bipartisan SECURE Act 2.0 was recently passed by the U.S. House of Representatives and is poised to be signed into law. It contains a wealth of provisions designed to improve retirement readiness by helping employees contribute more to a 401(k) plan and better manage their savings, regardless of where they are on the road to retirement. Note that employers have until January 1, 2024 to implement the administrative changes necessary to enable the act’s provisions.
Another bipartisan bill, the Retirement Savings for Americans Act of 2022 (RSSA), focuses on inconsistencies in workplace retirement benefits and seeks to improve efficiency and the portability of funds between retirement plans. Should both pieces of legislation pass, the combined reforms will more fully address today’s inadequate retirement savings and retirement inequality.
Employers Can Take the Lead
With a next-generation health plan that delivers 30% savings, employers can reduce and reallocate their overspend with wage improvements to help employees fund the retirement auto-enrollment contributions within SECURE 2.0.
Reducing overspend to fund more competitive benefits is key to attracting and retaining talent. Forward-looking employers have an advantage in complying with anticipated retirement mandates and offering enhanced, more attractive employee benefits.