Older women confront many retirement security challenges. For one thing, women live longer than do men, so their money must stretch farther. For another, many average fewer years in the paid workforce and, when they do work, their average pay is often lower. Additionally, they are more likely to work part-time, for a lower salary. These factors all translate into lower retirement accumulations, smaller retirement payouts, and higher poverty rates in old age, as reported in a recent Society of Actuaries 2014 study “Impact of Retirement Risk on Women.”
To help address some of these challenges, Senator Patty Murray (D-WA) recently introduced the Women’s Pension Protection Act of 2015, with co-sponsors including several Democratic women and Bernie Sanders. This is an important bill, because it makes three key recommendations:
- Require spousal consent for lump sum distributions from defined contribution retirement plans. The Act would improve the rights of spouses to marital retirement savings in employer-sponsored retirement savings plans like 401(k)s. The Act would also strengthen spousal rights over 401(k) account balances by requiring a spouse to consent to funds being distributed at retirement or when the employed spouse changes jobs.
- Expand coverage rules to require more coverage of part-time works. The Act would help long-term part-time workers to save for retirement at work, by requiring employers to make long-term part-time employees eligible to participate in defined contribution plans like 401(k)s.
- Provide women with information and advice to make the critical financial and investment decisions shaping their retirement security.
I believe it unlikely that this bill will be enacted in its present form, and the outlook for sensible pension reform addressing major retirement security issues is bleak in the current environment.
Nevertheless, this legislative proposal should encourage us to focus on and discuss important issues regarding retirement security. It also should remind us to identify feasible steps in the near term.