Bill Overview
Title: Incentivizing Small Business Retirement Savings Act
Description: This bill allows eligible small employers an additional pension plan startup cost tax credit for a specified percentage of their contributions to an pension plan established for the benefit of their non-highly compensated employees. The amount of such credit may not exceed $1,000 per employee and is subject to a phaseout if the employer has more than 50 employees.
Sponsors: Sen. Hickenlooper, John W. [D-CO]
Target Audience
Population: Non-highly compensated employees at small businesses
Estimated Size: 30000000
- The bill targets small employers, defined typically as those with fewer than 50 employees, to offer pension plans.
- It aims to support non-highly compensated employees, who are more likely to work in small businesses and have less personal savings for retirement.
- Globally, there are millions of small businesses that could potentially benefit from employer support of retirement savings initiatives.
- The target group is non-highly compensated employees of small businesses, a significant portion of the workforce worldwide.
Reasoning
- The policy targets small businesses with fewer than 50 employees, aiming to improve retirement savings for non-highly compensated employees.
- Given the financial threshold, the common impact on wellbeing is expected to be low to medium as it directly enhances future financial security but doesn't affect immediate income.
- Considering the number of eligible businesses, the policy’s coverage will be significant, but not all small businesses will opt in due to operational constraints.
- The policy will not impact highly compensated employees, as the setup is for those who generally have lower disposable income and retirement savings.
- Due to phaseouts, larger small businesses (closer to 50 employees) might face diminishing benefits per employee, slightly reducing individual impacts on wellbeing.
- Policy budget constraints imply that the reach of the policy will be substantial but not exhaustive; estimated to benefit around 2 million employees per year.
Simulated Interviews
Manufacturing worker (Columbus, Ohio)
Age: 40 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- I think having a retirement plan would be great, I don't save enough on my own.
- If my employer offered a plan and it improved my savings, that would take some stress off about my future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Marketing assistant (Austin, Texas)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- A pension plan would be amazing; it's overwhelming to start saving by myself.
- But startups might be too focused on immediate growth to prioritize this.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Café owner (Buffalo, New York)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I'm not sure if I can afford to offer a pension plan, even with credits.
- It would be beneficial, but financial viability is my priority.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Waitress (San Diego, California)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 14/20
Statement of Opinion:
- It's hard to save with my current wages, a retirement plan would help.
- I'd feel more secure if my employer could help me save without cutting my pay.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Cleaner (Miami, Florida)
Age: 45 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 11/20
Statement of Opinion:
- Without savings, I worry about retirement all the time.
- If I could get help to save, it would ease a lot of stress.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 7 | 4 |
| Year 20 | 7 | 5 |
Software developer (Chicago, Illinois)
Age: 30 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 16/20
Statement of Opinion:
- I already save for retirement, but more savings options wouldn't hurt.
- Though my focus is more on salary and bonuses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Truck driver (Raleigh, North Carolina)
Age: 55 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- It'd be helpful if there was an option for me and my driver to save for retirement.
- I need to analyze if tax credits really cover costs though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Barista (Seattle, Washington)
Age: 24 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 13/20
Statement of Opinion:
- I'm still studying, but thinking about future savings is stressful.
- My job doesn't offer any benefits currently; a retirement plan would be encouraging.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Graphic designer (San Francisco, California)
Age: 39 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- Retirement plans sound good, but as a freelancer, they rarely affect me.
- More concerned about consistent work and healthcare.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Sales representative (Boston, Massachusetts)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- A solid retirement plan would be a great reassurance.
- Balancing family expenses with savings is tough, so employer support would help.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Cost Estimates
Year 1: $2000000000 (Low: $1800000000, High: $2200000000)
Year 2: $2200000000 (Low: $1900000000, High: $2300000000)
Year 3: $2300000000 (Low: $2000000000, High: $2500000000)
Year 5: $2400000000 (Low: $2100000000, High: $2600000000)
Year 10: $2600000000 (Low: $2300000000, High: $2800000000)
Year 100: $3000000000 (Low: $2700000000, High: $3300000000)
Key Considerations
- The estimated number of target employees significantly influences the budgetary impact.
- Phasedown provisions for firms with more than 50 employees help control costs.
- The policy assumes successful uptake and implementation by small employers.
- Long-term savings to government safety net programs are speculative and hard to quantify.