Here’s a potential resolution to a thorny subject, one we even hesitate to raise. For years, the novel concept of paying stay-at-home moms for the services they provide (to households as well as society as a whole) is routinely raised. It’s elicited condescending scoffs and full-throated cheers, usually depending on gender and/or political persuasion. It’s unlikely to pass into any type of formal program, but the Women’s Pension Protection Act of 2015 might be a reasonable compromise for all.
The retirement gender gap is as shocking as it is frightening. Despite living, on average, longer than men, women fall far short in retirement preparedness. One reason is that more women than men work part time in order to take advantage of more flexible work schedules to aid in domestic duties. As Time notes this week, they therefore generally fail to qualify for participation in company-sponsored 401(k) plans.
What if that were to change?
Sponsored by Rep. Jan Schakowsky, D-IL and Senator Patty Murray, D-WA, the act, formally known as H.R. 4235, would improve retirement coverage for long-term, part-time workers, among other provisions.
“The WPPA would amend the current minimum participation standard, the completion of 1,000 hours during a 12-month period, for workers to participate in their employer’s retirement plan. Under the WPPA, workers who complete 500 hours of service for three consecutive years will be eligible to participate in their employer’s retirement plan,” according to Schalowsky.
Other provisions include:
- Increases Spousal Protections: The WPPA would extend spousal protections to the growing category of defined contribution plans, which include 401(k)s.
- Creates Access to Consumer Information: The WPPA will require that, in any offer to sell a financial product or service, financial providers shall provide a link to the Consumer Financial Protection Bureau website with information relating to retirement planning or later life economic security.
- Awards Grants to Promote Financial Literacy for Women: The WPPA will award grants of at least $250,000 to community-based organizations to improve the financial literacy of women who are of working or retirement age.
“One of the many barriers that women in America face in the effort for full equality is access to a secure retirement,” Schakowsky adds. “On average, women face a 26 percent gap in retirement savings compared to men, while also being much more likely to earn less than their male counterparts.”
So yes, while we’re not paying women to stay at home, we are giving them the same access to an affordable quality of life enjoyed by men in retirement. It’s all done on a percentage basis anyway, so the only real obstacle would be cost-effectiveness from a fee standpoint. Yeah, about that …
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
