The average woman loses over $400,000 over a 40-year career due to the wage gap between the sexes, and some women of color lose over $1,000,000 due to pay inequality by retirement.
With that in mind, Senator Patty Murray (D-WA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Congresswoman Lauren Underwood (D-IL), today reintroduced the Women’s Retirement Protection Act of 2021 (WRPA), legislation to address the retirement gap and bolster women’s financial security.
The reintroduction comes in light of the COVID-19 pandemic and economic crisis that have disproportionately impacted women, particularly women of color—with a recent survey finding that 40% of women said they expect the past year to have a long-term impact on their finances.
“COVID-19 has upended the finances of families across the country and led to severe job loss, especially in sectors like child care that disproportionately employ women, particularly women of color. Even before this pandemic, women in America typically had less money saved for retirement, in part because they were paid less than their male counterparts for the same work throughout their careers,” said Murray.
Even before the COVID-19 pandemic, data has long shown women’s financial futures are undermined by other factors. It was the National Women’s Law Center that found the average woman loses more than $400,000 over a 40-year career due to pay inequality, requiring women to work for almost a decade longer than their male counterparts to make up the gender wage gap.
Recent data from Human Interest, a 401k provider for small and medium-sized businesses (SMBs), found that after 40 years of earning the average salary for their gender, a man would end up with a 401k balance that breaks down into a $2,200 payout every month for the rest of his life whereas a woman would have 30% less—only $1,500 a month.
“Just like savings can compound, the wage gap can compound, too, into something much bigger—and in this case—more financially devastating by the time a woman reaches retirement,” said Human Interest CEO Jeff Schneble.
Women are also more likely to be part-time workers—which can limit their access to employer-sponsored retirement plans. They may also be prevented from securing the retirement resources they are entitled to following a divorce due to barriers like complex rules and legal fees—as discussed in a 2020 report Senator Murray requested from the Government Accountability Office.
“Inequities, like investments, compound over time—which is why it is so critical we take action now to address how this pandemic and other challenges are undermining women’s financial futures,” Murray said.
“As women strive for economic equality in this country, we need to make sure they have the opportunity for stable, secure retirement. That includes ensuring a woman’s spouse cannot alter their shared retirement savings without her consent. I’m honored to work with Senator Murray to strengthen consumer protections for retirement that address the economic inequalities that compound throughout a woman’s life,” Underwood said.
What’s in the bill
The WRPA includes a set of solutions that work to close the retirement gap by addressing some of the challenges that disproportionately affect women as they plan for their financial futures.
The legislation would strengthen consumer protections to safeguard retirement savings, increase eligibility for employer-sponsored retirement savings plans for part-time workers, increase access to information about retirement and savings tools, and help women with low incomes and survivors of domestic abuse get the retirement benefits they are entitled to following a divorce.
More specifically, WRPA would:
- Strengthen consumer protections to safeguard retirement savings by expanding existing spousal protections for defined benefit plans to defined contributions plans to prevent one spouse from making decisions that might undermine a couple’s retirement resources without the other’s knowledge and consent.
- Ensure more part-time workers are offered retirement savings plans by expanding the minimum participation standards for part-time workers—most of whom are women. The SECURE Act established retirement plan eligibility for such workers after three years with an employer—WRPA would reduce that to two years.
- Increase access to information about retirement and savings tools by providing grants for community-based organizations to help provide information and financial tools to women who are of working or retirement age.
- Support women with low incomes and survivors of domestic abuse seeking retirement benefits by providing grants for community-based organizations that assist them in obtaining qualified domestic relations orders, the legal instruments that allow for the division of retirement benefits—assuring they receive the retirement benefits they are entitled to following a divorce or legal separation.
Dem co-sponsors and other advocates
With the exception of Vermont Independent Sen. Bernie Sanders, the bill is sponsored entirely by Democrats.
In the Senate, the legislation is cosponsored by Senators Blumenthal (D-CT), Hirono (D-HI), Klobuchar (D-MN), Feinstein (D-CA), Smith (D-MN), Warren (D-MA), Cantwell (D-WA), Wyden (D-OR), Sanders (I-VT), Baldwin (D-WI), Bennet (D-CO), Menendez (D-NJ), Cortez Masto (D-NV), Kaine (D-VA), Padilla (D-CA), Rosen (D-NV), Brown (D-OH), Gillibrand (D-NY), Stabenow (D-MI), Durbin (D-IL), Merkley (D-OR), Duckworth (D-IL), Shaheen (D-NH), and Booker (D-NJ).
In the House, WRPA is co-lead by Representatives Jan Schakowsky (D-IL), Suzanne Bonamici (D-OR), and Donald Norcross (D-NJ).
“Women, especially women with low incomes and women of color, were facing a retirement crisis even before the pandemic. Without swift and targeted action, women will feel the impact of the past year and a half of economic devastation for the rest of their lives. The Women’s Retirement Protection Act will take meaningful steps to safeguard and protect women’s retirement security,” said Amy Matsui, Director of Income Security at the National Women’s Law Center.
“We applaud Senator Murray and Congresswoman Underwood for their efforts to address inequities that women face in the retirement system. The Women’s Retirement Protection Act of 2021 will expand coverage for part-time workers, provide help for women in obtaining a share of their former spouse’s retirement benefits at divorce, and improve spousal rights in 401k plans, all very important measures to improve retirement security for women,” said Karen Friedman, Executive Director of the Pension Rights Center.
“AARP is pleased to support the Women’s Retirement Protection Act which aims to improve women’s financial security. The bill would prevent a spouse from cashing out a retirement account without first getting the other spouse’s consent,” said AARP. “In addition, part-time workers would benefit from access to retirement plan coverage after two (rather than three) years of employment. This change will be especially helpful to the more than 27 million workers who work less than full-time, most of whom are women or caregivers.”
Full text of the Women’s Retirement Protection Act can be found HERE.
SEE ALSO:
- Women’s Wage Gap Woes Worsen in Retirement
- 401k Leakage and Auto Portability Featured at Senate Committee Hearing
- Senate HELP Committee to Address Retirement Security
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
