Congressman Jim Himes, D-Conn., and Senator Mark Warner, D-Va., introduced the Portable Retirement and Investment Account (PRIA) Act of 2021 on Wednesday.
The politicos claim PRIA Act will create universal, portable retirement and investment accounts that will be accessible to all Americans throughout their lives.
Every American will receive a PRIA at the same time they receive a Social Security Number. PRIAs will be administered by an independent board and managed by selected financial institutions. After the creation of the initial account, account holders will have the option to choose investment options from a qualified financial institution. Employers can contribute to their employee’s PRIA just like legacy plans like 401ks, but employees who separate from their employer will still have the ability to contribute to the same PRIA plan as before.
Americans who want to keep their 401ks, IRAs, and other savings plans with which they are familiar will still have those options. PRIAs are designed to supplement the existing system and provide a simple, portable option for those who want it.
Scary stats
Warner and Himes listed several reasons for the bill:
- Approximately half of American households do not have access to a 401k retirement account.
- The Federal Reserve calculates that half of Americans have not saved enough to retire at their current standard of living.
- While 80% of full-time workers have access to retirement savings accounts, only 40% of part-time workers have access.
- According to the 2020 Report on the Economic Well-Being of U.S. Households by the Federal Reserve, around 35% of Americans work outside of traditional full-time jobs, in the gig economy.
“The current retirement system isn’t working for all Americans,” Himes said in a statement. “The options to which American workers have access can differ significantly based on their area of employment and the systems can be needlessly confusing. In addition, many Americans lose access to retirement savings vehicles if they lose their jobs, and gig, contract, and part-time workers are often ineligible. PRIA changes all of this.”
“Americans are more likely to change jobs and be engaged in non-traditional forms of work than they were a generation ago, but our policies haven’t kept up with these shifts,” Warner added. “As more and more Americans hold multiple jobs across a career, a year, and even a day, PRIA will provide more workers with access to flexible, portable benefits such as retirement savings that will carry with them from employer to employer and gig to gig.”
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.
