Last month, my office introduced legislation that would help combat the looming retirement savings crisis facing our country and the state of Iowa. This crisis has been measured by many recent studies, including a Federal Reserve report that found 31 percent of America's current workforce has no retirement savings or pension.
Here in Iowa, small business workers are especially impacted by this crisis. According to the AARP Public Policy Institute, 42 percent of Iowa's private sector employees do not have access to an employer-sponsored retirement savings plan. Senate Study Bill 3164 proposes a solution to this problem: Retirement Savings Iowa.
Offered to Iowa's small business workers through their employers, Retirement Savings Iowa aims to allow every working Iowan the opportunity to save in an employer-provided retirement savings plan. While federal regulations are still pending, we are advocating four key features: voluntary enrollment, automatic payroll deduction, portability and tax advantages.
Retirement Savings Iowa would operate much like our successful 529 plan, College Savings Iowa, emphasizing professional investment management and affordability. It would be designed specifically for small businesses that do not already offer a retirement savings plan to their employees, removing many of the complexities and costs associated with setting up and maintaining these plans. Most importantly, it would offer small business workers access to the ease and convenience of saving through automatic payroll deduction.
We applaud businesses in Iowa that provide robust retirement plans to their employees. But we have heard from small business owners who would like to provide their employees with a retirement savings plan and are unable to do so for various reasons. Our legislation approaches this dilemma head-on. We aim to fill the gap for those small businesses that are currently not providing any type of retirement program through payroll deduction.
Retirement Savings Iowa would be a personal savings fund opened for and controlled by each individual employee. By offering automatic payroll deduction and the ability to move the plan across employers, employees are provided with the ease and independence of saving for tomorrow, regardless of where or for whom they work. Neither employers nor the state would be able to contribute to these accounts.