SECURE Act will give Main Street workers needed security

Today’s rapidly evolving workplace is marked by an acceleration in technology, worker mobility and a renewed spirit of entrepreneurship, leading to new startups and small-business job growth. But while we’re retiring our old ways of working, we too must ensure American workers can continue to retire securely.

For generations, the worksite has been the primary avenue to access the tools to save for a secure retirement, and timely legislation on Capitol Hill offers the best opportunity for ensuring this continues.

Countless studies have shown that American workers are under-saved and underprepared for retirement. No group is feeling this more than small-business workers.

Prudential recently conducted a survey of American workers with Morning Consult. We found that only 39 percent of small-business workers say their employer provides the benefits they need to feel financially secure —remarkably less than the two-thirds of workers in large businesses.

Today roughly half of the American workforce is employed by a small business, which oftentimes cannot provide retirement plans to their employees due to legal obstacles, administrative burdens and steep startup costs.

This is worrisome, because — as U.S. Comptroller General Gene Dodaro pointed out in recent congressional testimony — having access to a workplace retirement plan makes it easier to save and more likely that a worker will have another source of retirement income beyond Social Security.

Fortunately, new legislation making its way through Congress will help overcome these hurdles and expand access to retirement plans through the worksite. The SECURE Act was introduced earlier this year by House Way & Means Chairman Richard Neal (D-Mass.) and Ranking Member Kevin Brady (R-Texas), as well as Rep. Ron Kind (D-Wis.) and Rep. Mike Kelly (R-Pa.).

The bill increases the flexibility of retirement plans for small businesses and improves employees’ access to the accounts. It is one of the few proposals in a divided Congress with bipartisan support and was just approved by the House of Representatives. 

Much like a related bill in the Senate, the Retirement Enhancement and Savings Act introduced by Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.), this bipartisan legislation would make it easier for small businesses, without a common nexus, to join together to offer workplace retirement plans. 

As a result, a tech startup, a bakery and an auto repair shop can band together to offer a 401(k)-type plan. By working together, these businesses can share administrative costs and maximize economies of scale.

The legislation also contains other important measures, such as those that would make it easier for workers to convert their savings to guaranteed retirement income that cannot be outlived.

As workplace dynamics continue to evolve, small businesses are well-positioned to continue their growth trajectory. But as they do, the workers who power small business shouldn’t be deprived of the tools to save for a secure retirement.

Without addressing restricted access to workplace retirement plans, small-business workers are left vulnerable and ill-prepared for retirement. It is now time for the Senate to take up retirement security legislation and further strengthen the retirement readiness of millions of Americans.

Rob Falzon is vice chairman of Prudential Financial, Inc.