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Proposed changes to the pension system approved by the Senate committee

Written by Javed Iqbal

The Senate Finance Committee on Wednesday unanimously approved a number of proposals that make a full congressional review of a pension improvement package more likely this year.

Called the Enhancing American Retirement Now (EARN) Act, the measure contains some provisions that are the same or similar to those proposed in Parliament, which passed the Securing a Strong Retirement Act (HR 2954) at the end of March in a split vote of 414-5.

This bill, known as “Secure 2.0”, is intended to build on the original Secure Act of 2019, which heralded changes aimed at increasing pension security by, among other things, increasing access to savings schemes in the workplace.

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The Earn Act “includes more than 70 proposals aimed at helping more Americans save – the culmination of months of cooperation between almost all committee members, Democrats and Republicans,” said Finance Committee Chairman Ron Wyden, D-Ore., In the opening remarks at the Wednesday hearing.

The committee’s approval of the EARN Act comes about a week after the Senate Health, Education, Work and Pensions Committee introduced another pension-related measure called the Rise & Shine Act (p. 4353). Together, the bills are the Senate’s version of Secure 2.0.

Many Senate provisions are the same as those that cleared Parliament, including one to make it easier for employers to contribute to 401 (k) plans (and similar workplace plans) on behalf of employees who pay student loans instead of contribute to their pension scheme.

Other similarities between the two chambers’ proposals include allowing older workers to save more through so-called catchup contributions to their 401 (k) and raising the age at which savers should start taking the necessary minimum distributions from their retirement accounts.

However, the differences between the two chambers’ proposals would have to be clarified before full congressional approval could take place. Senate lawmakers said during Wednesday’s committee hearing that they are in talks with their colleagues in Parliament to reach agreement on a final version.

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Javed Iqbal

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