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The Women’s Pension Protection Act of 2018

On September 12, 2018 Senator Patty Murray (D-WA) introduced the Women’s Pension Protection Act of 2018 (WPPA), S.3436. A companion bill, H.R. 7026, was introduced in the House on October 2, 2018 by Congresswoman Jan Schakowsky (D-IL), joined by Donald Norcross (D-NJ) and Suzanne Bonamici (D-OR). The bill will improve retirement security for women by expanding access to retirement plans for part-time workers, enhancing protections for spouses, increasing financial literacy among women, and providing assistance to low-income women and survivors of domestic violence who seek retirement benefits at divorce.

Women have lower incomes in retirement and a greater chance of living in poverty than men. Section 2 of the bill, “Findings”, gives background information on women and retirement income.  “(W)omen’s retirement preparedness often lags significantly behind their male counterparts, resulting in the median retirement income for women in 2014 being just 54 percent of men’s retirement income.” Women are more likely to work in low-paying jobs and to work part-time.  Women generally assume more caregiving responsibilities than men, thus reducing their time at work. These characteristics of women’s lives and work affect their retirement income.¹

The Women’s Pension Protection Act addresses features of the U.S. retirement system that contribute to women’s low incomes in retirement. These include the lack of spousal protections for payouts from 401(k) and other individual account plans, barriers to plan participation for part-time workers, and complex rules for dividing property at divorce.

The Women’s Pension Protection Act would:

**Ease the requirements for participation in 401(k) and 403(b) retirement savings plans  so that employees who work at least 500 hours in each of two consecutive years would be eligible to participate in their employer’s plan. The current rule requires 1000 hours per year. There is an exception for employees covered by collective bargaining agreements when the agreements are the result of good faith bargaining.

The bill similarly amends the rules for vesting in an employer’s contributions to 401(k) and 403(b) retirement savings plans. Each 12-month period in which an employee works at least 500 hours will be treated as a year-of-service for vesting purposes. (Employees are always 100 percent vested in their own contributions to their retirement accounts.)

**Apply spousal consent requirements to distributions from individual account plans, such as 401(k) plans, and to designations or changes of beneficiary. (Spousal consent is already a requirement for distributions from defined benefit pension plans.) Prior to a distribution or beneficiary designation plans must provide to participants a written explanation of the rights of the participant and the participant’s spouse. Spousal consent must be in writing and be witnessed by a plan representative or notary public within 90 days prior to the date of distribution or beneficiary designation.

There are exceptions to spousal consent for certain distributions. These include required minimum distributions made to a participant at age 70 ½, hardship distributions, and forced transfers of small account balances of $5,000 or less. Additionally, spousal consent is not required for a rollover distribution to another employer plan with spousal protections or to an individual retirement account (IRA) that includes spousal protections.

**Require financial services businesses to provide a website link to the Consumer Financial Protection Bureau (CFPB) for consumers seeking information about investing retirement funds. Consumers seeking investment alternatives for retirement funds will find helpful information for decision-making on the CFPB website.

**Authorize competitive grants to community-based organizations to develop and implement financial literacy programs for women. The Secretary of Labor, acting with the Director of the Women’s Bureau, will award grants of at least $250,000.

**Provide funds for community-based organizations to assist low-income women and victims of domestic violence obtain qualified domestic relations orders (QDROs). Competitive grants in amounts of $250,000 or more will be awarded by the Secretary of Labor, acting with the Director of the Women’s Bureau and the Assistant Secretary of the Employee Benefits Security Administration. (A QDRO sets forth the terms of division of retirement plan benefits at divorce and establishes the rights of divorced spouses to those benefits.)

¹See “Women and the Retirement Gap,” a study released by Senator Murray in 2015.

Read our PRC Fact Sheet: I’m getting divorced: What is a qualified domestic relations order and why should I care?