Sen. Tammy Baldwin’s bill would increase retirement security protections for women

Sen. Tammy Baldwin has introduced legislation aimed at protecting access to retirement savings for women and others who are not the primary earners in their households.

“Every Wisconsinite who works hard their whole lives toward retirement should have a secure safety net to fall back on. Unfortunately, barriers like unequal pay and time off for caregiving hold too many women back from making this dream a reality,” said Baldwin in a March 12 press release. “I am proud to introduce this legislation to extend protections for women in the workforce and ensure more Americans get the hard-earned retirement they deserve.”

The Wisconsin Democrat is the lead sponsor of S. 988, the Women’s Retirement Protection Act, with 11 cosponsors. Illinois Democratic Rep. Lauren Underwood is sponsoring companion legislation in the House of Representatives, with nine colleagues cosponsoring.

The main impact of the bill would be to require that married individuals who take money out of their 401(k) retirement plans do so with the consent of their spouse. It would also boost grants to community groups that help working and retirement-age women with financial literacy and that assist survivors of spousal domestic abuse to obtain the retirement benefits they are owed.

Amy Matsui, senior director of income security at the nonprofit National Women’s Law Center, told the Wisconsin Independent that Baldwin’s bill is necessary because women on average earn less than men do and often stay home and act as unpaid caregivers. “In heterosexual married couples, it’s often the case that the female spouse is going to rely more on her spouse’s retirement savings for a secure retirement,” she said. While current law requires both spouses to consent to changes to traditional pension accounts with annuities, Matsui noted, “those same protections don’t apply to what is really kind of the prevalent form of retirement benefit right now, and that’s the 401(k) system.” 

Matsui pointed to the example of a husband rolling his 401(k) over into an individual retirement account after changing jobs. Under current law, she said, he could name somebody other than his wife as the beneficiary of the account — “a child from a former marriage, or a friend, a girlfriend, something like that, and the spouse would never know until the time that she tried to get those funds for her own retirement or even when that worker dies.”

The bill has been endorsed by AARP, which was quoted in Baldwin’s press release: “Our research shows over 90% of women aged 45 and above are concerned about having sufficient funds to retire comfortably. … We believe this legislation will be a valuable tool in helping women across America secure their financial future.”

“I think it’s something that is needed,” Sandy Drew of Madison, a retired Wisconsin state government employee who now volunteers with AARP Wisconsin, told the Wisconsin Independent in an interview. She noted that Wisconsin has spousal protections in place for public workers with pensions but not for private sector employees with 401(k) accounts. “It’s a protection that, for the public employees, is in place, but not in place for others necessarily.”

Drew noted that Baldwin’s proposal would provide vital protections when a relationship ends in divorce. 

“I think it’s a fairness issue. It’s hard enough, if you’ve ever … gone through a divorce, but they’re very difficult, or often are,” she said. “If you remove some of the issues that could make the divorce even worse, such as being denied any of the retirement benefits, I think that’s a positive.” 

While Baldwin and Underwood’s bills have not yet attracted any Republican cosponsors, Matsui is hopeful that both parties will understand that marriage forms an economic unit and that the rights of both spouses need to be protected by the law.

“The original legislation [the Retirement Equity Act] was signed under Ronald Reagan back in 1984, and part of his signing statement was that marriage is an economic partnership, and this recognizes it,” Matsui said. “So that’s the argument that advocates like us make.”