Critics say the bill mainly helps people who already can save. The Center on Budget and Policy Priorities, a nonprofit research organization, estimated that three-quarters of the House bill’s benefits would flow to people with incomes above $67,000 a year.
“We have been concerned that any approach to increasing savings focus on the 75 million Americans who don’t have access to pensions or 401(k)s or tax-favored savings,” said Treasury Secretary Lawrence Summers.
To address that concern, single people earning up to $25,000 and married couples earning up to $50,000 would benefit from a Senate bill proposal by Baucus creating tax credits of 5 percent to 50 percent for up to $2,000 in contributions to a qualified retirement plan.
One controversial element in the Senate bill would set up new disclosure rules for workers when employers convert to “cash balance” pension plans that can erode benefits expected by older employees. Opponents say this could legitimize a questionable practice and jeopardize pending court cases.
“It would allow companies to get away with age discrimination in their pension plans,” said Rep. Bernie Sanders, I-Vt.
Those concerns aside, the bill will be brought to the Senate floor later this month under budget “reconciliation” rules that limit debate and amendments.
If it passes as expected, the House and Senate would work out differences before a final product is sent to Clinton. The bill could still become a vehicle for unrelated tax legislation as the congressional session winds down, but supporters were optimistic the pension provisions would not fall victim to other divisive issues.
“It’s important that we have a bipartisan consensus if we want to have something enacted this year,” said Sen. James Jeffords, R-Vt.