DOL Proposal Not the Only Change to ERISA?

March 1, 2016

Generally, women are behind in retirement savings compared to their male counterparts, and one senator is proposing a way to fix that.

Although her proposal does not focus on rectifying the pay disparity among the genders, U.S. Senator Patty Murray of Washington is proposing to amend the Employee Retirement Income Security Act of 1974 (ERISA) to address this retirement savings gap.

The U.S. Census Bureau data released for 20141 showed that women who work full-time, year-round, made just 79 cents for every dollar of their male counterparts. A woman who works full-time over a 40-year period loses approximately $435,049 in lifetime income due to the wage gap, according to the National Women’s Law Center.2 In other words, women need to work 11 years longer than men to realize income equality.3 This income gap could directly translate to lower Social Security retirement income and pensions, since those benefits are based on earnings history, which ultimately impede women’s capacity to save for retirement. Keep in mind, all these statistics are for full-time, year-round workers, yet women make up a large portion of the part-time workplace, which consequently creates more challenges when saving for a secure retirement.

As introduced to the U.S. Senate on September 30, 2015, The Women’s Pension Protection Act (S. 2110; H.R. 4235) proposes to amend ERISA to reflect the current workplace retirement landscape resulting in a larger inclusion of women’s involvement in workplace retirement plans by:

  • Extending spousal protection to defined contribution plan distributions (i.e., 401(k), TSA/403(b), and IRA).
  • Improving retirement coverage for certain long-time part-time employees.
  • Creating access to consumer information.
  • Awarding grants to qualified community-based organizations to promote financial literacy among women.

The proposal of such a bill sheds light on a very important issue: ERISA, as written in 1974, is having a disparate impact on women’s ability to save for retirement. The proposed new bill will update a 42-year-old law to reflect the current retirement-savings reality and deliberately include a segment of society that has been unintentionally excluded. Women, who most often are the ones in need of longevity income due to their increased life expectancies, are not able to appropriately save for retirement and, as Senator Murray has recognized, there is need for reform.

Although this bill is just a proposal and in the very early stages of review, as it was just proposed to the Senate a few short months ago, its introduction brings to light the very real dilemma women currently in retirement are facing and have faced for years. As we wait to find out if this bill will gain any traction and eventually become law, women need another way to hedge against longevity with retirement solutions that are available now, such as Qualified Longevity Annuity Contracts (QLACs). A QLAC4 is designed to create lifetime income payments beginning at a future age regardless of how long one lives.

Should you have any questions about the proposed bill, or if you would like to discuss longevity income strategies for a specific client, please contact the Pacific Life Retirement Strategies Group at (800) 722-2333, ext. 3939, or send an e-mail to



1“Income and Poverty in the United States: 2014.” Current Population Survey (CPS). U.S. Census Bureau and U.S. Bureau of Labor Statistics (BLS), September 16, 2015
“How the Wage Gap Hurts Women and Families.” Employment. National Women’s Law Center, April 2015. Figure not adjusted for inflation and assumes a constant wage gap overtime of $10,876 annually.
In order for the contract to be eligible as a QLAC, certain requirements under Treasury Regulations must be met, including limits on the total amount of purchase payments that can be made to the contract. Compliance with the QLAC purchase payments limit is the owner’s responsibility, and failure to adhere may result in the contract no longer being considered a QLAC, and would subject the value of the QLAC to required minimum distribution requirements that may not be accessible through the contract. In addition, there are restrictions on annuity payout options that can be elected under a QLAC contract, and certain annuity features are not available. Changes to marital status may require a change to the annuity payout options and/or payments in order to maintain the QLAC status.

Picture of Caroline Elrod

Caroline Elrod is a Retirement Strategies Consultant with the Retirement Solutions Division at Pacific Life. She brings several years of industry experience to her role that includes tax planning with insurance products. Caroline enjoys educating financial advisors on creative and practical solutions to business, estate and retirement planning concerns.

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