Section 1 Short title
This Act may be cited as the “Pensions for All Act”.
Pensions for All Act
A BILL
To require every employer to provide to their employees a retirement program with benefits equivalent to the Federal Employees Retirement System or to elect for their employees to participate in the Federal Employees Retirement System, and for other purposes.
Sec. 2 Definitions
In this Act:
Covered retirement program— The term covered retirement program means a retirement program other than FERS that the Secretary determines provides benefits that are comparable to the benefits available under FERS to an employee (as that term is defined under section 8401 of title 5, United States Code, on the day before the date of enactment of this Act).
Employee; employer— The terms employer and employee have the meanings given such terms in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002).
FERS— The term FERS means the Federal Employees Retirement System under chapter 84 of title 5, United States Code.
Secretary— The term Secretary means the Secretary of Labor.
Sec. 3 Requirement to provide a retirement plan equivalent to FERS or to participate in FERS
Initial coverage—
Employers— Each employer shall—
make available to each employee employed by the employer a covered retirement program; or
notify the Secretary that the employees of the employer will participate in FERS.
Self-employed enrollment— Each self-employed individual shall—
be enrolled in a covered retirement program; or
notify the Secretary that the self-employed individual will participate in FERS.
Subsequent coverage election—
Options for employers— At a frequency determined by the Secretary, in coordination with the Director of the Office of Personnel Management, that is not less than annually, an employer that has in effect a covered retirement program for the employees of the employer or with respect to whom the employees of the employer are participating in FERS may elect to—
in the case of an employer that has in effect a covered retirement program—
cease making contributions to the covered retirement program for such employees; and
have each employee employed by the employer participate in FERS; or
in the case of an employer with respect to whom the employees of the employer are participating in FERS—
have the employees cease participating in FERS; and
make available to each employee employed by the employer a covered retirement program.
Options for self-employed individuals— At a frequency determined by the Secretary, in coordination with the Director of the Office of Personnel Management, that is not less than annually, a self-employed individual who is enrolled in a covered retirement program or is participating in FERS may elect to—
in the case of a self-employed individual who is enrolled in a covered retirement program—
cease making contributions to the covered retirement program; and
participate in FERS; or
in the case of a self-employed individual who is participating in FERS—
cease participating in FERS; and
enroll in a covered retirement program.
Sec. 4 Participation of non-Federal employees and self-employed individuals in FERS
by striking paragraph (2) and inserting the following:
“(2) the term basic pay—
“(A) except as provided in subparagraph (B), has the meaning given such term by section 8331(3); and
“(B) with respect to a covered self-employed individual, means the annual income of the covered self-employed individual that is attributable to the activities of the individual as a covered self-employed individual;”
in paragraph (11)—
in subparagraph (B), by striking “and” at the end;
in subparagraph (C), by adding “and” at the end;
by inserting after subparagraph (C) the following:
“(D) an individual who is—
“(i) an covered non-Federal employee; or
“(ii) a covered self-employed individual;”
in the matter following subparagraph (C), by striking “civilian service” and inserting “service in a position described in subparagraph (A), (B), (C), or (D)”;
in paragraph (12), by striking “civilian”;
in paragraph (31), in the matter following subparagraph (C), by striking “civilian service” and inserting “service as an employee or Member”;
in paragraph (38)(B), by striking “and” at the end;
in paragraph (39), by striking the period at the end and inserting a semicolon; and
by adding at the end the following:
“(40) the term covered non-Federal employer means an employer that is not a department, agency, or other instrumentality of the Federal Government and does not have in effect for all employees of the employer a retirement plan that the Secretary of Labor has determined provides benefits that are comparable to the benefits provided under the retirement program under this chapter;
“(41) the term covered non-Federal employee means an individual employed by a covered non-Federal employer; and
“(42) the term covered self-employed individual means a self-employed individual who is not enrolled in a retirement plan other than the Federal Employees Retirement System that the Secretary of Labor has determined provides benefits that are comparable to the benefits provided under the retirement program under this chapter.”
Eligibility for annuity— Section 8410 of title 5, United States Code, is amended by striking “civilian service” and inserting “service as an employee or a Member”.
Creditable service— Section 8411(b) of title 5, United States Code, is amended—
in paragraph (1), by inserting “subject to paragraphs (7) and (8),” before “employment”;
in paragraph (5), by striking “and” at the end;
in paragraph (6), by striking the period at the end and inserting a semicolon; and
by inserting after paragraph (6) the following:
“(7) a period of service as a covered non-Federal employee performed after the date of enactment of this paragraph; and
“(8) a period during which an individual is a covered self-employed individual that occurs after the date of enactment of this paragraph.”
Phased retirement— Section 8412a(c)(5)(A) of title 5, United States Code, is amended by striking “creditable civilian service” and inserting “other service that is creditable under this chapter”.
in subsection (a)—
in paragraph (1), by striking “The employing agency” and inserting “Subject to paragraph (4), the employing agency”;
in paragraph (3), by striking “civilian” each place it appears; and
by adding at the end the following:
“(4)
“(A) A covered non-Federal employer shall deduct and withhold from the basic pay of each covered non-Federal employee of the covered non-Federal employer the percentage of basic pay that would be deducted and withheld from basic pay if the covered non-Federal employee were an employee of the Federal Government, as determined in accordance with paragraphs (2) and (3).
“(B) For a covered self-employed individual, an amount equal to the percentage of basic pay of the covered self-employed individual that would be deducted and withheld from basic pay if the covered non-Federal employee were an employee of the Federal Government, as determined in accordance with paragraphs (2) and (3), shall be deemed to be deducted and withheld from the basic pay of the covered self-employed individual for purposes of subsection (c), and the covered self-employed individual shall deposit such amount in the Treasury of the United States in accordance with such subsection.”
in subsection (e)(1)(B), by striking “civilian” each place it appears.
Employer contributions— Section 8423(a) of title 5, United States Code, is amended—
in paragraph (1), in the matter preceding subparagraph (A), by inserting “, and, subject to paragraph (4), each covered non-Federal employer and each covered self-employed individual,” after “section 8422(a)”;
by redesignating paragraph (4) as paragraph (5); and
by inserting after paragraph (3) the following:
“(4)
“(A) In this paragraph—
“(i) the term additional employer percentage, with respect to a covered non-Federal employer, means 50 percent of the percentage obtained by dividing—
“(I) the amount of the annual revenue of the covered non-Federal employer that is in excess of $25,000,000; by
“(II) $75,000,000; and
“(ii) the term additional self-employed percentage, with respect to a covered self-employed individual, means 50 percent of the percentage obtained by dividing—
“(I) the amount of the basic pay of the covered self-employed individual that is in excess of $75,000; by
“(II) $50,000.
“(B) Subject to subparagraphs (D) and (E), the amount contributed to the Fund under paragraph (1) by a covered non-Federal employer shall be reduced as follows:
“(i) For a covered non-Federal employer with annual revenue of not more than $25,000,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount.
“(ii) For a covered non-Federal employer with annual revenue of more than $25,000,000 and not more than $100,000,000, the amount required to be contributed shall be the sum of—
“(I) the amount equal to 50 percent of the otherwise applicable amount; and
“(II) the amount equal to the additional employer percentage of the otherwise applicable amount.
“(C) Subject to subparagraph (E), the amount contributed to the Fund under paragraph (1) by a covered self-employed individual shall be reduced as follows:
“(i) For a covered self-employed individual with basic pay of not more than $75,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount.
“(ii) For a covered self-employed individual with basic pay of more than $75,000 and not more than $125,000, the amount required to be contributed shall be the sum of—
“(I) the amount equal to 50 percent of the otherwise applicable amount; and
“(II) the amount equal to the additional self-employed percentage of the otherwise applicable amount.
“(D) The amount of the reduction under subparagraph (B) with respect to a covered non-Federal employer shall be reduced or eliminated based on the proportion of highly compensated employees of the covered non-Federal employer, in accordance with regulations promulgated by the Secretary of Labor.
“(E)
“(i) A covered non-Federal employer may elect to have both the reduction under subparagraph (B) of this paragraph and the reduction under section 8432(c)(2)(B) not apply for any year.
“(ii) A covered self-employed individual may elect to have the reduction under subparagraph (C) of this paragraph and the reduction under section 8432(c)(2)(C) not apply for any year.”
Thrift savings plan—
Transfers treated as a separation— Section 8431(a) of title 5, United States Code, is amended by inserting “or employment at a covered non-Federal employer” after “Government employment”.
in subsection (a)—
in paragraph (1), by striking “An employee or Member” and inserting “Subject to paragraph (4), an employee or Member”; and
by adding at the end the following:
“(4) For a covered self-employed individual, the covered self-employed individual may contribute to the Thrift Savings Fund in such manner, and at such frequency, as the Secretary of Labor shall establish.”
in subsection (c)—
in paragraph (1)—
in subparagraph (A), by inserting “and each covered non-Federal employer” after “the employing agency”;
in subparagraph (C)(iii), by striking “civilian”; and
by adding at the end the following:
“(D)
“(i) A covered self-employed individual shall make contributions to the Thrift Savings Fund for the benefit of the self-employed individual in the same amount as would be contributed by a covered non-Federal employer if the self-employed individual were an employee of the covered non-Federal employer.
“(ii) The Secretary of Labor shall establish the manner and frequency with which a covered self-employed individual shall make contributions to the Thrift Savings Fund under this subparagraph.”
in paragraph (2)—
in subparagraph (A)—
by inserting “, and, subject to paragraph (4), each covered non-Federal employer and covered self-employed individual,” after “the employing agency”; and
by striking “employing agency's contribution” and inserting “contribution of the employing agency, covered non-Federal employer”; and
in subparagraph (B), in the matter preceding clause (i), by inserting “or, subject to paragraph (4), covered non-Federal employer, or covered self-employed individual” after “employing agency”; and
by adding at the end the following:
“(4)
“(A) In this paragraph—
“(i) the term additional employer percentage, with respect to a covered non-Federal employer, means 50 percent of the percentage obtained by dividing—
“(I) the amount of the annual revenue of the covered non-Federal employer that is in excess of $25,000,000; by
“(II) $75,000,000; and
“(ii) the term additional self-employed percentage, with respect to a covered self-employed individual, means 50 percent of the percentage obtained by dividing—
“(I) the amount of the basic pay of the covered self-employed individual that is in excess of $75,000; by
“(II) $50,000.
“(B) Subject to subparagraphs (D) and (E), the amount contributed to the Thrift Savings Fund under paragraphs (1) and (2) by a covered non-Federal employer shall be reduced as follows:
“(i) For a covered non-Federal employer with annual revenue of not more than $25,000,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount.
“(ii) For a covered non-Federal employer with annual revenue of more than $25,000,000 and not more than $100,000,000, the amount required to be contributed shall be the sum of—
“(I) the amount equal to 50 percent of the otherwise applicable amount; and
“(II) the amount equal to the additional employer percentage of the otherwise applicable amount.
“(C) Subject to subparagraph (E), the amount contributed to the Thrift Savings Fund under paragraphs (1) and (2) by a covered self-employed individual shall be reduced as follows:
“(i) For a covered self-employed individual with basic pay of not more than $75,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount.
“(ii) For a covered self-employed individual with basic pay of more than $75,000 and not more than $125,000, the amount required to be contributed shall be the sum of—
“(I) the amount equal to 50 percent of the otherwise applicable amount; and
“(II) the amount equal to the additional self-employed percentage of the otherwise applicable amount.
“(D) The amount of the reduction under subparagraph (B) with respect to a covered non-Federal employer shall be reduced or eliminated based on the proportion of highly compensated employees of the covered non-Federal employer, in accordance with regulations promulgated by the Secretary of Labor.
“(E)
“(i) A covered non-Federal employer may elect to have both the reduction under subparagraph (B) of this paragraph and the reduction under section 8423(a)(4)(B) not apply for any year.
“(ii) A covered self-employed individual may elect to have the reduction under subparagraph (C) of this subparagraph and the reduction under section 8423(a)(4)(C) not apply for any year.”
“(5)
“(A) The Secretary of Labor shall, at the frequency determined appropriate by the Secretary, compute the amount of the reduction in contributions by—
“(i) a covered non-Federal employer under paragraph (4) with respect to each covered non-Federal employee of the covered non-Federal employer; and
“(ii) a covered self-employed individual under paragraph (4) with respect to the covered self-employed individual.
“(B) The Secretary of the Treasury shall, in such installments as the Secretary determines appropriate, credit to the Thrift Savings Fund—
“(i) for the benefit of each covered non-Federal employee for whom the contributions by the covered non-Federal employer employing the covered non-Federal employee are reduced under paragraph (4) an amount equal to the amount of the reduction; and
“(ii) for the benefit of each covered self-employed individual for whom the contributions by the covered self-employed individual are reduced under paragraph (4) an amount equal to the amount of the reduction.”
in subsection (e)—
by inserting “(1)” before “The sums required”; and
by adding at the end the following:
“(2) The sums required to be contributed to the Thrift Savings Fund by a covered non-Federal employer or covered self-employed individual under subsection (c) for the benefit of a covered non-Federal employee or covered self-employed individual, respectively, shall be paid by the covered non-Federal employer or covered self-employed individual, respectively, in accordance with such procedures as the Secretary of the Treasury may, in consultation with the Executive Director, prescribe in regulations.”
in subsection (g)—
by inserting “or employment at a covered non-Federal employer” after “Government employment” each place it appears;
by striking “civilian service” each place it appears and inserting “creditable service as an employee or Member”; and
in paragraph (5), by inserting “or by a covered non-Federal employer” after “the Government”; and
in subsection (i)(1)(B), by striking “civilian service” and inserting “service as an employee”.
by inserting “or covered non-Federal employer” after “employing agency” each place it appears, except the second place it appears in subsection (c);
in subsection (a)—
in paragraph (1), by inserting “or covered non-Federal employer” after “such agency”; and
in paragraph (2)—
in the matter preceding subparagraph (A), by striking “an employing agency’s failure” and inserting “a failure by an employing agency or covered non-Federal employer”; and
in subparagraph (A), by inserting “or covered non-Federal employer” after “the agency”;
in subsection (b)(3), by inserting “, respectively,” before “errors”; and
in subsection (c), in the first sentence, by inserting “or paid by the covered non-Federal employer in accordance with such procedures as the Secretary of the Treasury may, in consultation with the Executive Director, prescribe in regulations” after “establishment”.
Contributions of persons who perform military service— Section 8432b of title 5, United States Code, is amended—
by inserting “or covered non-Federal employer” after “employing agency” each place it appears;
in subsection (g)(1), by inserting “or covered non-Federal employer” after “the agency”; and
in subsection (h)(1), by striking “civilian service” each place it appears and inserting “service as an employee”.
Contributions of certain persons reemployed after service with international organizations— Section 8432c of title 5, United States Code, is amended—
in subsection (c), by inserting “or covered non-Federal employer” after “the agency”; and
in subsection (e), by striking “civilian”.
by striking “Government employment” each place it appears and inserting “service that is creditable under this chapter”; and
in subsection (c)(1), by striking “Government service” and inserting “service that is creditable under this chapter”.
Rights of a widow or widower— Section 8442(b)(1) of title 5, United States Code, is amended, in the matter preceding subparagraph (A), by striking “civilian service” and inserting “service as an employee”.
Rights of a child— Section 8443(a)(1) of title 5, United States Code, is amended, in the matter preceding subparagraph (A), by striking “civilian service” and inserting “service as an employee”.
Disability retirement— Section 8451(a) of title 5, United States Code, is amended—
by striking “employee’s agency” each place it appears and inserting “agency or covered non-Federal employer employing the employee”; and
in paragraph (1)(A), by striking “civilian service” and inserting “service as an employee”.
Recovery; restoration of earning capacity— Section 8455(a)(1) of title 5, United States Code, is amended by inserting “or a covered non-Federal employer or on becoming a covered self-employed individual” after “reemployment by the Government”.
Authority of the office of personnel management— Section 8461(h)(1) of title 5, United States Code, is amended by inserting “, covered non-Federal employer, and covered self-employed individual” after “Each Government agency”.
Annuities and pay on reemployment— Section 8468 of title 5, United States Code, is amended by adding at the end the following:
“(k) This section shall not apply to an individual serving in a position as a covered non-Federal employee or who is a covered self-employed individual.”
Sec. 5 Credit for small employer and self-employed pension contributions
In general— Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36 the following new section:
“36A. Credit for small employer and self-employed pension contributions
“(a) In general—In the case of an eligible taxpayer, there shall be allowed as a credit against the tax imposed by subtitle A an amount equal to the contribution assistance amount with respect to such taxpayer for the taxable year.
“(b) Contribution assistance amount—In the case of an eligible taxpayer, for purposes of this section—
“(1) In general—The contribution assistance amount is an amount equal to the applicable percentage of the qualified pension contributions paid by the eligible taxpayer during the taxable year.
“(2) Applicable percentage—For purposes of paragraph (1), the applicable percentage is 50 percent, reduced (but not below zero) by the number of percentage points which—
“(A) in the case of an employer, bears the same ratio to 50 as the excess of—
“(i) the gross receipts of the employer for the taxable year, over
“(ii) $25,000,000, bears to
“(B) in the case of a self-employed individual, bears the same ratio to 50 as the excess of—
“(i) the income of the individual for the taxable year, over
“(ii) $75,000, bears to
“(3) Qualified pension contributions—The term qualified pension contributions means—
“(A) in the case of a covered non-Federal employer or covered self-employed individual, the contributions made by such employer or individual under sections 8423(a) and 8432(c) of title 5, United States Code,
“(B) in the case of any other employer, the nonelective contributions made by such employer to a covered retirement program (as defined in section 2 of the Pensions for All Act) on behalf of the employees of the employer, and
“(C) in the case of any other self-employed individual, the contributions made by such individual to a covered retirement program (as so defined) of the individual.
“(c) Eligible taxpayers, etc—For purposes of this section—
“(1) In general—The term eligible taxpayer means—
“(A) any covered non-Federal employer making an election under both sections 8423(a)(4)(E)(i) and 8432(c)(4)(E)(i) of title 5, United States Code not to receive a reduction in employer contributions,
“(B) any employer which is not a covered non-Federal employer,
“(C) any covered self-employed individual making an election under both sections 8423(a)(4)(E)(ii) and 8432(c)(4)(E)(ii) of title 5, United States Code not to receive a reduction in contributions, and
“(D) any self-employed individual who is not a covered self-employed individual.
“(2) Covered non-Federal employer; covered self-employed individual—The terms covered non-Federal employer and covered self-employed individual have the respective meanings given such terms by section 8401 of title 5, United States Code.
“(d) Coordination with other credits
“(1) Business credit treated as part of general business credit—In the case of an employer, the credit which (but for this paragraph) would otherwise be allowed under subsection (a) for any taxable year shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).
“(2) Denial of double benefit—No deduction or credit shall be allowed under any other section of this title with respect to contributions to a plan (including the Federal Employees Retirement System under chapter 84 of title 5, United States Code) if credit is allowable with respect to such contributions under subsection (a) (determined without regard to this subsection).”
Employer credit To be part of general business credit— Subsection (b) of section 38 of the Internal Revenue Code of 1986 is amended by striking “plus” at the end of paragraph (40), by striking the period at the end of paragraph (41) and inserting “, plus”, and by adding at the end the following new paragraph:
“(42) in the case of an eligible taxpayer (as defined in section 36A(c)), the portion of the credit for small employer and self-employed pension contributions to which section 36A(d)(1) applies.”
Conforming amendment— Section 6211(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting “, 36A” after “36”.
Clerical amendment— The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36 the following new item:
Effective date— The amendments made by this section shall apply to contributions made after the date of the enactment of this Act.
Sec. 6 Failure to provide covered retirement program
In general— Chapter 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
“4980J. Failure to maintain required retirement program
“(a) General rule
“(1) Employers—There is hereby imposed a tax on the failure of an employer either—
“(A) to make available a covered retirement program to all employees of the employer, or
“(B) in the case of a covered employer, to make required contributions under sections 8423(a) and 8432(c) of title 5, United States Code with respect to the employees of the employer.
“(2) Self-employed individuals—There is hereby imposed a tax on the failure of a self-employed individual either—
“(A) to participate in a covered retirement program, or
“(B) in the case of a covered self-employed individual, to make required contributions under sections 8423(a) and 8432(c) of title 5, United States Code with respect to the individual.
“(b) Amount of tax
“(1) In general—The amount of the tax imposed by subsection (a) on any failure with respect to an employee or self-employed individual shall be $10 for each day in the noncompliance period with respect to such failure.
“(2) Noncompliance period—For purposes of this section, the term noncompliance period means, with respect to any failure, the period—
“(A) beginning on the date such failure first occurs, and
“(B) ending on the earlier of—
“(i) the date such failure is corrected, or
“(ii) with respect to any employer, the date that is 3 months after the last date on which the employee is employed by the employer.
“(3) Adjustment for inflation
“(A) In general—In the case of any failure occurring in a calendar year beginning after 2026, the $10 amount under paragraph (1) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting “calendar year 2025” for “calendar year 2016” in subparagraph (A)(ii) thereof.
“(B) Rounding—If any amount adjusted under subparagraph (A) is not a whole dollar amount, such amount shall be rounded to the nearest whole dollar amount.
“(c) Limitations on amount of tax
“(1) Tax not to apply where failure not discovered exercising reasonable diligence—No tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Secretary that none of the persons referred to in subsection (d) knew, nor exercising reasonable diligence would have known, that such failure existed.
“(2) Overall limitation for unintentional failures—In the case of failures which are due to reasonable cause and not to willful neglect—
“(A) General rule—The tax imposed by subsection (a) for failures during the taxable year of the employer or self-employed individual shall not exceed $500,000.
“(B) Taxable years in the case of certain controlled groups—For purposes of this subparagraph, if not all persons who are treated as a single employer for purposes of this section have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561.
“(3) Waiver by Secretary—In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive relative to the failure involved.
“(d) Employer liability for tax—The employer shall be liable for the tax imposed by subsection (a)(1) on a failure. All employers, determined without regard to subsection (e)(2), shall be jointly and severally liable for the liability of any other employer with which they are aggregated under subsection (e)(2).
“(e) Definitions—For purposes of this section—
“(1) Terms relating to covered retirement programs, etc—Any term used in this section which is defined in section 2 of the Pensions for All Act has the meaning given such term by such section.
“(2) Employer—All employers treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer.”
Clerical amendment— The table of sections for chapter 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Effective date— The amendments made by this section shall apply to plan years beginning after December 31, 2025.
Sec. 7 Prohibition on the reduction of compensation
An employer that employs an employee on or before the date of enactment of this Act may not reduce any form of compensation provided to the employee due to the requirement imposed by this Act that the employee be enrolled in a covered retirement program or FERS.