WASHINGTON, DC – U.S. Senator Pat Roberts (R-Kan.) today discussed the importance of Employee Stock Ownership Plans (ESOPs) during a Senate Finance Committee hearing titled, “Challenges in the Retirement System.” Earlier this year, Sen. Roberts introduced legislation that would encourage retirement savings by fostering the growth of S corporations that are owned by ESOPs.

Through changes to the tax code and educational outreach to companies, the bipartisan Promotion and Expansion of Private Employee Ownership Act would eliminate barriers that businesses and their owners currently face in establishing a new S corporation ESOPs or expanding the employee-ownership stake in an S corporation.

Below are Sen. Roberts’ remarks as prepared for delivery:

“Retirement security is an important topic, and is one where I think there is quite a bit of bipartisan agreement. One proposal that I believe will help improve the retirement picture for Americans, which Senator Cardin and I have introduced for the last three congresses, is the Promotion and Expansion of Private Employee Ownership Act. Our bill would encourage the formation of S-Corporation Employee Stock Ownership Plans, of which we are both big believers, by adding a tax incentive already available to C-Corporation ESOPs, and through creating an office at the Treasury Department to provide technical assistance to S-ESOPs. Industry estimates place the number of employee stock ownership plans at more than 6,500 with more than 14 million participants.”

The Promotion and Expansion of Private Employee Ownership Act also provides an important protection for small businesses by ensuring that they continue to qualify for Small Business Administration (SBA) loans, contracting assistance, or business development programs after they are converted to ESOPs. The technical change in the law allows the business to maintain its status as minority-owned, woman-owned, veteran-owned, or otherwise qualify for specific programs within SBA that are dependent on the nature of the ownership.