Two senators have launched a bipartisan effort to provide greater flexibility and access to small business employers and employees seeking to save for retirement.

The SIMPLE Plan Modernization Act, introduced last week by Sens. Susan Collins (R-Me.) and Mark Warner (D-Va.), would increase the contribution limit for SIMPLE plans and reduce paperwork. The Savings Incentive Match Plan (SIMPLE) retirement plans were first introduced by Congress for businesses with 100 or fewer employees in the Small Business Job Protection Act of 1996.

The bill’s sponsors say that increasing the limit would achieve two basic goals: Encourage more small business employers to offer a retirement savings benefit to their employees, and allow small business employees to save even more each year on a tax-deferred basis.

The new bill would raise the contribution limit for SIMPLE plans from $12,500 to $15,500 for the smallest businesses (those with one to 25 employees) along with an increase in the catch-up limit from $3,000 to $4,500.

“In my home state, the vast majority of businesses are eligible to sign their employees up for SIMPLE plans,” Collins said in a statement.

“Financial advisers from Presque Isle to Portland have shared their concerns that neither employees nor their employers are in a good position to save for retirement. We must give small businesses and employees a better opportunity to save for retirement, and this legislation will provide such an opportunity,” Collins said.

The legislation would also give businesses with 26 to 100 employees the option of the higher limits. Should they move to the higher limits, however, it would increase their SIMPLE plan mandatory employer contribution requirements by one percentage point in order to continue to encourage them to transition to 401(k)s when they can do so.

The bill also allows for a reasonable transition period for employers who hire more than 25 employees. It would also make the limit increases unavailable if the employer has had another defined contribution plan in the past three years.

To reduce red tape, the bill would modernize SIMPLE plan form filing requirements and modify the transition rules from SIMPLE plans to traditional plans to facilitate and encourage such transactions.

Finally, the bill would direct Congress to study the use of SIMPLE plans and report to Congress on such use, along with any recommendations.