Retirement Security for All
Retirement in the United States is in crisis. Many of us can feel the American Dream slipping away. Our ability as a nation to sustain our economy at a time when a record number of workers are entering their retirement years should be an important part of our national debate. Retirement security for all should be a national priority. To accomplish that, we need to propose and develop new and innovative solutions.
First, the facts:
- Until the 1980s pensions were common and workers knew that with Social Security, their own savings including 401(k)s, and a pension, they could retire with dignity.
- Today, there’s somewhere betwee a $4-8 trillion retirement savings deficit.
- Over the next 10 to 15 years, the bulk of the 75 million baby boomers will be of retirement age – giving the U.S. the largest over-65 population in its history.
- For the last 100 years public pensions have proven to be the most cost-effective vehicles for both taxpayers and pensioners to ensure a safe retirement. When properly funded by legislatures and employee contributions, these pensions are a model of how retirement policy can work at the national level.
Why does this matter? We believe retirement security for ALL Americans lies in a partnership between the public and private sectors. What works for some should work for all.
What's Our Answer?
The Secure Choice Pension (SCP) is envisioned as a public-private partnership to provide retirement security for American workers, particularly those who work for small businesses, and who don't currently have a defined benefit pension. The concept is that the states - individually, or possibly in groups - would enact legislation to establish a state or regional SCP plan. Participation in the SCP would be voluntary. Contributions to the SCP would come ideally from both employers and employees. For participating employers, administrative and fiduciary duties would be largely removed and placed upon the board of trustees. Their only real obligation would be to make the employer's contribution. While each SCP participating employee would have an individual participant account, all contributions to the SCP would be pooled for investment purposes to achieve economies of scale and to negotiate lower fees from investment firms that the SCP board would hire. At retirement, employees participating in a SCP would have their accounts converted to an annuity and be guaranteed an income for life - an income immune to stock market fluctuations and sudden economic downturns.