Today the Pension Rights Center applauded Senator Tom Harkin, chairman of the Senate Health, Education, Labor, and Pensions Committee, for his new report, The Retirement Crisis and a Plan to Solve It.
“Senator Harkin’s bold report identifies the causes of the retirement crisis and proposes imaginative and realistic solutions to the address the crisis,” said Karen Friedman, the Center’s executive vice president and policy director. “The report makes a compelling case for a new private retirement system that would provide a meaningful supplement to Social Security for the millions of employees whose employers do not offer pensions or retirement savings plans. The report also makes common-sense recommendations for strengthening Social Security, the foundation of our nation’s retirement system. Together, these measures would help ensure that all Americans can retire with security and dignity.”
The report outlines four principles for reforming the private pension system: universality, security, shared responsibility, and professional management of pooled assets. These principles are consistent with the principles for a new retirement system developed by Retirement USA, an initiative for a new universal, secure and adequate retirement system on top of Social Security coordinated by the Pension Rights Center.
The Senator’s proposal for USA Retirement Funds, a new system of privately-run pension plans, requires that individuals who are not covered by an employer-sponsored retirement plan be automatically enrolled in regulated privately-run retirement funds, in which
- Contributions by both employees and employers are pooled and professionally invested;
- Lifetime benefits are paid out at retirement age;
- Investment and life-expectancy risks would be shared by employees and retirees; and
- The administrative burden on employers would be limited to ensuring that contributions are transmitted to the funds.
The report also includes suggestions to strengthen Social Security in three key ways:
- Providing improved benefits for all retirees, particularly workers with very low lifetime earnings;
- Using a more accurate method for calculating cost-of-living adjustments to better help retirees weather inflation and increases in health care costs; and
- Strengthening the program’s finances by phasing out the provisions that allow high-income employees to avoid making payroll tax contributions on all of their wages.
“The Pension Rights Center salutes Senator Harkin for his vision, creativity, and courage,” continued Friedman. “We urge the Senator’s colleagues on both sides of the aisle and in both Houses of Congress to read this report, join the discussion, and work with the Senator to solve the retirement crisis.”