RESET RETIREMENT: SOLUTIONS FOR THE 21ST CENTURY
The Economic Policy Institute, American Federation of Teachers, and The New School Retirement Equity Lab hosted an event in the historic Kennedy Caucus Room of the Russell Senate Office Building on June 14th with a panel on Guaranteed Retirement Accounts (“GRAs”).
Kathleen Kennedy Townsend opened the event and introduced the panel: Randi Weingarten, President, American Federation of Teachers; Tony James, Executive Chairman, Blackstone; Co-author, “Rescuing Retirement;” Chad Bolt, Legislative Assistant, U. S. Senator Sherrod Brown; and Doug Calidas, Deputy Legislative Director, U. S. Senator Amy Klobuchar. The moderator was Caroline Atkinson, Senior Advisor, Rock Creek, former Deputy National Security Advisor for International Economics, White House. Teresa Ghilarducci, Professor at the New School and co-author of “Rescuing Retirement” was also in attendance and made the closing remarks.
Rescuing Retirement, co-authored by Teresa Ghilarducci and Tony James, published in 2018 proposes a solution to the growing retirement crisis in the United States. The book explains the crisis, the causes and effects, and a “Four-Pronged Solution” to “Rescuing Retirement.”
H. R. 2120 was introduced in the House of Representatives in April, 2019 by Representatives Scott Peters, Lucy McBath, and Lisa Blunt Rochester titled “The Saving for the Future Act” to establish a minimum employer contribution to a savings plan of 50 cents per hour worked and workers are automatically enrolled to contribute 4% of their own earnings. Read details of the bill.
Senators Chris Coons and Amy Klobuchar support this bill and wrote a piece on Saving for the Future.
The Economic Policy Institute has prepared several papers on this topic which can be found on their website. They include a primer on GRAs.
The proposition presented at this event was for a Federally mandated program that requires employers and employees to each contribute a proposed minimum of one and one half percent of salary to GRAs. The GRAs are described as a hybrid of defined contribution and defined benefit plans with allowances for limited cash withdrawals, thus avoiding some of the problems that have occurred in existing defined contribution plans. Under H. R. 2120, individuals would have the option to place their contributions with the Thrift Savings Plan or their home state retirement funds.
The panel discussed the importance of solving the pension crisis in the United States and their reasons for supporting this proposal. The panel stated that Social Security will not be affected. A question and answer period followed with many concerns regarding the ability to provide a “guaranteed” pension. There were also statements made by attendees who want to see more attention paid to saving defined benefit pension plans. Panel members acknowledged the need for continued support for defined benefit pension plans but the consensus was that in reality that ship has sailed and a viable alternative will be critical for the future of an ever aging, long-lived population. It seems the devil will be in the details.