The United States is facing a growing retirement crisis: the retirement income deficit - i.e., the difference between what people have saved for retirement and what they should have at this point - is at least $6.6 trillion. Today, 75 million working Americans do not have a retirement plan and half of all Americans have less than $10,000 in savings. Only one in five people has a defined-benefit pension plan, and half of workers have no plan at all.
To tackle this growing retirement crisis, Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Tom Harkin recently introduced the Universal, Secure, and Adaptable (USA) Retirement Funds Act. This major legislative initiative tackles the growing retirement crisis and aims to rebuild the private pension system. Harkin's legislation would create a new type of privately-run retirement plan that combines the advantages of traditional pensions?including lifetime income benefits and pooled, professional management?with the portability and ease for employers of a 401(k).
There is strong public support for reforming the retirement system. A recent study by the National Institute for Retirement Security found a majority of Americans agree there is a need for a strong, universal pension system, and 90 percent favor a plan that is available to all Americans, is portable, and provides a monthly check throughout retirement.
What Are Some of the Key Features of USA Retirement Funds?
- Universal Coverage: USA Retirement Funds would be available to everyone, including the more than 61 million people without access to a workplace retirement plan and the 14.5 million people who are self-employed.
- Automatic Enrollment: Employees would be automatically enrolled at a rate of 6 percent per year, but could choose to raise, lower, or stop their contributions.
- Secure Lifetime Income: Benefits would be paid monthly for life, and participants would be shielded from market volatility and other risks.
- Lower Costs: Pooled, professional management and risk sharing will reduce the cost of retirement by up to 50 percent.
- Portability: People would be able to take their benefit with them as they change employers.
- Simple and Easy for Businesses: Small businesses can easily participate and would not have to take on risk or undue administrative burden.
How Would USA Retirement Funds Address the Retirement Crisis?
USA Retirement Funds address the retirement crisis by ensuring that the 75 million working people without a retirement plan - including 61 million without access to a workplace plan and 14.5 million self-employed workers - would, for the first time, have the opportunity to earn a safe and secure pension benefit. USA Retirement Funds would drastically increase the retirement savings through automatic enrollment while reducing the cost of retirement by up to 50 percent. Together with Senator Harkin's Strengthening Social Security Act (S.567), USA Retirement Funds would put our country on a path toward restoring the "three-legged stool" of retirement security and ensure that every American has a pension, Social Security, and the opportunity to save.
Why Are USA Retirement Funds Good For Business?
USA Retirement Funds would be good for business because they would make it easy for employers - especially small business owners - to offer quality retirement benefits. Current retirement plans make employers responsible and liable for all of the management and administration of the plan. USA Retirement Funds would relieve employers of that burden because the funds would be run by an independent board of trustees. All employers would have to do is help their employees enroll and send along employee contributions. Employers could make voluntary contributions if they want.
Why Are USA Retirement Funds Good For The Economy?
USA Retirement Funds will help millions of people save for retirement. All of that new savings will be invested into the economy, creating growth and new jobs. Because the funds are long-term investors, they would be able to provide much needed "patient capital" for entrepreneurs and innovators.
More information on the bill can be found in the Bill Snapshot, Bill Summary, and FAQ.
Widespread Support for the USA Retirement Funds Act
The USA Retirement Funds Act has garnered support from a broad range of advocates and experts, including: the Service Employees International Union (SEIU); Center for American Progress; Economic Policy Institute; National Council of La Raza; Robert B. Reich, former Secretary of Labor; Denise Bowyer, Vice President of American Income Life and board member of the American Sustainable Business Council Action Fund; Pension Rights Center; National Hispanic Council on Aging; Latinos for a Secure Retirement; Latinos for a Secure Retirement; National Retiree Legislative Network; Alliance for Retirement Americans; United Auto Workers; National Institute on Retirement Security; National Conference on Public Employee Retirement Systems; National Council on Teacher Retirement; Wider Opportunities for Women; and Jobs with Justice.
For more information, please contact Kate Cyrul Frischmann ( Kate_Frischmann@harkin.) or Allison Preiss ( Allison_Preiss@help.senate.).
###
