Pension Plans for Everyone?
About one-third of U.S. private-sector workers lack access to workplace retirement plans. Roughly half of U.S. households risk taking a cut to their standard of living in retirement.
Last week, U.S. Reps. Terri Sewell and Lloyd Smucker introduced H.R. 9462, the Retirement Savings for Americans Act, a bipartisan, bicameral bill that addresses those issues. The bill follows similar legislation proposed in the senate by John Hickenlooper and Thom Tillis in mid-October.
Stripped of the self-congratulatory and somewhat condescending rhetoric from both sides of the aisle, the bill proposes:
Automatic Eligibility and Automatic Enrollment: With an opt-out option for those who choose to exercise it.
Federal Matching Contributions: An income limited 1% Federal contribution employed) and up to a 4% matching contribution via a refundable federal tax credit.
Portability and Private Asset Ownership: Accounts would be the property of the worker and the assets could be passed down to future generations to help them build wealth and financial security.
Investment Options: A menu of low-fee investment options to choose from, including lifecycle funds tied to a worker’s estimated retirement date, or index funds made of stocks and bonds.
Both the House and Senate versions of the bill make employers responsible for implementing the plans, enrollment, withholding, and remitting funds.
The funds themselves will be overseen by a Presidentially appointed and Senate confirmed Board, supported by an Advisory Board, and assisted by Board appointed Money Managers.
It's all a bit vague at the moment, but here is a scary thought - a massive pension system overseen by political appointees and financial industry honchos. What could possibly go wrong with that? For now, we'll just wait and see.