The heart of his plan is a new system of privately run pension plans, which requires that individuals who are not covered by an employer-sponsored retirement plan be automatically enrolled in regulated, privately run retirement funds. This concerns David John, senior research fellow at the Heritage Foundation.
“We’re delighted the senator is looking at the issue,” he told PLANADVISER. “At the same time, it has some fairly significant weaknesses compared to some of the other proposals that are out there. The problems that we’ve got with it include the fact that it appears the senator is creating a large central pension plan that will directly compete with many of the existing plans.”
Others see the plan as a solution for the retirement savings crisis.
“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,” said Karen Friedman, the Pension Rights Center’s executive vice president and policy director. “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 is available here.
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,” Friedman said. “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.”