The proposed Secure Choice Pension (SCP) is aimed at enhancing retirement security in the private sector by providing workers who are not in a pension plan with a guaranteed, lifetime retirement income that would be immune to stock market fluctuations and economic downturns. The plan would provide the flexibility and portability that a mobile private work force needs, while spreading investment risks and costs over large pools of plan participants and employers, according to a press release.
“What we are proposing is a new alternative, a modification of the cash balance pension model, to address the retirement security crisis that faces the private sector,” Kim said in the announcement. “The SCP would be a public-private enterprise – a partnership between the private sector and public sector to provide lifetime retirement security for all.”
As envisioned by NCPERS, each state would establish its own SCP, to be administered by a board of trustees made up of public and private representatives. Private sector employers would join an SCP, allowing their employees to participate in that SCP. Both the participating employers and employees would make regular contributions to the SCP.
SCPs would give participants the benefits of lower costs, because of the efficiencies and economies of scale available to large pension plans. It would also give private sector participants the benefits of higher returns because SCP assets would be pooled and managed by professionals.
At retirement, the SCP would provide participants with a guaranteed pension payment for life, with an opportunity for increased payments in good economic times. Plan participants would enjoy a guaranteed minimum retirement income, but the SCP’s trustees would be able to declare a “dividend” during a strong economy that would increase that benefit.NCPERS’ full proposal for the Secure Choice Plan is available at http://www.retirementsecurityforall.org.