WASHINGTON, D.C.—Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the following statement today in response to a new report from the Center for American Progress (CAP). The report showed that providing universal access to hybrid retirement plans - like Harkin’s USA Retirement Funds - would contribute to a more secure retirement for Americans by reducing both risk and costs, especially when compared to traditional plans like 401(k)s and Individual Retirement Accounts (IRAs).
"We are facing a retirement crisis. Half of Americans have less than $10,000 in savings and the retirement income deficit is $6.6 trillion and growing,” said Harkin. “At the heart of the American Dream is that promise that if you work hard and play by the rules, you will be able to enjoy your golden years with dignity and financial independence. But today, only half of the workforce has access to a retirement plan through their employer, and those that have anything at all are likely to only have a 401(k). We can do better – as this report illustrates. My USA Retirement Funds proposal would ensure that everyone has the opportunity to earn a safe and secure pension benefit that they cannot outlive while reducing the burden on employers."
The CAP report released today studied the personal retirement savings plans used by most Americans – such as 401(k)s and IRAs – and the ways they can be improved by reducing the unnecessary costs and risks associated with each. The report offers two alternatives that combine the best elements of each: the USA Retirement Funds proposal, which was first announced by Chairman Harkin in July 2012, as well as CAP’s Secure, Accessible, Flexible, and Efficient (SAFE) Retirement Plan. As the report noted, giving workers and retirees the option to enroll in a model similar to the ones offered by CAP and Harkin “could provide a more secure retirement at a far lower cost.”
USA Retirement Funds would combine the advantages of traditional pensions – including lifetime income benefits and pooled, professional management – with the portability of a 401(k). The result is that middle-class families will be able to earn secure retirement benefits that they take with them as they change jobs. The plan would also make it simple for employers to offer a true pension benefit without having to take on all of the risk and administrative burden.