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Pension Reform: Beyond the 401(k)…

Pension Reform: Beyond the 401(k)…. Teresa Ghilarducci Irene and Bernard Schwartz Professor of Economics New School for Social Research “Beyond the 401(k) Project” – funded by the Rockefeller Foundation (with assistance from, Daniela Arias, Eloy Fisher, Bridget Fisher, Robbie

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Pension Reform: Beyond the 401(k)…

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  1. Pension Reform: Beyond the 401(k)… Teresa Ghilarducci Irene and Bernard Schwartz Professor of Economics New School for Social Research “Beyond the 401(k) Project” – fundedby the Rockefeller Foundation (with assistance from, Daniela Arias, Eloy Fisher, Bridget Fisher, Robbie Hiltonsmith, David Stubbs)

  2. Peoplewantto head for a saferetirement, butweneedtohelpthemgetthere…

  3. Employerpensions are failing…[Munnell (2006); Butrica, Iams & Smith (2003)]

  4. Peoplewant a retirementsolution… • 83% saygovernmentshouldguaranteepensions. • 81% saygovernmentshouldguaranteehealthcare. • 78% saygovernmentshouldraiseminimumwage.

  5. Expensivepension subsidies are failing…

  6. TaxExpenditures can bemadeEffective, Efficient and Fair 6% of taxpayers get 50% of all tax subsidies !!! Current system 401(k)’s tax breaks exceed savings !!!

  7. Whatisthesolution? GuaranteedPensions • 5% of pay is split evenly between the employer and employee. • Everyone gets a $600 tax credit which is adjusted for inflation CONTRIBUTIONS

  8. Whatisthesolution? GuaranteedPensions • Professional Board invests the money in private markets managed by a Guaranteed Retirement Fund. • The guarantee will be revenue-neutral. INVESTMENTS

  9. Whatisthesolution? GuaranteedPensions • GRA’s will provide a yearly payout to the individual adjusted for inflation. • The accumulated funds cannot be withdrawn before retirement. PAYOUT AT RETIREMENT

  10. Whatisthesolution? GuaranteedPensions SAFE AND SECURE RETIREMENT

  11. Retirement Security Under a GuaranteedRetirementAccount(Source: http://www.sharedprosperity.org/bp204/bp204.pdf)

  12. Everybody wins! • Workers with Pensions and 401(k)’s • Wall Street Firms • Private Employers with Pensions and 401(k)’s. • Public Employers with Pensions in Crises. • Workers without Pensions.

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