More on the USA Retirement Funds

Last updated on: August 16, 2016 at 9:47 am by Jane the Actuary

More on the USA Retirement Funds 2016-08-16T09:47:03-06:00 Jane the Actuary

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So I blogged about the USA Retirement Fund proposal yesterday. And for more information, here’s the link to the HELP committee news release, which itself links to summaries and FAQs about the proposal.

Really, I think this is, on the whole, a sound proposal. The idea is that, except for extremely small employers, everyone who doesn’t otherwise have a defined benefit pension, or a defined contribution pension with a lifetime income option, is to be autoenrolled in a pooled retirement fund, which will provide professional fund management and a semi-variable annuity at retirement.

Is this forced savings? No. Anyone who chooses can opt out.

Is this another big government intervention? No, these are private plans, intended to be sponsored by associations, non-profits, even financial institutions themselves (e.g., annuity providers or benefits outsourcing firms).

Is this another burdensome mandate on employers? No. The only mandate is to enable payroll deduction; there is no required employer contribution.

Is there a risk of more government bail-outs? No, there is no mechanism built into this legislation for bailing out a plan; the intention is that plans are managed carefully but in extreme events benefits will be cut.

Is it perfect? No. It has a really cheesy name, to begin with. And it doesn’t acknowledge that Social Security’s progressive benefit structure means that people’s savings needs differ. The legislation also seriously punts on the funding requirements, legislating that a bipartisan commission will set regulations around how determinations are made about whether benefits need to be reduced or may be increased with investment experience.

But this proposal has pretty much just gone out into the void . . . a google search for “USA Retirement Fund” has so few results (and a large number of these referring to earlier versions) that my own post from yesterday is on the 2nd page of results. There’s a USA Today article, and a MoneyWatch one, but not much else.

Why no news coverage? Is the plan so doomed that no one is bothering talking about it? Or is this some devious political strategy in which there’s general bipartisan agreement but no one wants anyone to get upset by noticing this?

So that leaves me trying to figure out how to do something — in my capacity as Jane the Actuary, or in my actual professional capacity — because we, as a country, do need something like this. Sure, Andrew Biggs likes to say that there is no crisis, and everyone’s doing just fine, but we’re headed into uncharted territory, as defined benefit pensions are disappearing, but the current generation of retirees and near-retirees is not affected in nearly the same way as future generations, due to grandfathering provisions. (I called it the “other other pension crisis” back in the fall, when state/local pensions were labelled as the “other pension crisis.”)

And my first thought was that I’d go onto the comments and blogs where this plan is being written about and talk it up. . . but that doesn’t exactly work if NOBODY’S TALKING ABOUT IT! Time to think about a Plan B, I guess.

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The "USA Retirement Funds" Act

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