Insights Blog

Bipartisan Policy Committee Releases Retirement Recommendations

June 21, 2016

Without changes to our failed system, a growing number of Americans will ride a wave of insufficient savings to deprivation in their old age.

More than half of American households who are near retirement have less than $12,000 saved. The number of 65-year-olds per year who are poor or near poor between 2013 and 2022 will increase by 146%.

A recent report by the Bipartisan Policy Center's (BPC) Commission on Retirement Security and Personal Savings takes the first steps toward reform by recognizing the principles necessary to create effective retirement savings vehicles. The Commission's call for Retirement Security Plans to pool resources and decrease administrative burdens supports the need for economies of scale and universal access. The call to expand myRA and create a nationwide minimum-coverage standard supports the need for mandated participation and a shared responsibility between employers and employees. The call for a lifelong income plan supports the need for annuities to ensure seniors don't outlive their savings.

state image"Growing inequality has made retirement increasingly available to only a few," said Commission member and SCEPA Director Teresa Ghilarducci. "We need a federal plan that serves everyone. With 27 states actively pursuing retirement reform, these leaders have made it clear that the political will for change exists. Historically, we have relied on state innovation to spur federal action. As with Social Security and healthcare (see image), this report recognizes that federal legislation is necessary to provide employers and employees consistency and portability across states.

The Commission recognizes the failure of our current system and sets us on the right path to reform. However, it does not claim these recommendations, even if fully implemented, will solve the retirement crisis."

Ghilarducci stressed that she looks forward to taking the next steps toward comprehensive reform through supporting Guaranteed Retirement Accounts (GRAs). A joint policy proposal issued with Hamilton "Tony" James of Blackstone (from the diverse backgrounds of academia and investment banking), GRAs would provide savings accounts that advance the same principles in the Commission's report. By creating individual accounts on top of Social Security with mandated contributions from both employers and employees, these accounts would pool investments, guarantee a return, and provide lifelong annuity payments.

The report also put forward reform measures for Social Security. Ghilarducci joined with fellow commissioner Alan Reuther to discuss their disagreement with some of the recommended policies on Huffington Post in a blog titled, "A Better Way to Fix to Social Security." 

About SCEPA

SCEPA works to focus the public economics debate on the role government can and should play in the real productive economy - that of business, management, and labor - to raise living standards, create economic security, and attain full employment.