Making Retirement Work Project
Project Description:
The Rockefeller Foundation’s Campaign for American Workers is supporting innovative work to develop “innovative products and policies to increase economic security within the U.S. workforce, particularly among poor and vulnerable workers.” The Foundation has recognized that one of the most critical problems facing the workforce is the inadequate provision of retirement security. The Schwartz Center for Economic Policy Analysis (SCEPA) is poised to help solve this problem by advancing policies that will enable all workers to invest regularly for their retirement, including changing tax incentives and subsidies so that all workers have access to the efficient and professional pension institutions available to public sector employees, college professors, and some private sector employees.
Many analysts have invoked a “three-legged stool” in describing the ideal structure of a retiree’s income—with legs represented by Social Security, personal savings, and employer based pension plans. But that metaphor only describes the reality for the highest income retirees. By contrast, most middle-class retirees depend on a “pyramid” model: Social Security is the base since it represents the bulk of the individual’s retirement support; employer pensions form a smaller, middle tier just above it; and personal savings occupy an even smaller tier at the top. In recent years, the employer pension layer has eroded as employers reduce or eliminate defined-benefit (DB) pension plans. And it is increasingly clear that defined-contribution plans, principally individual 401(k) plans, cannot fill the gap, even as the already sizeable public tax subsidy for such plans continues to increase, adding to the growing federal deficit.
A major new policy approach is needed—one that can efficiently provide safe and secure retirement to all American workers. SCEPA is proposing to meet this need by developing and advancing a powerful reform idea—Guaranteed Retirement Accounts (GRAs). The proposed project will be led by Dr. Teresa Ghilarducci, Director of SCEPA and one of the nation’s leading retirement policy experts. She will work with Demos’ Economic Opportunity Program and the Economic Policy Institute (EPI) to promote GRA-based pension reforms on Capitol Hill and beyond.
With support from the Rockefeller Foundation and in collaboration with Demos and EPI, SCEPA will lay the groundwork for a broad coalition in support of GRAs. This coalition will consist of diverse groups harmed by the transformation of the employer pension system into a system of individual financial accounts—including institutional money managers, employers, taxpayers, and workers. At the same time, this project will build bridges among academics, pension regulators, federal policymakers, and a variety of media outlets. We will reach these communities through targeted meetings, reports, press releases, events, and research—deployed in combinations appropriate to each audience.
Project Team Members:
Teresa Ghilarducci, Professor of Economics and Director of the Schwartz
Center for Economic Policy Analysis, The New School for Social Research
Nancy Cauthen, Director of the Economic Opportunity Program at Demos
Daniela Arias, PhD Student and Research Assistant, Schwartz Center for Economic Policy Analysis, The New School for Social Research
Eloy Fisher, PhD Student and Research Assistant, Schwartz Center for Economic Policy Analysis, The New School for Social Research
David Stubbs, PhD Student and Research Assistant, Schwartz Center for Economic Policy Analysis, The New School for Social Research
Project Information
GAO Report
Teresa Ghilarducci's GRA's are referenced in the GAO report as an alternative approach to retirement security.
Toward Retirement Income Security
GRAs described in EPI briefing paper.
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