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Beyond 401(k)s: Guaranteeing Secure Retirement
A Project of SCEPA, Demos, and the Economic Policy Institute
With support from the Rockefeller Foundation and in collaboration with Demos and EPI, SCEPA is working to lay the groundwork for a broad coalition in support of a safe and secure retirement for all Americans.
Project Overview
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 working to meet this need by developing and advancing a powerful reform idea—Guaranteed Retirement Accounts (GRAs). The project is led by Dr. Teresa Ghilarducci, director of SCEPA and one of the nation’s leading retirement policy experts. Along with the SCEPA researchers, she is working with Demos’ Economic Opportunity Program and the Economic Policy Institute (EPI) to promote GRA-based pension reforms on Capitol Hill and beyond.
Together, this team is building a coalition of diverse groups negatively impacted 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 is building bridges among academics, pension regulators, and federal policymakers. We are reaching out to these communities through targeted meetings, reports, media outreach, events, and research—deployed in combinations appropriate to each audience.
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