Forbes: Economics professor says new pension bill is ‘not enough’

The Securing a Strong Retirement Act of 2021, also known as “SECURE” or “SECURE 2.0”, recently passed the US House of Representatives with an overwhelming majority of 414 to 5 votes. The new bill introduces several changes to employer-funded pension plans, including setting up automatic enrollment of employees in certain plans and increasing the age at which participants must receive mandatory payouts.

According to Teresa Ghilarducci, a labor economist and pension security expert at The New School in New York City, this will likely help with future problems related to Americans’ generally under-retirement savings, but it doesn’t go far enough to address several root issues.

Ghilarducci praised the act of bipartisanship in the House of Representatives, calling the law a “first step” in pension reform, but said the new legislation just doesn’t go far enough.

“What do you need from a pension system?” she asks rhetorically. “You have to save consistently; You need enough money in this plan; You need that money well spent at low fees; and you need the money for life. SECURE 2.0 offers you none of that. But SECURE 2.0 is a first step — specifically, auto-enrollment and auto-escalation, all to get people to save long-term, for the long haul.”

It is well known that many Americans fear for their ability to support themselves in retirement. Ghilarducci cites several statistics that support this point.

“82% of American voters believe retirement security is a problem for the country, according to the Economic Innovation Group’s (EIG) Retirement Security and Wealth Attitudes National Voter Survey, which also found that 91% of voters agree that all working Americans who do this should have the opportunity to participate in a retirement plan,” she says. “The fear is justified.”

According to data from the Employee Benefit Research Institute (EBRI), up to 41% of retired households are projected to face funding shortfalls, she says. Additionally, retirement security is less achievable for Americans who make less money during their careers, including those without college degrees, women and people of color, based on data from the Bipartisan Policy Center (BPC).

“As the House of Representatives recognizes that retirement planning is a pressing national concern in passing SECURE 2.0, and the Senate is likely to pass accompanying legislation this summer, I urge Congress to build on that legislation with an instrument that will support both the… would complement the current private pension system as well as the proposed SECURE 2.0 legislative package,” she says.

Both she and Kevin Hassett, a former senior advisor and chair of the Council of Economic Advisers in the Trump administration, have collaborated on a plan published by the Economic Innovation Group (EIG) that “professionally managed most people without pension plans accessing the same Options in the Federal Thrift Savings Plan (TSP) – the retirement savings plan offered to government employees and congressmen that provides a government supplement to their contributions.”

Ghilarducci has previously detailed her perspective on reverse mortgage products for RMD.

Read the column at Forbes.

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