Congress needs to protect employees' retirement plans
Proposed legislation on pension reform now before Congress may end up driving workers out of traditional defined benefit retirement plans that give retirees the comfort of knowing exactly how much they will have to live on after retirement. As select members of the House and Senate consider these reforms in conference committees in the coming weeks, they should step back to consider the benefits of comprehensive pension reform.
The proposed legislation now under debate would give employers security to switch their company pension plans towards defined contribution plans, under which employees set aside their own money (sometimes with employers matching those amounts) for retirement in managed 401(k) funds, or in so called cash balance plans, which combine aspects of defined benefit and defined contribution plans.
Defined benefit plans, however, have worked for millions of American retirees in the past, and can continue to do so. The Center for American Progress on Friday, May 19 will publish a detailed report on how this country can defend and expand defined benefit plans for those American workers who want such retirement security.
Many Americans, however, rely on investing their own earnings in defined contribution 401(k) and Individual Retirement Accounts, and will continue to do so. During the debate over Social Security "reform" back in 2004, the Center for American Progress proposed a plan that would strengthen Social Security through an expanded Universal 401(k) program for all Americans. That plan is as germane today as it was two years ago.
Progressives and conservatives alike should support serious efforts to increase national savings, ownership and wealth creation for hardworking families. These goals are achievable through comprehensive pension reform that looks to the future retirement needs of employees.
Please see our pension reform plans and analysis: