Pension Modernization for a 21st Century Workforce

David Madland

CAP Senior Fellow David Madland delivers remarks at a roundtable discussion with the Senate Committee on Health, Education, Labor, and Pensions. Read the full testimony (CAP Action)

Thank you for inviting me here today to discuss pension modernization for the 21st century.

My name is David Madland and I’m the Director of the American Worker Project at the Center for American Progress Action Fund.

I appreciate the opportunity to present my views on this important topic, a topic which I have been researching for some time. I wrote my dissertation about the decline of the private-sector defined-benefit pension system and have written extensively in academic and popular publications about retirement policy.

In my testimony I will address the three questions posed by this committee, which are focused on how to best improve the private retirement system, and leave discussion about Social Security for another time.

Social Security provides an essential baseline of income for retirees and must be strengthened to ensure that it continues to do so for generations to come, as the Center for American Progress has proposed. But Social Security was never intended to be people’s only source of income in retirement.

To maintain their standard of living in retirement, Americans depend upon accumulations in employer-sponsored retirement accounts—such as 401(k)s and pensions—and, to a smaller degree, private savings.

Unfortunately, the private retirement system is failing too many Americans, something that is becoming abundantly clear as the first generation of workers to depend primarily on 401(k) plans—rather than the increasingly rare defined-benefit pension—starts to retire.

The failures of the private retirement system could have troubling consequences. If we continue down the current path, many retirees will outlive their retirement savings, potentially saddling their children and the country with a burden that weighs down the economy and causes significant human suffering.

CAP Senior Fellow David Madland delivers remarks at a roundtable discussion with the Senate Committee on Health, Education, Labor, and Pensions. Read the full testimony (CAP Action)