Why there’s global urgency to enhance pensions

Source: Adam Mayer, Toronto Star, August 17 2014

As Ontario gets going on its supplementary pension plan, Britain has already launched one and the U.S. has one under consideration. … South of the border, a proposal that would supplement U.S. Social Security was laid out by Iowa Senator Tom Harkin in February and is in the early stages of debate. Harkin’s plan would cover 75 million Americans without any pension at all. … Harkin’s plan would be mandatory for companies with more than 10 people. Both employees and employers would contribute and the money could be directed into one of several privately run funds. …

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Harkin Unveils Legislation to Address Retirement Crisis, Rebuild Private Pension System
Source: Senator Harkin, Press Release, January 30, 2014

Harkin, Chair of Senate Pensions Committee, Proposes “Universal, Secure, Adaptable (USA) Retirement Funds Act” to Expand Access to Privately-Run, Portable Retirement Plans

Harkin’s legislation would create a new type of privately-run retirement plan that combines the advantages of traditional pensions—including lifetime income benefits and pooled, professional management—with the portability and ease for employers of a 401(k). The key features of USA Retirement Funds include:
∙ Universal Coverage: USA Retirement Funds would be available to everyone, including the more than 61 million people without access to a workplace retirement plan and the 14.5 million people who are self-employed.
∙ Automatic Enrollment: Employees would be automatically enrolled at a rate of 6 percent per year, but could choose to raise, lower, or stop their contributions.
∙ Secure Lifetime Income: Benefits would be paid monthly for life, and participants would be shielded from market volatility and other risks.
∙ Lower Costs: Pooled, professional management and risk sharing will reduce the cost of retirement by up to 50 percent.
∙ Portability: People would be able to take their benefit with them as they change employers.
∙ Simple and Easy for Businesses: Small businesses can easily participate and would not have to take on risk or undue administrative burden.

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