September 20, 2012 (PLANSPONSOR.com) – During a Senate Committee on Health, Education, Labor and Pensions’ roundtable, witnesses agreed business owners need incentives to offer retirement plans.
Senator Tom Harkin (D-Iowa), chairman of the Committee, began the roundtable discussion, “Pension Modernization for the 21st-Century Workforce,” by saying that the defined benefit (DB) pension crisis is underreported. Today only about one in five people have pension plans, whereas one in two had these plans 30 years ago.
Harkin recently released a report titled "The Retirement Crisis and a Plan to Solve It.” The heart of his plan is a new system of privately run hybrid pension plans, which incorporate many of the benefits of traditional pensions while substantially reducing the burden on employers (see “Harkin Retirement System Proposal Gets Mixed Reviews”). Harkin’s proposal requires that individuals who are not covered by an employer-sponsored retirement plan be automatically enrolled in regulated, privately run retirement funds.
David Madland, director of the American Worker Project, Center for American Progress, said during the roundtable that Harkin’s proposal is a good tradeoff because it functions like a defined contribution (DC) plan for employers, but like a defined benefit (DB) plan for employees.
Harkin asked witnesses what the pension system should look like to meet the challenges of the global economy and provide security for working Americans. Aliya Wong, executive director of retirement policy for the U.S. Chamber of Commerce, said the Chamber believes a successful private retirement system is voluntary, flexible and innovative.