U.S. Senators Todd Young (R-Indiana) and Cory Booker (D-New Jersey) introduced legislation to establish a federal commission charged with reviewing private retirement benefit programs and submitting a report to Congress on how to improve private retirement security in the United States.
A press release from Young notes that private retirement systems have undergone significant changes over the past 40 years as traditional pensions have become less common. Individuals must now prudently plan for their own retirement security through retirement savings accounts like 401(k) plans. In addition, Young notes that the economy is undergoing another shift, as workers are more likely to work in the ‘gig economy,’ defined by serial employment or the contingent workforce. For these workers, it is particularly difficult to save for their own retirement.
“With many individuals reaching retirement with little to no savings of their own, we must take a serious look at our current retirement programs and make the changes necessary to help secure the futures of so many hardworking Americans,” says Young. “Our bill would enact a commission to better understand how we can strengthen private benefit programs and ensure our current and future generations have the tools necessary to plan for retirement.”
The press release also mentions a Government Accountability Office report in which the GAO said: “Congress should consider establishing an independent commission to comprehensively examine the U.S. retirement system and make recommendations to clarify key policy goals for the system and improve how the nation promotes retirement security.” According to the GAO report, the three pillars of the current retirement system in the United States are anticipated to be unable to ensure adequate benefits for a growing number of Americans due, in part, to the financial risks associated with certain federal programs.
Specifically, the Federal Retirement Commission Act calls for the creation of a commission comprised of the Secretary of Labor, Treasury, Commerce, two presidential appointees, six U.S. Senate appointees, and six U.S. House of Representatives appointees. The commission would be charged with:
- A comprehensive review of private benefit programs existing in the United States, with a particular focus on moving from defined benefit to defined contribution models;
- A comprehensive review of private retirement coverage, individual and household accounts balances, investment trends, costs and net returns, and retention and distribution during retirement;
- A comprehensive review of societal trends, including wage growth, economic growth, unique small business challenges, serial employment, gig economy, health care costs, life expectancy, and shrinking household size, that could lead future generations to be less financially secure in retirement compared to previous generations;
- A comprehensive review of other countries’ retirement programs; and
- Submitting to Congress recommendations on how to improve or replace existing private retirement programs upon the affirmative vote of at least three-quarters of the members of the Commission.