Citation URL: http://www.urban.org/PamelaPerun

Designed to promote retirement saving, the Pension Protection Act of 2006 clarified auto-enrollment, auto-contribution, and auto-investment rules in employer 401(k) plans. Early evidence suggests that the legislation boosted these plan features and increased employee participation in 401(k) plans. It is too soon to gauge the act's ultimate success, however, because it hinges on the number of new participants that will eventually amass substantial account balances. Adding to the uncertainty, the recent LaRue Supreme Court decision, which highlights the legal liability that employers face as plan fiduciaries, could undermine future retirement security by making some employers reluctant to sponsor plans.

Despite decades of significant tax subsidies for pensions and retirement accounts, most Americans retire with little or no pension saving. This paper suggests that it is possible to create a "Super Simple" saving plan that would provide a basic, low-cost, easily administrable plan with the potential to increase significantly the retirement assets available to moderate- and middle-income individuals. This plan follows the lead of a new system about to be implemented in the United Kingdom, which features automatic contribution for employees who do not opt out, a significant government match, and simplification of existing rules amongst other elements.

Within 10 years the retirement of the baby boomers will cause the economy to lose large numbers of experienced workers. Currently there are a number of institutional and legal arrangements in place that encourage early retirement and limit the ability of employers and employees to negotiate approaches to partial retirement. The brief suggests a number of legal and regulatory reforms that would increase the ability of older workers to stay on the job longer without losing protection against age and economic discrimination.

Analyses of the private pension system typically focus on such issues as how to improve overage or encourage saving or prevent tax abuse or generate retirement income more equitably. Those issues are important, but the thesis of this paper is that more attention needs to be paid to the structure in which they are embedded. It examines the nuts-and-bolts of the private pension system, that is, the plans that comprise it and the rules that govern them. The architecture and machinery of the private pension system have much to teach us about directions for reform.

The paper describes the huge loss of skills and experience that will accompany the retirement of the baby boom generation. The problem can be mitigated by making longer work more attractive through offers of part-time employment and longer vacations. Unfortunately, a number of private practices and public policies have evolved over the years that encourage early retirement and make it challenging for employers and employees to negotiate flexible, partial retirement arrangements. Private and civil service defined benefit pension plans often penalize working beyond the late 50s even though they specify an official retirement age of 65. High health insurance costs for older workers also curb employment opportunities. The combination of tax law, IRS regulations, ERISA, and the Age Discrimination in Employment Act create complex barriers to partial retirement that are not insurmountable, but can only be overcome with great effort and the risk of litigation. The authors make a number of suggestions for changing regulations and for new legislation.

[BridgeNews] When the U.S. Congress reconvenes later this month, the Senate will consider its version of the Comprehensive Retirement Security and Pension Reform Act. This bill, a variant of the Taxpayer Refund and Relief Act of 1999 that President Clinton vetoed, passed the House in July by a whopping 401 to 25 vote. But the bill represents a second-rate solution to a first-order problem—an out of touch and outmoded private pension system that leaves millions of Americans without adequate retirement incomes.

Like Rip Van Winkle, baby boomers have awoken to find that they have aged. Their retirement is looming, and now it seems that everyone is worried about saving for it. The popular press, with the assistance of the financial services industry, has made saving for retirement a trendy topic. Financial planning advice and products devoted to retirement savings fill the daily newspaper, the media, and even the Internet.

In 1999, the Employee Retirement Income Security Act of 1974 (ERISA), the primary law regulating the private pension system, turned 25. This paper proposes a new model for ERISA of vastly simplified plans and rules intended to make the private pension system more accessible by employers and employees alike.

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