February 1, 2014

Pension Plans For The Masses: Good Idea Or Pipe Dream?

“An ambitious idea for a universal retirement program introduced by Sen. Tom Harkin is being welcomed for advancing a national debate on ways to improve retirement security…”.


 The Looming Retirement Savings Crisis

Through a multi-decade series of political and private sector co-missions and omissions, the majority of private sector workers in Canada, the United Kingdom, and the United States do not participate in a workplace pension plan today. A growing body of studies in all three countries suggests that, as a result, a significant proportion of these workers and their families face the prospect of material declines in living standards in their post-work years.

These projections have raised a profound public policy question. What, if anything, should the governments of these countries do about this looming crisis? There is a growing consensus in all three countries that doing nothing is no longer a defensible option. But what to do? That is the question this Letter addresses. It does so by providing brief updates of the state of the pension reform debate in each of the three countries, documenting the surprisingly similar solutions that are emerging, and raising questions about the remaining gaps between intent and implementation.  

The USA Retirement Funds Initiative

The headline in a recent (Feb 3) Pensions&Investments article about Senator Harkin’s USA Retirement Funds Act was a pleasant surprise. It read: “Harkin’s plan called a good start despite some hurdles”. America’s financial services industry has a history of vigorously defending its turf against any government initiative it perceives might intrude on it. Has the industry turned altruistic? Or is the Harkin initiative not seen as a threat to its financial interests? These are surely intriguing questions. 

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