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The roadblock to common sense pension reform (VIDEO)

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55 million Americans — about half of the entire private-sector workforce — have no employer-sponsored retirement plan at all. Many work for small businesses in the low-wage service and hospitality sectors. If they don’t save money independently, they will have nothing when they stop working.

This is very different from four decades ago when most workers retired with a company pension.

The good news is that several states – including Oregon, California, Illinois, Connecticut, and Maryland — now let such workers put money away in state-sponsored retirement plans that allow them to withdraw their accumulated savings, tax free, when they hit retirement.

55 million without any pension

The bad news is that the investment industry is aggressively seeking to block these plans, fearing the competition.

That’s because the fees charged by most state retirement plans are capped at around 1 percent – much lower than the fees of similar plans operated by banks and investment companies. And state fees are expected to drop even lower as more workers enroll.

If each of America’s 40 million retirees saved on average $50,000 in the state program, they’d have an additional $20 billion in the first year. That’s $20 billion more in the pockets of retirees, not financial institutions.

Right now, the industry’s efforts appear to be winning.

Republicans in Congress – backed by the U.S. Chamber of Commerce and a coalition of Wall Street investment firms – are seeking to block states from implementing these plans at all.

Investment and insurance companies are also spending like mad on election campaigns of friendly state legislators and threatening lawsuits. Which is why many proposed state-run retirement plans are languishing in statehouses around the country.

Folks, the anger and frustration that led to Trump continues to simmer. If we allow the moneyed interests to block common-sense reforms like this, in future years, America could face an even worse fate than Trump.

When you vote in November, vote for legislators who want to allow workers to save for retirement a

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About Robert Reich


Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; Beyond Outrage; and Saving Capitalism. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.

Comments

  1. Jerry Shepherd says

    This should not be a surprise, with a republican congress and President. Everything they do is pro-business and forget the people. Even as we read articles like this the repugs are trying to weaken Social Security and Medicare. Why would they start being socially aware now?