In a bid to improve the retirement prospects of working Americans, U.S. Sen. Tom Harkin, D-Iowa, is set to renew his push for legislation to create a hybrid, privately run retirement system.
Harkin's plan, designed to eliminate a $6.6 trillion gap in savings compared to what is needed to live on in retirement, would combine elements of traditional pension plans with the portability and ease for employers that are part of 401(k) systems.
The senator, chairman of the Health, Education, Labor and Pensions Committee, will outline the plan at a press conference on Thursday at the National Press Club in Washington, D.C.
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The legislation was crafted as part of a 2012 report that found one of the biggest drivers of the nation's retirement crisis is that employees of small businesses cannot participate in low-cost, quality retirement plans.
In the report on retirement security he laid out four principles for reforming the current system: participation should be universal and automatic; participants need certainty in their benefits; employees, employers and government all have a role; and assets should be pooled and professionally managed.
In a letter accompanying the 2012 report, Harkin explained the urgency needed to fix the gap in retirement savings.
"The retirement crisis will have significant repercussions. As older Americans transition out of the workforce, either voluntarily or involuntarily, many will find that they cannot afford basic living expenses," he wrote. "They will be forced to make the difficult choice between putting food on the table and buying their medication. The retirement crisis will put an enormous strain on our families, our communities, and our social safety net."
Harkin has also proposed ensuring the stability of the Social Security system by gradually raising the cap on wages that are subject to the payroll tax. In addition, he has proposed increasing benefits by 15 percent over 10 years by tinkering with the formula used to determine them.
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