Momentum is building, as it should, for policymakers to do more to make saving for retirement easier for more people. At the state level, Democrats are getting excited about the idea of government-run programs of various kinds—a potentially dangerous enterprise (think about what a hash most cities and states have made of the pension programs they already operate for their own employees).
But nature abhors a vacuum, and if the GOP doesn’t start thinking creatively about the needs of workers then its likely that we’ll see the proliferation of expensive and badly-run state programs.
A recent survey from Pew Charitable Trusts highlights the need for policy changes to give businesses more incentives to offer retirement plans:
Many Americans face the prospect of inadequate savings once they retire, primarily because they have not had access to an employer-sponsored retirement savings program. Research and industry experience show that most employees will save through an employer plan if given the opportunity. Pew’s research shows that employers— especially small- and medium-sized businesses—face challenges when trying to offer retirement benefits to their workers, and they do not expect these challenges to ease in the near future.
Businesses need plans that are easy to set up and operate. Small business owners are not hunting for more bureaucratic tasks to accomplish and forms to fill out. They need to offer employees a good choice of low fee products, with protections for the large number of Americans who don’t know much about investing. They need to offer flexibility and portability; many workers, especially in the small business sector, move around, and young businesses don’t always last 30 years. Ideally, there would be a way that low-income workers could qualify for some kind of match from federal and/or state governments—it’s cheaper and smarter to help working people save for retirement than have a huge population of seniors fighting for entitlements because they haven’t saved enough.
Reforming the retirement system is much easier than reforming healthcare. It’s the kind of thing that should be a top priority for politicians who care about helping ordinary people solve the problems of everyday life.