Senate Finance Committee Chairman Ron Wyden (D-Ore.) told the panel Tuesday an automatic government-sponsored IRA for workers not covered by an employer pension plan is worth considering.
Yesterday, a task force in his home state of Oregon recommended such a plan, which he said has the potential for being a first step towards retirement security for many.
While experts have frequently testified about a retirement crisis to Congress, Investment Company Institute Chief Economist Brian Reid said the retirement system is working for the majority of American workers and has become stronger in the past half century.
The mutual fund trade group executive noted 80 percent of near-retiree households in 2013 had accrued retirement benefits.
Countering the increasingly loud warnings by investor advocates and regulators about the damage of high fees to retirement savings, Reid said fees paid on mutual funds have dropped in the last two decades.
He cautioned a Congressionally imposed retirement savings regime would hurt workers focused on accumulating money for other goals such as education or the purchase of a home.
Countering ICI’s optimism about the health of retirement savings, Vanguard founder and former CEO John Bogle said the failure of the system is pervasive. He said the three pillars of retirement security in the nation — Social Security, defined benefit plans and defined contribution plans — show signs of serious structural weaknesses.
The pending Social Security shortfall could be eliminated by raising the retirement age to 69 and imposing a means test for benefits, Bogle said.
He called the outlook for the massive number of underfunded private and government defined benefit plans as “disruptive and painful.”
Fixing defined contribution plans can be repaired without huge costs, said the Vanguard patriarch, by directing participants to invest in low-fee accounts operated by managers held to a fiduciary standard.
Source: Financial Advisor