Democrat Floats Retirement Reform Ideas
Congress should be taking a comprehensive approach to protecting future retirees, not simply talking about private Social Security accounts.[@@]
A Democratic congressman and former top Clinton aide made that case last week on the floor of the U.S. House of Representatives.
Automatic 401(k) enrollment and unifying 16 retirement savings plans into 1 are 2 of the ideas that Rep. Rahm Emanuel offered as possible bases for discussion for members of both parties.
Emanuel, who served as a top aide to former President Bill Clinton and today represents a Chicago district in the House, said the first order of business is to take privatization off the table.
President Bush has made enactment of Social Security reforms that include private, worker-controlled accounts a top priority for his second term. Democrats have refused to consider that proposal.
Emanuel said the best way to get discussion back on track is to change the focus.
“We need to broaden the debate on privatization of Social Security into a discussion of retirement security,” Emanuel said.
President Reagan took privatization off the table and secured Social Security for 75 years, Emanuel said.
“If you take privatization off the table today you can secure Social Security for another 75 years, and we can make progress on 401(k)s, employer-based retirement, defined benefit pensions as well as personal savings,” he said.
Emanuel said enrolling workers in 401(k) plans automatically might be one way to increase participation dramatically. He cited the example of a Fortune 500 company in Chicago that increased enrollment 92% by using an automatic enrollment method.
“Also, you would have automatic step up, so that when you stay longer and your pay goes up, the participation in your plan increases,” Emanuel said.
Other ideas that Emanuel offered include direct deposits from tax refunds into savings accounts and a new tax credit for retirement savers who earn less than $60,000 per year.