Congress can and should salvage defined benefit plans, says a former U.S. congressman and pension reform advocate.
Former Rep. Earl Pomeroy, a Democratic congressman who represented North Dakota for nearly two decades, said Thursday at a Washington, D.C., forum that DB plans were “not yesterday’s model for retirement security.”
In his prescription for saving existing DB plans and encouraging new ones, Pomeroy called upon Congress to reduce the regulatory burdens and costs of the plans for businesses, make funding requirements for employers less volatile and look for ways that employers and employees can share risk in the plans, perhaps using a hybrid model.
“Employers view DBs as too risky, so they are shifting all of the risk to workers in the form of 401(k)s,” Pomeroy said.
The forum was sponsored by the Corporation for Enterprise Development and the Center for American Progress.
Massachusetts Sen. Elizabeth Warren, also speaking at the forum, said one way the nation needs to alleviate the retirement crisis is to reduce the share of private sector working Americans without employer-based retirement plans (a number now at about 50%) and to shift much of the $158 billion in tax breaks wealthier Americans are getting from on-the-job retirement programs.
Warren, often-mentioned as a Democratic presidential contender, said the retirement crisis is a values issue.
“It is who we are as Americans,” she said.
She added that the prevailing talk in Washington of cutting Social Security benefits is moving in the wrong direction. Instead, she said benefits should be increased for the less well-off because for 14 million retirees, Social Security is the only thing standing between them and poverty.