In Monday’s blog post we documented the sad state of retirement security in the United States today. Many working families have little or no savings and will face a lower standard of living in retirement. Unfortunately, the government, at both the state and federal levels, has done little to help alleviate the retirement security crisis and has, in some instances, made it worse.
Americans want the government to address the retirement savings crisis. According to polling released earlier this year, 85 percent of Americans say political leaders in Washington do not understand the challenges of saving for retirement. 86 percent say the nation’s political leaders need to give a higher priority to retirement security.
The Trump administration has taken a number of actions that weaken retirement security for working families. These actions include:
- Delaying and seeking to repeal the fiduciary rule, which protects individual savers from misleading advice from financial advisors
- Signing off on the repeal of regulations that made it easier for states to establish government-facilitated retirement savings plans for private sector workers
- Seeking harsh cuts to the pension benefits of federal employees
Beyond these actions, as part of their tax reform efforts, the Trump administration and Congressional Republicans are considering making changes to the tax treatment of retirement plans that would make it more difficult for working families to save for retirement.
At the state level, this year has seen numerous attacks on the pensions of librarians, sanitation workers, corrections officers, and other public employees. Michigan enacted harsh changes to the pension plan for public school employees that shifts more of the risk to individual workers, while also making the plans more expensive and less generous. Florida switched the default retirement plan from the defined benefit pension to the 401(k)-style defined contribution plan. This means that workers who do not actively choose the pension will be forced into the 401(k)-style plan. Finally, in Kentucky, Governor Bevin just today released an outrageous and draconian pension proposal that would severely slash the pension benefits of public employees across the commonwealth. He is threatening to call a special legislative session in the coming weeks to quickly force through this brutal plan.
Not all of the states are weakening retirement security though. Several states, including Oregon and California, are actively engaged in establishing retirement savings plans for private sector workers who do not have a plan through their employer. Oregon launched their plan, called OregonSaves, to great early success over the summer.
As an increasing number of Americans are concerned about the state of retirement security, it is unfortunate that governments at the state and federal levels are doing more to hinder than help working families save for retirement. Rather than pursuing harsh cuts to public pensions or repealing regulations that help workers save, political leaders should be looking for ways to expand retirement security. Voters must demand more from their elected leaders and hold them accountable for their actions.