Why a mandatory retirement saving plan still isn’t dead in the U.S.

Teresa Ghilarducci

Teresa Ghilarducci

In today’s New York Times, I examine the prospects for a universal, mandatory retirement saving system in the U.S. The idea has long been left for dead, since the concept of employer mandates has been toxic ever since passage of the Affordable Care Act.

But some states have begun implementing mandatory programs of their own, and some experts believe that could generate momentum for a single national plan.

And, it is worth remembering that the Obama Administration’s mandatory auto-IRA program has bipartisan roots: the idea is the brainchild of David John, senior strategic policy adviser at the AARP Public Policy Institute, and  J. Mark Iwry. When the two cooked up the auto-IRA idea, John was a senior research fellow at the conservative Heritage Foundation; Iwry, was working at the centrist Brookings Institution and today is a senior adviser at the U.S. Department of the Treasury.

Now, an alliance has surfaced to push a mandatory plan between Teresa Ghilarducci, the labor economist at the New School for Social Research, and Tony James – president of Blackstone, the Wall Street private equity giant. The two are working on a white paper focused on Ghilarducci’s plan for Guaranteed Retirement Accounts. Moreover, Ghilarducci is serving on a Bipartisan Policy Center commission working on recommendations on retirement security and personal saving; a mandatory savings program is one idea under consideration, along with ideas for reform of Social Security and retirement-related taxes, and financial literacy initiatives.

My Times article also reviews mandatory savings programs already launched in Australia, Britain and New Zealand. Comparisons to the United States situation are limited, since the broader retirement policy context differs by country quite a bit. But all of the programs were created in response to concerns about low savings rates and inadequate coverage from existing systems. Worries about rising longevity and the sustainability of traditional old-age public pension programs — similar to the Social Security system in the United States — also played a role.

Political opposition to a mandatory system here likely would come from both the right and the left. Some segments of the financial services industry oppose it on ideological grounds, while others worry about creation of a “public option” for saving that likely would create low-cost competitors. Meanwhile, some on the left worry that mandatory saving plans would be coupled with cuts in Social Security – a program they would like to expand.


  1. Gilbert Pond says:

    It’s about liberty and freedom. Anything mandatory reduces a citizens freedom and liberty to make their own choices and decide, on their own, what they feel is best for them. The USA is constitutionally intended to be a group of individuals with freedom of choice–their own choice, not the governments or someone else’s. We have way too many mandatory systems, laws and regulations now–which we need to reduce or eliminate–not make more.

  2. ronald schumacher says:

    An interesting idea on the surface—except will each individual manage/invest on their own or do we turn all that money over to the Wall Street Thieves (bankers) to play with as they have with our savings accounts and every other bit of count they can get their hands on???

  3. Proving once again that the left hand of the government has no idea what the left hand of the government is doing, let alone that a right hand even exists! The overall fiscal policy push d by our own central bank is the akeynesian madness that saving for the future destroys the economy by removing money from circulation and stifling business and therefore economic growth. Never mind that this is pure fiction, it’s what the idiots at the Fed believe in and what they direct investment he economy towards achieving through QE, manipulation of interest rates and other forms of toxic interference with free markets. How do we reconcile akeynesian-based Fed policy with mandatory universal savings, if savers supposedly destroy economic productivity? The best policy is indeed to produce a financially educated public that feels the power and necessity to take care of itself, but putting the responsibility for financial education into the hands of the same financial industry ( or its government allies) that is currently effecting the massive thidden transfer of wealth from the middle class to itself, will only hasten the total destruction of our economy, culture and sovereign freedom.

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