Harkin pushes for new retirement plan

Proposal would combine savings, Social Security, pension into privately run system

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Less than two weeks after announcing his own retirement in 2014, Sen. Tom Harkin, D-Iowa, has unveiled a proposal to benefit retiring Americans.

Harkin wants to start an “evolving discussion” about a privately run retirement system for older Americans. The name would be “USA,” for “Universal, Secure and Adaptable,” and the basic idea is that workers without a retirement plan would be able to create one by authorizing automatic withdrawals from their paychecks, while employers are given tax credits to offset their costs.

He calls retirement a “three-legged stool,” based on personal savings, Social Security and a pension — different from a defined benefit system as has been the case for most U.S. companies’ workers for decades.

“It’s something I’m working a lot on,” Harkin told The Gazette. “Thirty years ago, one out of every two people had a pension. Now it’s one out of every five. And it’s getting worse. It keeps going down.”

Harkin chairs the Senate Health, Labor, Education and Pensions Committee, and he calls his pension proposal — which he hasn’t offered yet — one of his last main legislative achievements he wants to notch before leaving Washington. He is one of a chamber of 55 Democrats and 45 Democrats — but with a 60-vote Senate threshold still in place, he will need to pull a handful of Republicans over to his idea.

He has statistics on his side. Fifteen percent of Iowans are older than 65 — one of the highest rates in the nation — and more than 78,000 are older than 85, according to statistics from AARP Iowa. Furthermore, the percentage of Iowans older than 85 is projected to grow by 36 percent by 2030, making the Hawkeye State one of the more senior states in population.

Harkin also cites statistics that show the so-called “retirement gap,” which means the amount that people save and what they need in retirement, has grown to a deficit of $6.6 trillion.

Republican support

Harkin does not, however, yet have Republicans totally on his side — one of which being Sen. Chuck Grassley, Harkin’s colleague since 1980 and the senior Republican on the Senate Judiciary Committee. Grassley, who is 79, is familiar with Harkin’s idea but wants any talk of pension reform tied to reforming Social Security.

“The best way to team it up is with reform of Social Security,” Grassley said. “If you want to have a reform of the retirement system as a three-legged stool, and he’s taking one of those stools but the other one is that we need to strengthen Social Security. We need to do that together.”

Specifically, Grassley called for President Obama to take a more active role in the debate — and if so, he outlined ideas similar to those raised by President Ronald Reagan and House Speaker Tip O’Neill in the 1980s.

“Then everything’s on the table — increasing the age, solving some of the formulas and, I hate to say it, but it could even involve raising the taxes, although I’m not ‘taxes first.’ In fact, I don’t think you could even raise taxes enough to solve the Social Security problem.”

Harkin was puzzled by Grassley’s idea, which could create a potentially lethal Senate floor fight, although he left open the idea in a future bill that could combine the ideas.

Harkin reminded a reporter last week that he introduced a bill last year that would raise the cap, extend benefits and increase the solvency of Social Security.

“These are different issues. The pensions bill that I’m introducing has nothing to do with Social Security, and Social Security has nothing to do with that .... I don’t see why they would want to tie the two together. They have nothing to do with each other. Social Security is far and apart from a pension bill.”

As support for his bill, Harkin also cites a poll by the National Academy of Social Insurance, which finds 74 percent of Republican voters and 88 percent of Democrats agree on the need to preserve Social Security “even if taxes are raised.”

Anthony Carroll, the state advocacy director of AARP Iowa, told The Gazette he likes Harkin’s idea of bridging “the retirement security gap,” even with Washington talking constantly of deficits. He said the AARP has pushed for “automatic enrollees,” among other benefits.

“Only half of our current workforce has access to some type of retirement plan,” he said. “You’re looking at half of our population that doesn’t have access to anything. There’s been a rise in 401(1) k, but still, there are less people, and there are less-defined benefits. I think that’s just a simple fact.”

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