Harkin proposes private retirement plan

CEDAR RAPIDS – Sen. Tom Harkin is proposing a private retirement plan to supplement Social Security and personal savings that would guarantee retirees an annual annuity.

The Iowa Democrat will have meetings Aug. 8 and 9 in Des Moines and Mason City, respectively, to discuss his USA Retirement Fund proposal.

Too many Americans are not prepared for retirement, largely because of the decline of private pension plans, Harkin, chairman of the Senate Health, Education, Labor and Pension Committee, said Aug. 2.

“One of the bedrocks assumptions of the middle class in this country is that after a lifetime of hard work people deserve the opportunity to live out their golden years with dignity and financial independence,” he said. “But increasingly the dream of a secure retirement is being eclipsed by a nightmarish retirement crisis.”

The “retirement income deficit” representing the difference between what people have saved for retirement and will they will need has grown “is a staggering $6.6 trillion,” Harkin said.

“We are facing a retirement crisis where only one in five in private sector workforce has a defined benefit pension,” he said. Half of private sector workers have less than $10,000 in savings.

Social Security is still strong, he said, but stagnant wages and rising costs make it hard for people to build a retirement nest egg.

So Harkin is proposing a two-pronged approach: improvements to Social Security to increase benefits and its sustainability; and universal access to a private pension plan that pools savings to reduce risk and reduce the burden on employers.

Like a 401(k), he said, it will be portable – a retirement plan an individual would begin contributing to when they start their first job and continue building up to retirement.

Their contributions would be handled by pension plan administrators and invested in long-term projects such as roads, bridges, municipal bonds and, possibly, the stock market.

Two major differences between the USA Retirement Fund and a 401(k) are no employer contribution and workers could not lose money.

“That would never happen under this system,” he said.

Like Social Security, it would be a defined benefit plan so a worker would know at any given point what their annuity would be based on their contributions.

Here are details of Harkin's retirement security meetings:

Aug. 8 – 1:30 p.m., Des Moines Central Public Library Meeting Room, 1000 Grand Ave.

Aug. 9 -- 3 p.m., North Iowa Area Community College, 500 College Dr., Mason City, Muse Norris Conference Center, Room 180 B +C