Washington Post Discovers Efforts to Supplement Retirement Savings

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Wednesday, 21 August 2013 07:02

The Washington Post may not be the best place to get breaking news, but that doesn't mean they never get the news. Today it ran a piece discussing a proposal by the Center for American Progress (CAP) to create state-run savings systems that workers could contribute to on an opt-out basis. In other words, they would be contributing to the system unless they explicitly asked not to contribute. The plan is intended to supplement Social Security, recognizing that the vast majority of workers have been able to accumulate little or nothing in 401(k) type plans. It would also provide a guaranteed benefit based on the contribution, similar to a cash balance pension plan.

While it's good to see the Post take note of the CAP proposal, these types of plans are not exactly new. The Economic Opportunity Institute in Washington State has been working on a similar plan for almost 15 years. They got a bill through the legislature for a study of such a system just before the economic downturn in 2007. The budget crisis from the downturn made the state reluctant to spend even the seed money that would be needed to get a plan in place.

There were also efforts undertaken in Maryland, Connecticut, and California (in 2007), that came close to being approved by legislatures and put into law. (CEPR assisted several of these efforts.) Anyhow, it would be helpful to include some of this background.