Minimum wage laws are designed, in theory, to give every worker a livable wage and a decent standard of living. But what if the same concept was applied to retirement savings?
Third Way, a moderate think tank, has proposed just that: a minimum, mandatory “pension” that all employers would give their employees based on hours worked.
From the proposal:
We propose a minimum pension law—a requirement that employers contribute a minimum of 50 cents per hour worked, for every worker, into a retirement plan. A minimum pension would provide all workers with the opportunity to create their own personal wealth—providing for a more secure retirement and a reduction of the current wealth disparity in our country. With improved access to simple investment vehicles and tax breaks that aid small businesses, employers would largely benefit too.
And from International Business Times:
“A minimum pension sounds like a minimum wage, and it is,” David Brown and Kimberly Pucher, the authors of Third Way’s report, wrote. “The minimum pension requires that, in addition to wages, employees must receive at least 50 cents an hour in retirement contributions.”
That’s a minimum contribution of $1,000 a year to full-time, full-year workers, to be indexed for inflation.
Third Way drafted the proposal, in part, because of a recent barrage of statistics suggesting many Americans aren’t nearly as ready for retirement as they’d like. From International Business Times:
The public sector and most private sector companies offer retirement plans, but about 30 percent of non-retired Americans have no money saved for retirement, the Federal Reserve reported last month. Most workers who aren’t saving for retirement have lower incomes and two-thirds of them work for companies that don’t offer a retirement savings plan, according to Boston College’s Center for Retirement Research. Many of those who are saving aren’t saving enough, so though Americans pay $140 billion each year subsidizing retirement accounts, millions are nearing retirement with little or nothing saved.
You can read the entire proposal here.
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