Making 401(k)s for Everybody
Small changes, big improvements.
Reaching Across the Aisle
The great irony of 401(k) plans is that they suffer from the same problem of the system that they replaced, defined benefits. (This fact has escaped many 401(k) critics, who pine for a return from today’s frying pan to the earlier generations’ fire.) Both 401(k)s and their defined-benefit predecessors serve those who least need the help: higher-paid employees at larger companies. Those further down the workplace ladder are, for the most part, left behind.
Those who seek to reform the 401(k) system are aware of this; it would be hard to study the subject objectively without reaching that conclusion. Typically, their proposals address some of this inequality. A new paper by a group called the Bipartisan Policy Center--a think tank founded by four former senators, two Democrat and two Republican--pushes the issue further. The key points of “Securing Our Financial Future: Report of the Commission on Retirement Security and Personal Savings” aim squarely at extending 401(k)s’ reach, so that the program becomes truly national.