Securing a Reliable Income in Retirement: An Examination of the Benefits and Challenges of Pooled Funding and Risk-Sharing in Collective Defined Contribution (CDC) Plans (Policy Report 21-03, April 2021)
Private sector workers in the United States continue to struggle to find a cost-effective way of securing a reliable income in retirement. The US is not alone in facing this challenge. In both the Netherlands, and most recently now in the United Kingdom (UK), collective defined contribution (CDC) plans are being used to provide lifetime income. Recent studies of CDC plan experience in Europe suggest that a CDC plan can be simple and low-cost in design and generate a retirement income at least 30% higher than a typical DC plan. This paper reviews the benefits, risks, and challenges in CDC plans based on experiences in the Netherlands and the UK, and concludes with some lessons for US.
This paper provides policymakers with a primer about ERISA and the Tax Code, how these federal laws and their regulations pertain to IRAs and 401(k)s, and what this means for state-facilitated retirement savings programs. After reviewing the question of ERISA applicability to state auto-IRAs and an overview of the federal Tax Code and IRA rules, it explores how ERISA and the Tax Code rules apply to 401(k)s, including the new rules allowing states (and others) to possibly lower 401(k) costs by sponsoring group 401(k)MEPs and PEPs.
This report provides state-level analysis of the benefits of expanding worker access to save for retirement through state-facilitated auto-IRA programs. This report follows CRI’s earlier research on the potential benefits of national universal access to retirement savings options for U.S. workers (See Policy Report 20-02). Included in the analysis are 51 state (and DC) fact sheets that provides information on key state specific metrics including demographic trends related to the aging of the population, the size of the retirement savings access gap, the projected growth in savings with an auto-IRA program, and the economic and fiscal benefits to the state of adding new savers.
This report analyzes the potential benefits of national universal access to retirement savings options for U.S. workers. It examines how characteristics such as account type (payroll deduction IRA vs. 401(k)), the employers required to participate, and default levels of employee contributions and any employer contributions will drive access, savings, asset growth, and retirement income over time. The economic and fiscal benefits of a national approach to the universal access is enormous, contributing to significant growth in GDP and reduced federal and state spending on benefit programs for the elderly. This report draws from the experience of other countries and from the early state-facilitated retirement programs in the U.S. to make the case that universal access to retirement savings options can be achieved in a simple, cost-effective manner with private market providers ready to compete to offer options for workers.
This report describes the potential benefits that allocation to alternative assets could offer a TDF’s investment portfolio, including enhanced retirement income for participants, with some case study considerations and international examples. It identifies and explains the unique challenges a fiduciary should consider when deciding to include alternatives in a TDF, as well as appropriate strategies a fiduciary may use to apply appropriate due diligence. Finally, to support and encourage this innovation, the report recommends action by DOL to clarify a fiduciary’s responsibility when including alternatives in TDFs.
This report analyzes how different lifetime income solutions can help retirees meet their lifetime income needs. It examines several options to determine how well they achieve different objectives for retirement income including stability, maximization, longevity protection, growth potential, asset preservation, cost and liquidity. It highlights the growing demand for lifetime income solutions and the need for policymakers and plan sponsors to begin to integrate these solutions into retirement plans as more plan participants come to expect their DC plans to help generate and protect income for retirement.
This final report updates and replaces CRI Working Paper 18-02, published in June 2018. This report outlines several models, based on a multi-state or regional approach, that should be explored for how states can work together to serve more than one state. Although individual states can establish their own state-sponsored retirement savings programs, the consideration of interstate arrangements offers opportunities for states to explore how they can achieve economies of scale to help minimize costs while significantly expanding access to retirement savings options.
On June 19, 2018, the Georgetown University Center for Retirement Initiatives (CRI) convened an invitation-only one-day policy forum with approximately 100 senior industry leaders, policymakers, and stakeholders to examine some of the key challenges designing a retirement savings system focused on improving long-term outcomes to strengthen retirement security for millions of Americans. This report provides a comprehensive overview of the discussion held during this event, covering innovative ideas and proposals for addressing some of the challenges faced in closing the access gap, improving the design and performance of investments in retirement savings plans, and identifying ways to build and deliver more-effective and attractive lifetime income options.
The Benefits of Achieving Economies of Scale in State-Sponsored Retirement Savings Programs: The Case for Multi-State Collaboration (Working Paper, 18-02, June 2018)
This report outlines several models, ones based on a multi-state or regional approach, that should be explored for how states can work together to serve more than one state. Although individual states can establish their own state-sponsored retirement savings programs, the consideration of interstate arrangements offers opportunities for states to explore how they can achieve economies of scale to help minimize costs while significantly expanding access to retirement savings options. This document has been updated – please refer to Policy Report 19-01.
This report highlights new analysis showing how target date funds (TDFs) can be modified to improve expected retirement income for individuals by between 11 and 17 percent with the inclusion of alternative assets. Operational issues, such as liquidity, pricing, etc. can be easily addressed today, as demonstrated by the increased use of custom funds in DC plans. Policymakers and plan sponsors should consider the inclusion of alternative assets classes in DC plans, specifically through target date structures.
This report provides an overview of how ERISA and the Tax Code, as well as securities and other laws, would apply to a state-facilitated MEP and includes sample model legislation.
This report provides an overview of the retirement security challenges facing the nation and Vermont; outlines the range of plan design options for state-sponsored retirement programs for private sector employers and employees, including legal, regulatory, and plan design considerations; and reviews some early lessons learned from other states that are in various stages of implementing new programs.
As states contemplate ways to help expand the availability and effectiveness of private sector retirement savings options, they must understand how ERISA and other federal laws would apply to any new program for the private sector.