Center for American Progress: “American Retirement Savings Could Be Better
The proposed Secure, Accessible, Flexible and Efficient (SAFE) Retirement Plan is outlined in the Center for American Progress's (CAP) report "American Retirement Savings Could Be Much Better." The SAFE Plan would combine elements of a traditional defined benefit pension — including regular lifetime payments in retirement, professional management, and pooled investing — with elements of a defined contribution plan, such as predictable costs for employers and portability for workers.
Key features of the SAFE Plan, according to CAP, would include:
- Organized as nonprofits, run by independent boards with significant participant representation;
- Available to all workers regardless of whether their employer offered retirement benefits prior to the introduction of the plan;
- Professionally managed investments, with plan boards able to hire investment management providers;
- Portable benefits that remain with workers throughout job changes that are payable for life;
- After workers select a plan, employers would handle enrollment and any required payroll deductions. If employers make contributions, employer costs would be fixed as a percentage of pay, and employers would not be faced with administrative or fiduciary obligations;
- The risks being spread among workers and retirees rather than borne solely by employers;
- While payout levels would not be guaranteed, the plan would be far less risky for workers and retirees than a 401(k), with a higher likelihood of achieving target benefit levels;
- Being more efficient than a 401(k) in achieving required investment returns at a low cost; and
- Employers wouldn't be required to guarantee returns as with traditional pensions. A SAFE Plan would not impose any additional costs or risk on government.