Should State Government Offer A Retirement Plan For Private Citizens?
State government should offer a retirement plan to the increasing number of people whose companies don't provide a pension or a 401(k) savings program, labor groups and other advocates this week told a legislative panel.
The Labor and Public Employees Committee has raised a bill that would create a task force to study that concept and report back when the 2013 General Assembly session convenes next January.
"Much of our membership is fortunate enough to have defined-benefit pensions, largely because we were able to fight for them at the bargaining table," Salvatore Luciano, a veteran state employee union leader, told legislators Tuesday. But in the private sector, "this is a sacred part of the American dream that we are losing."
Luciano, the longtime executive director of Council 4 of the American Federation of State, County and Municipal Employees, said, "I see family and friends forced to choose between money in their 401(k) and helping their children pay for college. I see family and friends putting off their retirements as the assets in their 401(k) were lost during the stock market crash."
The traditional American retirement income was based on three tiers: Social Security, employer-sponsored retirement plans and personal savings, said Lauren Schmitz, a research analyst with the Schwartz Center for Economic Policy Analysis in New York.
"But the employer-sponsored retirement system is on the decline on several fronts," Schmitz testified, noting that a majority of employers offer no plan, with small and medium firms the least likely to provide one.
About 61 percent of employers nationwide sponsored plans in 2000, but just 53 percent did by 2010, she said, citing U.S. labor and census statistics. Over the same period in Connecticut, the percentage dropped from 64 percent to 58 percent.
"However, the retirement security crisis isn't just limited to the half of workers who don't participate" in retirement plans," said Robert Hiltonsmith, a policy analyst with Demos, a New York-based progressive policy organization. "Even many of those who are actively saving for retirement are at risk as well."
Hiltonsmith testified that many plan participants not only took a hit during the stock crash of the last recession, but also have insufficient savings to cover the rest of their lives.