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Solutions to the Retirement Problem, Compared

It can be hard to keep track of all the various retirement security proposals proposed by lawmakers and think tanks over the past few years. Here is a list of a few of the major aspects of some of the proposals.

Heritage Foundation: One small part of its comprehensive 2011 “Saving the American Dream” plan calls for creating automatic payroll deductions for all workers. The deductions would start at 3 percent and move up to 6 percent. Funds would be deposited in a personal retirement account “like an IRA or a 401(k) plan.” Workers could choose to save more or less or opt out entirely.

Center for American Progress: The left-leaning think tank proposes automatically deducting money from workers’ paychecks, regardless of whether their employer offers retirement options. The plans would be run as nonprofits with independent boards that would pool assets. Assets would be managed by an independent board to better manage risks and fees.

S 1270: The bill by Sen. Orrin G. Hatch, R-Utah, introduced last year, differs slightly from the above two by trying to expand retirement coverage for private sector workers without imposing any kind of mandate. One key part would create incentives for small businesses or startups to launch “starter 401(k)s” that would be exempt from some of the rules governing traditional 401(k)s. That would make it easier for employers to avoid having to match employee contributions. The bill also offers tax credits to participating employers. Employees would be automatically enrolled but could opt out.

S 1979: This bill from Sen. Tom Harkin, D-Iowa, was introduced last month and would require employers who do not already offer retirement plans to deduct 6 percent of worker paychecks and direct the money to newly formed “USA Retirement Funds” run by the private sector but overseen by the government. Like the Center for American Progress plan, Harkin’s proposal would pool assets in order to minimize risk and fees. The funds would be converted to annuities upon retirement, guaranteeing retirees a paycheck for the rest of their lives.

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