Looking Back, Looking Forward

While December is when most of us look back on the year coming to end and make plans and resolutions for the year about to begin, September is another one of those times for me. After all, it’s an important month in its own right—the start of the academic year (even if classes now begin in August), the official beginning of the race in election years like this one, the unofficial end of summer with Labor Day and lest we forget, the anniversary of ERISA’s passage.

September also brings a couple of personal anniversaries: Labor Day marks the beginning of another year as a self-described ERISA “geek” and in the middle of month, my third year in Washington at the AFL-CIO begins.

My anniversary musings this year, as you might expect, were influenced by the work of the past year and the significance of the election to come in November

Health care reform is clearly important with many polls ranking it, together with the economy, among the top issues of concern. But, one issue that’s talked about less outside the benefits community is just as critical--the pending retirement security crisis.

Here are just a few facts to consider, most of which are familiar to benefits professionals. Pension coverage remains at about 50 percent of the workforce. The shift from defined benefit to defined contribution plans, primarily 401(k) plans, is leading to a decline in pension wealth. And, according to the latest Retirement Confidence Survey from the Employee Benefit Research Institute, only 18 percent of workers are very confident about having sufficient money for retirement. The 9 point drop from the 2007 survey was the biggest one-year drop in the survey’s history. One bright spot is the continued vibrancy of defined benefit plans in the public sector.

So far, the conventional wisdom seems to be that individual account defined contribution plans or individual retirement accounts (IRAs) are the best way for workers to provide for their retirement. But, is this really true? Should we consider different approaches to defined benefit coverage?

When I was introduced to ERISA more than 25 years ago, there was talk of setting a national retirement income policy. Is it finally time for all of us to have that conversation?