GAO Suggests Commission to Examine U.S. Retirement System
The Government Accountability Office is recommending that Congress consider establishing an independent commission to examine the U.S. retirement system and offer recommendations to clarify key policy goals for the system and improve how the nation promotes retirement security.
According to the agency, such a commission should include representatives from government agencies, employers, the financial services industry, unions, participant advocates and researchers, among others, to help guide policymakers on changes needed to improve the system.
In “The Nation’s Retirement System: A Comprehensive Re-evaluation Is Needed to Better Promote Future Retirement Security,” the GAO notes
that the nation’s retirement system has not been comprehensively examined by the federal government since the 1979 Commission on Pension Policy.
“Issues identified by the 1979 commission not only continue to be relevant today, but have become more complex and more urgent with the shift from DB to DC plans, and the increasing risks and responsibilities workers face in planning and managing their retirement, as well as the increasing fiscal risks across the system,” GAO says in the report.
The agency refers to challenges with each of the three pillars in explaining why it believes a comprehensive solution is needed. Among them are that Social Security is projected to be unable to pay full retirement benefits beginning in 2035. Fewer employers are offering DB plans and the PBGC faces an accumulated deficit of nearly $80 billion at the end of fiscal year 2016. And millions of workers do not have access to either a DB or a DC plan and their personal savings likely will not be enough to last through retirement.
The GAO notes that an earlier panel of retirement experts convened by the agency agreed that a comprehensive solution needs to be found and the experiences of other countries can help provide useful insights for ways to improve the nation’s approach.
Among the policy goals that GAO believes should be considered:
- • promoting universal access to a retirement savings vehicle;
- ensuring greater retirement income adequacy;
- improving options for the spend-down of savings in retirement;
- reducing complexity and risk for both participants and employers; and
- stabilizing fiscal exposure to the federal government.
Perhaps stating the obvious, GAO notes that, “given this complexity and the interrelated nature of the challenges facing the retirement system today, a piecemeal approach without clear leadership will not be sufficient” to address the underlying policy goals.
The GAO serves as Congress’ audit and investigative arm to help evaluate federal programs and policies, and provide analyses, recommendations, and other assistance. Many times GAO reports and analyses are ignored, while other times they serve as the catalyst for policy change. In this case, it’s conceivable that a significant number of retirement industry professionals would argue that policymakers already have a number of potential solutions at their fingertips and they just need the political will to act, rather than spending time convening another commission.