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Universal Voluntary Accounts: A Step Towards Fixing the Retirement System

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Publication Date:

Publisher(s): Center for Economic and Policy Research

Author(s): Dean Baker

Topic: Banking and finance (Personal finance and saving)

Keywords: Pension accounts; Pension portability; Thrist Savings Plan (TSP)

Type: Report

Coverage: United States

Abstract:

Most older workers are ill-prepared for retirement, with few financial assets to rely upon other than Social Security. Less than 20 percent of the private sector workforce is currently covered by a defined benefit (DB) plan, and this number is declining rapidly. Defined-contribution (DC) plans, such as 401(k) accounts, have not come close to filling the gap. This paper outlines a proposal for a system of universal voluntary accounts (UVAs). UVAs would be state sponsored, but privately managed, defined-contribution accounts. The accounts would be open to every worker in a state.