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Unlike workers in many developed nations, far too few American workers today can look forward to financial independence as they age. Many will be compelled to work much later, some into their 70s. This paper recommends a single private defined contribution (DC) pension system to cover all workers, with a single set of rules to replace the current patchwork of DC retirement plans in the US. Key provisions include - Creation of broadly diversified Trusteed Retirement Funds (TRFs), whose sponsors are trustees, with fiduciary responsibilities. - Payroll deduction of every employee's salary to go automatically into a broadly diversified TRF unless the employee opts out. - Employers to be relieved from fiduciary responsibility. - Default use of TRF savings to buy either an immediate or deferred indexed annuity. - All TRFs and annuities to be without marketing costs. - Tax deductions designed to stay within current US tax expenditures for retirement.
About the author
Russell Olson and Douglas Phillips have devoted their careers to managing funds as fiduciaries. Olson, author of four books on investing, was responsible for Eastman Kodak's pension plan and 401(k) plan. Phillips, with 33 years of investment experience, is chief investment officer for the University of Rochester's $2 billion endowment fund.
