In its June 9 editorial, Pensions & Investments is right to raise a caution flag over states' decisions to provide saving assistance for small-business workers and owners, but the conclusion is wrong. Yes it's complex, but providing missing retirement security to millions of Americans is both a moral imperative and necessary to protect the economy as a whole. That trumps the complexity argument.
In Connecticut, we began working on such a plan over three years ago. We did this because more and more private-sector companies were closing their pension plans and replacing them with savings accounts, sometimes with employer partial contributions, which largely disappeared at the outset of the recession.
Since the 1930s, we have described the American retirement system as a three-legged stool consisting of Social Security, an employer-sponsored pension and personal saving. To a large part that's gone — replaced by Social Security, inadequately regulated 401(k) savings plans often with egregiously high fees, and employee savings.
The deterioration of personal savings and real, i.e., defined benefit, retirement plans has had a destructive impact on the middle-class economy. Numerous studies tell us we are facing a generation of workers who will work until they are either forced out or until they are unable to continue to do so, leaving them without adequate income for basic survival. Given this bleak prediction, it's no surprise states are stepping in to assist their citizens.
The sad truth is the federal government should assume this responsibility, and possibly when it begins to function properly again we will see that happen. In the meantime, states like Connecticut will successfully run these programs using robust resources already in place.
Director of policy and planning
Council 4, American Federation of State,
County and Municipal Employees
New Britain, Conn.