WATERLOO --- Sen. Tom Harkin, D-Iowa, believes America faces a retirement crisis and has a proposal to fix it.
Harkin, as chairman of the Senate committee on health, education, labor and pensions, proposes a new program that would supplement current retirement options with a new hybrid between 401k plans and Social Security.
The program, called Universal, Secure and Adaptable Retirement Funds, would be a supported by a .5 percent to 1 percent payroll contribution from employers and larger contributions from workers. According to Harkin, companies and employees that do not have pension plans would be automatically entered into the program, but could opt out if they choose.
Funds in the USA accounts would be invested through private asset managers and Harkin envisions the investment risk lessened by a broad pool of participants. The retirement account would also be portable and able to move with the employee through different jobs. However, the payout would be available only as a monthly annuity once the employee is retired. If an account holder dies before retirement, the money would not be available to their dependents.
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No bill has been introduced in Congress regarding the proposal, but Harkin has been holding meetings around Iowa seeking input. On Thursday, he and Rep. Bruce Braley, D-Iowa, met with constituents at Hawkeye Community College to present the plan.
Harkin said the "three-legged stool" of retirement financing --- pensions, Social Security and personal savings and investments --- is broken.
"Pensions have gone by the wayside. Savings are down as people are just scraping by, so the only thing left is Social Security," Harkin said.
LeVorn Robinson operates the Alpha Express delivery company in Waterloo. He said it's difficult for businesses like his to offer plans that will allow employees a comfortable retirement.
"For a small business it's almost impossible to afford a retirement plan but as we see our people get closer to retirement we know they are going to need something to help to support them because we can see that Social Security won't be able to do that," Robinson said.