Debate: Should the U.S. Government Create a Nationwide Retirement Savings Plan?

Their reasons:

Bloink: Nearly 20 states have already established state-sponsored retirement plans. These programs are working to effectively provide retirement savings options for individuals who would otherwise lack access to a meaningful retirement savings plan. We should by now be well aware that the employer-based 401(k) system does not work for all Americans — especially lower-income Americans. A government-sponsored option would ensure that every American worker has access to a quality retirement savings option regardless of their employment history and status.

Byrnes: First, we should consider that the federal government currently doesn't have the bandwidth to sponsor such a complex endeavor. Should we create such a system, we'd likely be plagued with administrative problems for years, if not decades. Such a system will never happen just considering the complexities associated with such a huge and sweeping endeavor.

Bloink: Many workers enter retirement with little to no savings primarily because of the sporadic coverage options they have experienced throughout their working lives. A national, government-sponsored retirement plan option would ensure continuity for all Americans and increase retirement savings by requiring employers who do not offer retirement savings options to automatically enroll their employees in the government-sponsored plan with an opt-out feature.

Byrnes: Too many variables exist with this type of sweeping, federally sponsored retirement savings option. How would investment decisions be managed for participants who fail to make their own elections? How would such a program affect the markets and economy as a whole? Do we want the federal government to be stepping into making important investment decisions on behalf of retirement savers? This is simply not a workable solution.

Bloink: Thus far, we have failed to enact regulations that would ensure the stability of our current Social Security system. A nationwide retirement savings option at the federal level would provide an important supplement for the lower-income American workers who tend to rely on Social Security the most—yet have had only spotty retirement savings options throughout their working lives. Sure, administrative burdens would likely exist, as with any other option. We have to weigh the benefits against these burdens.

Byrnes: A federally run retirement savings program would also give employers a strong disincentive for offering their own retirement savings options, likely limiting the options for employees of smaller employers even further. We also have to consider that not every low-income employee would be happy with the federal government controlling their private retirement savings. It simply would not be an effective option to encourage robust growth.