| | With recent corporate bankruptcies and the slump in the stock market draining billions of dollars in workers’ retirement savings, and with fewer employers providing guaranteed (defined) pension plans, the need for retirement security—including a strengthened Social Security program—is greater than ever. The AFL-CIO recently asked the 2004 presidential candidates how they plan to strengthen Social Security and encourage employers to ensure a secure retirement future for their workers. |
George W. Bush
Candidate response not received.
For more information, visit www.georgewbush.com and www.aflcio.org/issuespolitics/bushwatch/.
John Kerry
Retirement Security
What will you do to encourage employers to provide secure defined-benefit pensions for workers?
After Social Security, defined-benefit pension plans are workers' best bet for a secure retirement. Defined benefit plans provide a guaranteed benefit that accrues over a worker's career. However, over the last generation, there has been a significant shift towards defined contribution plans, in which workers generally manage their own investments but are also subject to all of the market risk. Now, more than one-fourth of workers have a 401(k)-type plan as their only employer-based retirement plan. As President I would work to protect all types of pension plans. For example, I want to make sure that older workers' benefits are not jeopardized when companies shift to cash-balance pension plans. I want workers in defined contribution plans to have much more information and greater diversification rights than they do today. I want to make it easier for workers to bring their existing plans with them when they change jobs, because too many workers are simply cashing out and paying the 10 percent tax penalty. And I want to make it easier for small businesses to provide some sort of retirement plan for their workers. The great challenge facing the country on the issue of secure retirement-outside of Social Security-is ensuring that more workers, especially lower-income workers, have access to a secure employer-based retirement plan. Narrowing that gap will be a high priority of mine.
What sorts of 401(k) plan reform will you propose?
I am committed to pushing for significant 401(k) reform as president. I will support proposals that provide better investment information and advice to workers, much more flexible diversification rules (including special provisions to protect older workers), and new rules on blackout periods. We must ensure that workers' retirement savings are protected, and that workers are empowered with better information and more control over their investments. Workers can no longer be put in situations where if their company fails, their lifetime savings disappear. As a lesson learned from the Enron scandal, I would make sure that companies could not force employees to hold employer stock for longer than the time it takes the stock to vest. Once employees own the stock the employers provide them with as a match for the contributions they make themselves to their accounts, the employees should be free to divest of that stock and diversify their savings.
What specific steps will you take to strengthen Social Security for this and future generations?
One reason that I am so concerned about the return to sizeable budget deficits is that the baby boomers will begin to retire less than 10 years from now, placing heavy fiscal demands on the country that we should be preparing for today. That's why, back in 2001, I supported setting aside some of the projected surpluses for Social Security reform. Significant reform will be harder now, but it is still necessary. As President, I would fight to ensure that Social Security remains a viable program for generations to come. Social Security is the most successful social program ever enacted, and the social insurance aspect of it is an essential component. I won't allow Republicans to turn it into another private pension plan subject to the unpredictable whims of the stock market. I will appoint a commission to study this issue - but not like the stacked commission set up by President Bush, where everyone knew the outcome before it began. However, the most important step we can take to strengthen Social Security is to grow the economy, create jobs and increase revenues into the program, which is one important reason that we must end President Bush's failing economic policies.Will you support or oppose measures to replace any part of Social Security’s guaranteed benefits with individual investment accounts or to increase the retirement age (which will increase to 67 under current law)?
I do not support any of the current plans for privatization or partial privatization of Social Security because each would leave beneficiaries unacceptably vulnerable to volatility in the financial markets and each would require the federal government to borrow more than $1 trillion to pay promised benefits. This will no doubt leave many workers with lower benefits I will remain opposed to any plan that threatens retirement security or requires such massive sums to be borrowed in order for the government to meet its obligations. That said, we do need to do more to help workers save for their retirement outside of social security and to assure these savings are protected. But we do not need to undermine Social Security.
On the question of retirement age, I am opposed to making any major changes to Social Security that would affect any worker at or near retirement, which includes increasing the normal retirement age beyond 67. We shouldn't ask people to contribute to the program throughout their entire working lives, and then change the benefit rules as they near retirement. Moreover, even though life expectancy has increased it does not mean that all workers - particularly those who work on their feet or in labor intensive jobs - can work until 70 or beyond.
