July 21, 2014
Steven Pearlstein has a good piece on a proposal in Illinois to have the state administer retirement accounts for workers who don’t have access to one at their workplace, however he gets one part wrong. Under the proposal, 3.0 percent of a workers paycheck would be automatically deducted for a retirement account, but she would have the option to not have the deduction or to reduce (or increase) the amount. He tells readers:
“This concept goes by the name of “Automatic IRA.” It was first proposed in 2006 by two respected policy wonks, David John, then of the conservative Heritage Foundation (now at AARP), and Mark Iwry, then at the more liberal Brookings Institution (now at the Obama Treasury). It quickly won support from Democrats and Republican sponsors on Capitol Hill. In the 2008 presidential campaign, both John McCain and Barack Obama endorsed it.”
Actually the idea goes much further back than this. There were many similar concepts being debated in the 1990s. My friends at the Economic Opportunity Institute in Washington State had been working on this concept in the form of Washington Voluntary Accounts since 1998. So, it’s a good piece, but many more folks deserve credit on advancing this proposal.
Btw, he describes Illinois public employee pensions as “overgenerous.” I’ll let this one pass (workers did forgo pay for these pensions), since my mother gets one.