Is it Time to Admit the Failure of an Employer-Based Pension System

Abstract

In her contribution to the Twelfth Annual Lewis and Clark Business Law Forum (The Aging of the Baby Boomers and America's Changing Retirement System), Susan Stabile paints a pessimistic picture of the state of retirement security in the United States. She examines two aspects of the failure of an employer-based pension system, focusing first on the problems associated with defined contribution plans such as 401(k) plans, which have become the dominant means by which employers offer their employees pension coverage, and second, on the reality that millions of employees lack any pension coverage at all. She argues that the failures of the employer-based system can not be rectified by incremental changes and that serious consideration must be given to alternative models of providing Americans with retirement security. Although recognizing that neither of the models she discusses, i.e., the provision of a government pension for everyone and movement to a mandatory employment-based system with more stringent regulation than currently exists, would be politically easy to enact, she argues that some major overhaul is needed if we remain convinced that adequate retirement security is an important social goal.