Stretching the Pension Dollar

By Sylvester J. Schieber, Richard Joss and Marjorie M. Kulash | Watson Wyatt Worldwide

Providing retirement security for the large baby boom generation has become a major concern in the United States, not only because of Social Security’s imbalances but also because private savings, both by individuals and by their employers through pension arrangements, may not be adequate. This paper focuses especially on employer-sponsored arrangements and ways to encourage employers to offer plans to their workers. Of course, the importance of social insurance, personal savings, and even some continuing earnings as older workers phase down gradually into retirement is recognized.

Given the low personal savings rates in the United States, individuals should be encouraged to save more on their own. For example, more vigorous communications by employers who are already sponsoring retirement plans can enhance participation and contribution rates. Increased employer matching contributions can stimulate greater employee saving as well. Relaxing rules that discourage phased retirement, such as those that prohibit in-service pension distributions before normal retirement age, would make it easier for individuals to contribute to their retirement income through extended employment toward the end of their working career.

Read Full Report