By: Russ Kamp, Managing Director, Ryan ALM, Inc.

In a country as divided as ours, it is incredibly rare when one sees such unanimity as 83% of Americans believing that all workers should have access to a pension plan. This result is according to a recent study conducted by the National Institute on Retirement Security (NIRS). According to the survey, the American worker is not confident in the least that they will enjoy a dignified retirement given the current state of affairs.

According to NIRS, “Eighty-three percent of Americans say that all workers should have a pension so they can be independent and self-reliant in retirement, and more than three-fourths of Americans agree that those with pensions are more likely to have a secure retirement.” Imagine that, a super majority of American workers want access to a pension plan so that they can be independent and self-reliant! They aren’t looking for a handout from the federal government, but that is what they’ll be forced to incur should our retirement industry continue to fail our workers.

Furthermore, “79 percent of Americans agree there indeed is a retirement crisis, up from 67 percent in 2020. More than half of Americans (55 percent) are concerned that they cannot achieve financial security in retirement.” Not shocking that a majority of Americans are concerned about achieving financial security. A good chunk of our working population doesn’t have access to an employee-sponsored plan and when they do, most workers can’t put in nearly enough to achieve the financial independence that they desire. These findings are detailed in a new report from the National Institute on Retirement Security (NIRS), Retirement Insecurity 2024: Americans’ Views of Retirement. The report findings are based upon a national survey of working age Americans conducted by Greenwald Research.

There is also great anxiousness involving the securing of Social Security. More than 90% of the respondents to the survey believe that securing SS needs to be a priority for the next administration. SS is a critical benefit that currently supports >67 million Americans. In many cases, SS is the only source of funds for older Americans. I am incredibly concerned about the lack of retirement progress in this country. DB plans need to be the backbone of any retirement system, as asking untrained individuals to fund, manage, and disburse a “benefit” is just poor policy.

I’m less concerned about our government’s ability to continue to fund SS given our fiat currency. I am concerned that those in Congress don’t necessarily understand our monetary system and will enact unnecessary changes in order to fix something that isn’t broken.

Defined benefit plans were once used effectively by corporate America to attract and retain talent. They were a tool to manage a workforce from the initial hire to retirement. By migrating from DB to DC plans, corporate America has lost that ability, as the American worker now goes up and down the elevator with their “retirement” benefit in their back pocket. There are investment strategies that can be deployed to reduce the volatility of the funded status and contribution expenses that worked against retaining DB plans. Will DB plan asset allocations finally take advantage of these investment ideas to get off the performance rollercoaster? I significant majority of Americans sure hope so!