There are large structural gaps in the employer-sponsored retirement system. I would like delve a bit into the kinds of workers who are left out, and why.
Nari Rhee, Ph.D., is director of the Retirement Security program at the UC Berkeley Labor Center. Her current research focuses on the retirement crisis facing California and the U.S. in the context of declining pension coverage, and policies to improve the retirement income prospects of low- and middle- wage workers. Before returning to the Labor Center in November 2014, she served for two years as manager of research at the National Institute on Retirement Security. She formerly held appointments as a postdoctoral scholar, visiting scholar, and associate academic specialist at the Labor Center. Dr. Rhee has written on a wide range of issues related to pensions and retirement security, including public pension reform, international pension systems, and retirement plan design. Her analysis of the retirement savings crisis and its racial dimensions has received broad media coverage and informed policy debates at the state and national levels.
Dr. Rhee’s previous work engaged a range of issues related to the economic security of low-wage workers, including care work, income inequality, housing affordability, uneven regional development, and labor-community coalition building. She earned a Ph.D. in geography from UC Berkeley in 2007, a master’s degree in urban planning from UCLA in 1998, and a bachelor’s degree in anthropology from UC Santa Cruz in 1996.
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Testimony of Nari Rhee before the U.S. DOL ERISA Advisory Council Hearing. The US private sector employer-sponsored retirement system leaves out many workers, disproportionately impacting Blacks and Latinos. While some states have forged their own path to try to close this coverage gap, these efforts are limited in scope by ERISA preemption. Federal policy action is necessary so that all workers are covered by a plan that effectively prepares them for a financially secure retirement.
Testimony of Nari Rhee before the Health, Employment, Labor and Pensions Subcommittee of the U.S. House Committee on Education and Labor on how the US retirement system can be strengthened and made more inclusive, so that all workers – regardless of race, gender, or class – can have economic security in retirement.
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“I do think that we are starting to see a crisis,” said Nari Rhee, director of the Retirement Security Program at UC Berkeley’s Center for Labor Research and Education, “in terms of seniors not being able to stay in Silicon Valley and the Bay Area.”
Nari Rhee talked about disproportionate disparity in retirement security among home care workers, especially women and people of color. Women often have truncated careers, she said, with interruptions for child-rearing or caring for elderly parents.
Hearing witness Nari Rhee said the current employer-sponsored retirement savings system omits many employees, including direct care workers, who toil in predominantly low-wage jobs. This reality poses special challenges for women, given their disproportionate caregiving responsibilities for children and aging parents, due to foregoing pay, a lasting pay penalty and a significant cumulative reduction in potential lifetime earnings.
Lawmakers and a panel of experts said the U.S. retirement system works well for some but is leaving others behind, and discussed ways to close the savings gap in a hearing Thursday before the Senate Special Committee on Aging.
Rhee, who reviewed a copy of the rankings ahead of their release, said it was difficult to compare defined contribution and hybrid plans alongside pension plans without calculating the likely salary replacement rates under all three plans.
Rhee also argued for a national universal retirement savings system. “I am agnostic on the exact policy model. Having been deeply involved with the development of the CalSavers program, I offer that there’s much to learn from the states.”
Many states have pursued their own requirements for most or all employers to offer a plan of some form, driven in part out of concern for the long-term financial burden that will arise from legions of older workers who haven’t saved enough for retirement, according to Nari Rhee, director of the Retirement Security Program at the University of California at Berkeley.
“The employer-sponsored retirement system leaves out many groups of workers and jobs, in a manner that disproportionately impacts women and people of color, particularly Blacks and Latinos,” Nari Rhee, director the retirement security program at the University of California at Berkeley, said in her written testimony.
Rhee said, “Your degree of access to the DC plan system is directly correlated with your income level. Most concerning, those sectors of the economy with the greatest representation of Latino and Black workers, such as hospitality, have the worst access to the DC plan system. The upshot of this is that only 46% of Black working households and 36% of Latino households are currently enrolled in the DC plan system.”
Rhee told The Sacramento Bee the House retirement reform legislation, which passed the House Ways and Means Committee on a voice vote last month, “tinkers around the edges of the retirement system and will thus have a modest impact on household retirement assets.”