The three pillars of the American retirement system — Social Security, workplace retirement plans and individual savings — will not provide adequate retirement security for a growing number of people, according to a report issued Wednesday by the U.S. Government Accountability Office.
Part of the risk, the report said, comes from federal programs like Social Security, which is projected to be unable to pay full benefits by 2035, and "substantial liabilities" of the Pension Benefit Guaranty Corp.' multiemployer program.
In addition, "the federal government is on an unsustainable fiscal path, largely due to spending increases driven largely by health-care programs, demographic changes and net interest on government debt," said Gene Dodaro, head of the GAO head and comptroller general of the United States.
Other factors are a "marked shift" to defined contribution plans instead of defined benefit plans offered to employees, who have increased risk and responsibility for their retirement security. Increased debt and health-care costs further compound that risk, the report found.
Mr. Dodaro noted that the last comprehensive federal evaluation of retirement security was 40 years ago, from the 1979 Commission on Pension Policy. The GAO report recommends that Congress establish an independent commission to recommend policy goals and ways to improve the system.
The report, "The Nation's Retirement System: A Comprehensive Re-evaluation Is Needed to Better Promote Future Retirement Security," was sent to Congress and will be on the GAO website.
Hazel Bradford is a reporter for InvestmentNews' sister publication Pensions & Investments.