Modernizing the U.S. pension system
Pension reform is one way the United States can modernize its aging infrastructure. Of the 50 states, only seven have 80 or more years of life expectancy for men and women. The old way of funding pensions—which required government contributions and left governors and taxpayers on the hook for expensive financial obligations—is no longer affordable. *** The high cost of pensions has resulted in chronic fiscal shortfalls in state and municipal governments, which in turn have created huge incentives for furloughs, layoffs, and resignations. *** Pension reform will not be easy, but it is essential if the United States is to avoid becoming a society where a large and growing proportion of the population is retired on very small pensions. The following are some of the key issues that need to be addressed: -Defining the optimal retirement age for both public and private-sector workers. -Eliminating the vesting and length of service rule requirements, which unnecessarily tie workers’ hands and often discourage them from taking early retirement. -Improving the automatic cost-of-living adjustments that are made to pensions, so that they more adequately reflect the actual costs of living. -Making it easier for workers to transfer their pension benefits