The catastrophic losses that the National Flood Insurance Program (NFIP) faces in the wake of this year’s hurricane season prove that it is time for Congress to fix the program once and for all. The solution is to take steps to make NFIP actuarially sound. Such changes may not be popular among those who live in flood plains or along the coast, but they are the only responsible way to shore up the program and protect taxpayers.

The retirement security of millions of workers who are covered by defined benefit pension plans is at risk because many of those plans do not have enough money to pay all of the benefits they have promised. While the federal Pension Benefit Guarantee Corporation (PBGC) has had to take over underfunded pension plans from two airlines and most of the steel industry, worse is yet to come. Other airlines are already in trouble, and the auto industry is also feeling the crush of massive pension obligations. The end result may be a massive bailout of PBGC that costs taxpayers tens of billions of dollars. To avoid this, Congress needs to act quickly. It should start by considering the Administration’s proposal on defined benefit pension reform.

But Resist Interfering in Its Investment Choices

Congress will improve the retirement security of millions of federal workers if it agrees to add auto-enrollment to the Thrift Savings Plan (TSP), a part of the federal government's employee retirement system. Under auto-enrollment, a worker participates in TSP unless he or she opts out of it. On June 19, the Federal Retirement Thrift Investment Board (FRTIB), which manages TSP and has a fiduciary responsibility to ensure that TSP operates solely for the benefit of federal workers, voted to ask Congress for the authority to automatically enroll new and returning workers into TSP. The recommendation also has the support of TSP's Employee Thrift Advisory Council. Establishing auto-enrollment would especially help military personnel, whose participation rate in TSP is well below that of civilian employees.

by David C. John and J. Mark Iwry

Retirement insecurity looms for millions of American workers. For most of us, Social Security will not be enough. A comfortable retirement, according to most investment professionals, requires an annual income of about 70 percent of pre-retirement earnings -- far more than Social Security provides for most workers.

Yet our nation’s personal savings rate -- saving as a percentage of income -- has dropped below zero, and traditional employer-sponsored defined benefit pensions, which have served workers so well for decades, are rapidly eroding.

by David C. John and J. Mark Iwry