EDITORIAL: Saving for retirement

According to recent Labor Department data, one-third of U.S. workers toil for companies that don’t offer employer-run savings plans. That number includes 60 percent of part-time workers and half of all Americans at firms with fewer than 50 employees.

The Obama administration now aims to fix this “problem” with new rules that make it easier for states and large cities to establish their own retirement programs for private-sector workers. While well-intentioned, the effort triggers a host of red flags.

“All Americans deserve a secure retirement after a lifetime of hard work,” Jeff Zients, director of the White House National Economic Council, told Bloomberg on a conference call. “Too many Americans reach retirement age without enough savings to supplement their Social Security checks.”

That’s true. But it has nothing to do with a lack of access to retirement vehicles — which are available at virtually every private financial institution — and everything to do with spending habits and financial literacy.

In fact, encouraging states and local government to run competing plans is a recipe for fiscal shenanigans. Expect politics to dominate discussions about investment options. And don’t be surprised if politicians can’t keep their hands off this new pot of money. Do the words “Social Security” mean anything?

Writing about a proposal to create such a program in California, the Wall Street Journal noted this week that taxpayers could eventually face huge costs. “Have you ever heard of a public fund that didn’t have an implicit taxpayer guarantee?” the paper asked.

In addition, some of the administration’s new rules exempt state-run retirement plans from consumer protections imposed on private-sector plans. There are also concerns that states will be able to handcuff employees, preventing them from shopping around for lower-cost, private-sector IRA options for their own money.

We already have a preview of how well this will work thanks to President Obama’s myRA — short for “my Retirement Account.” Rolled out in 2014 in an effort to encourage the roughly 50 million Americans without access to an employer-based 401(k) to get into a savings habit, the myRA offers a minuscule 1.5 percent return — not nearly enough to convince millions of Americans to start saving.

Of course, convincing people to start saving was never the real goal of the plan. The myRA’s real purpose is to get the working poor to pay for the government’s deficit spending.

There’s simply no need for state and local governments to duplicate what’s already available in the private sector.