A leading progressive retirement academic and the head of one ofthe world's largest private equity firms are presenting a radicalretirement policy in a new report: a national retirement savings plan.

Teresa Ghilarducci, director of the Schwartz Center for EconomicPolicy Analysis at The New School, and Tony James, president ofBlackstone, have issued a report on their proposal: a national planthat they say “ensures every worker a more secure retirement.”

The report, “A Comprehensive Plan to Confront the RetirementSavings Crisis,” proposes a system of Guaranteed RetirementAccounts (GRAs) for all workers as an alternative to the currentsystem, which it says “favors investments that deliver subparreturns; offers lopsided subsidies for the wealthy; and leaves thevast majority of workers unable to save enough for retirement.”

Underthat existing system, the average retirement savings totals$14,500, while what's needed is an average of $290,000 in savings—amassive gap.

The proposed GRAs, which would cover 95 million workers, wouldbe owned and controlled by the worker.

And there are plenty of specifics on how they would function.Workers would contribute 1.5 percent of their annual income, whichwould be matched by a 1.5 percent contribution from theiremployer—which, the report declares, together with Social Security,“is the minimum needed to close the gap.”

The contributions are “mandatory, but cost-neutral for almostall workers below median income,” it says, because “[t]he 1.5percent employee contribution is offset by a deficit-neutral taxcredit.”

Other particulars include the fact that participants would owntheir fund and choose their portfolio manager. Assets would beinvested with long-term, low-fee strategies to generate betterreturns—targeting a return of 6 percent to 7 percent, whereas401(k)s only bring in 3 percent to 4 percent per year.

And the government would guarantee a minimum return of 2 percentper year.

Because it would use existing structures and redeploy “existingregressive tax subsidies toward workers at the bottom 90 percent ofincome distribution,” the plan would not be a new program run bythe government, nor would it increase the deficit or create a newgovernment bureaucracy, the authors declared.

And without action on the scale of their proposed program, theyforesee a bleak future for the country.

“If we stay on our current path,” Ghilarducci and James wrote,“America will face rates of poverty among senior citizens not seensince the Great Depression. The strain of this population will haveresounding effects across the economy, the government, and futuregenerations.”