Ted Benna, the father of the 401(k), has another idea for helping American workers save for retirement: Radish, an employer-funded retirement plan that rewards employees for things such as attendance, safety, training and performance.
I like it.
But the more I think about it, the more questions I have.
And perhaps those questions tell us something larger about what's wrong with our retirement system.
Roughly two-thirds of private-sector workers have access to a workplace retirement plan, yet only about half participate. But what about the workers who aren't counted because they're outside the traditional employer system altogether?
What about gig workers and independent contractors?
And what about workers who have access to a retirement plan but simply cannot afford to give up part of today's paycheck for money they won't use for decades?
Radish approaches that problem differently. Instead of requiring employees to contribute their own money, employers can make contributions based on things such as attendance, retention, safety, training and performance.
That makes sense to me.
Trucking is an obvious example. Reward a driver for safe driving, completing training or meeting reasonable performance standards, and put the reward toward the driver's financial future.
But let's take that idea one step further.
Driverless trucks aren't science fiction anymore. They're operating today.
If we're going to reward today's truck driver for driving safely, shouldn't we also reward that employee for learning the skills that may be necessary when someone isn't sitting behind the wheel?
There are other questions.
If employers substitute retirement incentives for cash compensation, could that hold down wages?
If these incentives aren't treated as wages for Social Security purposes, are we helping employees build one retirement asset while potentially reducing another?
What happens when an employee changes employers? I had five employers during my first 16 years in the workforce. Portability matters.
What happens when someone gets promoted from a dangerous job into a safer position? Does the incentive change? What happens to the money already accumulated?
And where should this money be invested?
A money market fund provides stability, but stability has a price. It wasn't that long ago that money market funds were paying next to nothing. For an employee who might have decades before retirement, I question whether that should be the default destination for long-term retirement savings.
None of these questions makes Radish a bad idea.
Quite the opposite.
I think Ted Benna is asking exactly the right question: How do we help workers accumulate money when many of them cannot afford to contribute to a traditional 401(k)?
I would simply take the question further.
The retirement system shouldn't only help people save for the end of their working lives. Perhaps it should also help them navigate the changes that occur during them.
Yes, I'd like Radish with my salad.
But I'd like to know what's in the salad.