La Follette School Professor Pam Herd and three colleagues received funding from AARP’s Innovation Challenge to identify policy solutions for strengthening Social Security. Their proposal would create a new Minimum Benefit Plan (MBP) for low-income retirees that examines sufficiency of retirement income in lieu of calculating years of low earnings.
La Follette Professor Tim Smeeding, Melissa Favreault of the Urban Institute, and Madonna Harrington Meyer of Syracuse University are the other researchers on the project, A Targeted Minimum Benefit Plan (MBP): A New Proposal to Reduce Poverty among the Elderly. Herd also serves as principal investigator of the Wisconsin Longitudinal Study.
The researchers posit this would be more administratively efficient than Supplemental Security Income (SSI) and the existing special minimum benefit. The MBP, payable at full retirement age (66 or 67), would be available to those workers with at least 20 years of U.S. residency and 10 years of payroll tax contributions whose income fell below 100 percent of the poverty level.
AARP launched the Innovation Challenge in August 2016 “to identify policy solutions to strengthen economic security for American workers and retirees by achieving Social Security solvency and maintaining benefit adequacy for future generations.”
It received an overwhelming number of responses to the Challenge, and all proposals that met the innovation criteria were reviewed by blind panels using a consistent scoring rubric. The panel included the directors of the Retirement Research Centers at the University of Michigan, Boston College, and the National Bureau of Economic Research.