Taking a Serious Look at the Retirement Crisis in America: What Can We Do to Expand Defined Benefit Pension Plans for Workers? (U.S. Senate Committee on Health, Education, Labor, and Pensions)

Hearing	Taking a Serious Look at the Retirement Crisis in America: What Can We Do to Expand Defined Benefit Pension Plans for Workers?
Committee	U.S. Senate Committee on Health, Education, Labor, and Pensions
Date	February 28, 2024

 

Hearing Takeaways:

• The State of the U.S.’s Retirement System: Committee Democrats, Ms. Schambers, Dr. Ghilarducci, and Mr. Doonan raised concerns that the U.S. retirement system is facing significant challenges with many Americans having little or no retirement savings. They stated that these limited retirement savings are causing stress for current and retiring workers and are the U.S. to experience high elderly poverty rates. Full Committee Ranking Member Bill Cassidy (R-LA) and Ms. Greszler argued however that these concerns were either unfounded or overstated. Ms. Greszler remarked that the financial well-being of older Americans is strong based on historic standards and highlighted how the share of older Americans with no retirement savings had fallen to 12 percent in 2022. She noted how the real incomes of retirees are up over 30 percent over the previous 35 years, even considering the impact of inflation on retirement savings. Dr. Ghilarducci argued however that many of these positive assessments of the U.S.’s retirement system focus on averages rather than medians. She stated that the financial success of wealthy Americans has brought up the U.S.’s average retirement wealth. Full Committee Ranking Member Cassidy further stated that many of the statistics pertaining to the state of the U.S.’s retirement system do not account for recent legislative reforms.
  • Defined Benefit Pension Plans: Full Committee Chairman Bernie Sanders (I-VT), Ms. Schambers, and Mr. Doonan lamented the declining popularity of defined benefit pension plans. They argued that these plans provide retirees with better financial security than defined contribution retirement plans. Mr. Doonan stated that pension plans are the most economically efficient way to deliver retirement income and can help companies to retain workers for longer. Full Committee Ranking Member Cassidy stated that while defined benefit pension plans can still be useful, he asserted that the U.S. should not provide preference for these plans over defined contribution retirement plans. He raised concerns however that defined benefit pension plans may not be conducive for workers that frequently switch jobs (which is a growing percentage of the U.S. workforce). He added that workers are often subject to layoffs, which force workers to involuntarily leave their jobs.
  • Defined Contribution Retirement Plans: Full Committee Ranking Member Cassidy highlighted the growing popularity of defined contribution retirement plans and stated that these retirement plans enable people to maintain their retirement accounts when moving jobs. Dr. Ghilarducci and Mr. Doonan argued however that defined contribution retirement plans are less efficient than defined benefit pension plans. Ms. Schambers and Mr. Doonan also raised concerns that defined contribution retirement plans do not provide the same level of predictable income as defined benefit pension plans.
  • Multiemployer Union Pension Plans: Committee Republicans and Ms. Greszler raised concerns that many multiemployer union pension plans are underfunded. They criticized previous government bailouts of these pensions plans and asserted that these bailouts had provided unfair preferential treatment to unions. They also contended that these bailouts had failed to require that these pension plans make significant reforms that would prevent future financial challenges. However, Sen. Tim Kaine (D-VA) expressed support for the American Rescue Plan of 2021’s inclusion of financial relief for multiemployer pension plans. He stated that this relief protects the pension plans of 2 million workers and reduces the likelihood that the troubled pension plans will require a bailout from the U.S. Pension Benefit Guaranty Corporation (PBGC).
  • The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) and the SECURE 2.0 Act of 2022 (SECURE ACT 2.0): Committee Members, Mr. Doonan, and Mr. Stevenson highlighted how Congress had worked in a bipartisan fashion to pass the SECURE Act and the SECURE Act 2.0 into law in recent years. These laws are meant to expand access to retirement savings options for workers. They expressed support for these laws and expressed interest in ensuring that the laws are properly implemented. 
  • Social Security: Full Committee Chairman Sanders and Dr. Ghilarducci discussed the important role that Social Security plays in supporting retirement security for many Americans. Chairman Sanders called on the U.S. to expand Social Security given how many senior citizens live in poverty and lack retirement funds. However, some Committee Republicans and Ms. Greszler raised significant concerns over the Social Security program’s financial situation and warned that the Program faces looming insolvency absent tax increases or benefit cuts. They also expressed doubts that young Americans will be able to obtain their promised Social Security benefits when they reach retirement age given the Program’s financial issues. Ms. Greszler further argued that the growth of Social Security has particularly harmed lower-income workers because they have little money available for retirement savings after they pay their Social Security taxes. She also noted how low-income and African American workers have the lowest life expectancies, which makes them less likely to receive Social Security benefits in retirement.
  • The U.S. Department of Labor’s (DoL) Proposed Fiduciary Rule: Sen. Ted Budd (R-NC) and Mr. Stevenson expressed concerns over the DoL’s fiduciary rule proposal for financial advisors. Sen. Budd warned that the DoL’s proposed fiduciary rule would further restrict access to retirement planning, increase costs for consumers, limit personalized financial advice, and only allow for consideration of basic investment products. Mr. Stevenson stated that the comprehensive nature of the DoL’s proposed fiduciary rule will diminish the retirement industry’s ability to implement the SECURE Act and the SECURE Act 2.0. He also warned that the proposed rule would impose major expenses on retirement plans.
  • Retirement Savings Challenges for Mothers: Sen. Maggie Hassan (D-NH) referenced a recent DoL report that had found that mothers lose an average of nearly $240,000 in income over their lifetimes because of the time that they spend caring for their children. Ms. Schambers testified that taking time off of work limits her ability to contribute to her 401(k) plan. She noted how her employer only matches up to 40 hours per week of wages when contributing to her 401(k) plan. She indicated that she will not receive her full 401(k) plan contribution from her employer if she does not work 40 hours in a week.
• Retirement Plan and Policy Reforms: Committee Members and the hearing’s witnesses also used the hearing to consider current innovations within the retirement planning sector and policy reforms that could improve the U.S.’s retirement system.
  • Establishment of New Retirement Account Options for Workers: Committee Members and the hearing’s witnesses proposed several different policies that would create new retirement accounts. Full Committee Chairman Bernie Sanders (I-VT) stated that corporations that do not provide retirement plans for their workers should give workers the option to contribute to a federal pension plan similar to the pension plan that members of Congress receive. Dr. Ghilarducci expressed support for the Retirement Savings for Americans Act of 2023 (RSAA), which would expand retirement accounts to all sector workers that do not have such accounts. She explained that this proposal would use thrift savings plans, include automatic enrollment features, include portability features, provide good investment options, and support sensible de-accumulation. She added that this proposal would include a 5 percent match. Ms. Greszler recommended that Congress enact universal savings accounts to make it simpler and easier for workers to save for all types of expected and unexpected life events.
  • The Retirement Plans Startup Costs Tax Credit: Sen. Maggie Hassan (D-NH) and Sen. Ted Budd (R-NC) mentioned how they were working on bipartisan legislation to improve the existing Retirement Plans Startup Costs Tax Credit. They stated that this legislation would ensure that the smallest businesses receive tax cuts that fully cover the costs of starting a retirement plan. Mr. Stevenson expressed support for efforts to help small businesses in creating retirement plans.
  • Social Security Reforms: Committee Members and the hearing’s witnesses also proposed reforms to Social Security meant to bolster the Program’s financial situation. Full Committee Chairman Sanders mentioned how he had introduced legislation that would make Social Security solvent for 75 years and increase benefits for U.S. senior citizens in need by $2,400 per year. He indicated that this legislation would accomplish these objectives through lifting the cap on the Social Security payroll tax. Ms. Greszler remarked that the U.S. will ultimately need to shift Social Security to a universal benefit system. She stated that the U.S. should gradually reduce Social Security benefits for middle- and upper-income earners and gradually increase Social Security benefits for lower income earners. She also suggested that the U.S. consider indexing retirement age to life expectancy and adopting a more accurate inflation index for Social Security. She further stated that U.S. workers should have an option to put their money into a vehicle that receives a positive rate of return and that cannot be spent by Congress.
  • Retirement Plan Innovations: Full Committee Ranking Member Bill Cassidy (R-LA), Mr. Doonan, and Mr. Stevenson discussed how retirement plan innovations can provide more guaranteed income to retirees, which can reduce financial uncertainties. These innovations include innovative lifetime income products, step-up tools, and lock-in tools. Mr. Doonan suggested that these innovations can support the increased adoption of defined benefit pension plans.
  • The Helping Young Americans Save for Retirement Act: Full Committee Ranking Member Cassidy and Sen. Tim Kaine (D-VA) mentioned how they had worked to develop the Helping Young Americans Save for Retirement Act. This legislation would reduce the minimum age threshold of workplace retirement plans from 21 to 18, which would enable younger workers to begin saving for their retirements earlier.
  • The Auto Reenroll Act of 2023: Full Committee Ranking Member Cassidy and Sen. Kaine also proposed the Auto Reenroll Act of 2023. This legislation would allow for businesses to periodically and automatically enroll employees back into their retirement plans and would provide employees with the option to opt out of these plans.
  • The 401Kids Savings Account Act of 2024: Sen. Robert Casey Jr. (D-PA) mentioned how he had proposed the 401Kids Savings Account Act of 2024, which would create savings accounts for all children automatically at birth. He indicated that this proposal would provide federal support for the savings accounts of low- and moderate-income families. He stated that the funds from these savings accounts could be used for education, small business formation, a first home purchase, and retirement when the savings account holder reaches the age of 18. He also stated that starting the savings process at birth will enable families to take advantage of compound returns, which will lead to greater assets later in life. Dr. Ghilarducci, Mr. Doonan, and Mr. Stevenson expressed support for this proposal’s general approach because it would enable Americans to benefit from compound interest over a long period.
  • Employee Stock Ownership Plans (ESOPs): Sen. Kaine also expressed support for ESOPs and commented that these plans provide strong retirement security for workers. He noted how ESOPs have historically been concentrated in certain industries (such as construction and contracting) and highlighted how ESOPs are increasingly being offered within the retail and hospitality industries. He stated that the U.S. should promote ESOPs through the U.S. tax code and other strategies.

Hearing Witnesses:

1. Ms. Sara Schambers, UAW Member, Local 182, Ford Livonia Transmission
2. Ms. Teresa Ghilarducci, Irene and Bernard L Schwartz Professor of Economics and Policy Analysis, The New School for Social Research
3. Mr. Dan Doonan, Executive Director, National Institute on Retirement Security
4. Ms. Rachel Greszler, Senior Research Fellow, The Heritage Foundation
5. Mr. Eric Stevenson, President, Nationwide Retirement Solutions, Nationwide Mutual Insurance Company

Member Opening Statements:

Full Committee Chairman Bernie Sanders (I-VT):

• He remarked that the U.S. currently has an unprecedented amount of income and wealth inequality and asserted that the U.S.’s social safety net for the most vulnerable Americans remains “far behind” other wealthy nations.
  • He noted how the U.S. has the highest rate of child poverty among major nations, a dysfunctional childcare system, more than 600,000 homeless people, and over 85 million people that are either underinsured or uninsured.
• He stated however that the U.S.’s challenges are not confined to children and poor people and that U.S. senior citizens are also facing struggles.
• He asserted that the U.S. faces a “retirement crisis” that demands the immediate attention of policymakers.
  • He noted how almost 45 percent of older Americans between the ages of 55 and 64 have no savings at all and no idea of how they will be able to retire.
• He further raised concerns over how there are millions of U.S. senior citizens that are no longer able to work, that have exhausted all of their savings, and that do not have pensions.
  • He highlighted how one-quarter of U.S. senior citizens are trying to live on an income of less than $15,000 per year and how over half of U.S. senior citizens are trying to live on an income of less than $30,000 per year.
• He mentioned how the Organisation for Economic Co-operation and Development (OECD) had found that over 23 percent of U.S. senior citizens live in poverty, which is one of the highest senior citizen poverty rates among wealthy countries.
  • He indicated that Denmark, France, and the United Kingdom (UK) have senior citizen poverty rates of 3 percent, 4.4 percent, and 15.5 percent, respectively.
• He discussed how company-provided defined benefit pension plans that guarantee monthly retirement incomes used to be very common in the U.S.
  • He noted how companies would bear all of the responsibility to fund these defined benefit pension plans for their workers.
• He lamented however that most companies no longer offer defined benefit pension plans to their workers and commented that the elimination of these pension plans has harmed U.S. workers.
  • He noted how the percentage of U.S. workers that are at risk of not being able to maintain their standard of living in old age had increased from 31 percent in 1983 to 51 percent in 2020.
• He called on the U.S. to expand Social Security given how many senior citizens live in poverty and lack retirement funds.
  • He stated that the U.S. must work to ensure Social Security’s long-term solvency so that future generations can benefit from the Program.
• He mentioned how he had introduced legislation that would make Social Security solvent for 75 years and increase benefits for U.S. senior citizens in need by $2,400 per year.
  • He indicated that this legislation would accomplish these objectives through lifting the cap on the Social Security payroll tax.
• He also remarked that all corporations in the U.S. should be required to provide retirement plans for their workers.
• He stated that corporations that do not provide retirement plans for their workers should give workers the option to contribute to a federal pension plan similar to the pension plan that members of Congress receive.
  • He noted how members of Congress and federal employees currently have a percentage of their salaries deducted from their paychecks that is put into the Federal Employees Retirement System (FERS), which provides a pension based on a person’s salary and years of service.
• He expressed his interest in working with the Committee to address the U.S.’s retirement challenges.

Full Committee Ranking Member Bill Cassidy (R-LA):

• He discussed how Congress had passed the Employee Retirement Income Security Act of 1974 (ERISA) in response to the loss of retirement security for tens of thousands of Americans.
  • He explained how this law had come in response to the collapse of Studebaker and the termination of 1,800 other pension plans over a four-year period.
• He stated that defined benefit pension plans have largely been replaced by defined contribution retirement plans since ERISA’s enactment and commented that defined contribution retirement plans have “flourished.”
  • He noted how 146 million Americans collectively own $9.5 trillion in retirement assets as of 2021.
• He remarked that the advantage of defined contribution retirement plans is that they provide workers with ownership of their retirement accounts, regardless of what happens to a worker’s current or previous employer.
  • He highlighted how most workers now move between employers and commented that defined contribution retirement plans enable workers to change jobs while maintaining their retirement accounts.
• He mentioned how Congress had recently passed the bipartisan SECURE Act 2.0, which makes improvements to the U.S.’s retirement system and is largely based on the defined benefit pension plan system.
• He also noted how there remain provisions of the SECURE Act 2.0 that still need to be implemented, including provisions that help low-income individuals.
  • He highlighted how the law’s enhanced Saver’s Match tax credit (which will support retirement savings for low-income Americans) will go into effect in 2027.
• He stated that many of Full Committee Chairman Bernie Sanders’s (I-VT) referenced statistics regarding the problems within the U.S. retirement system are from 2021 and thus predate the reforms enacted in the SECURE Act 2.0.
• He remarked however that defined benefit pension plans can still be useful and commented that reforms to these plans can ensure their success.
  • He noted how Congress had enacted reforms to defined benefit pension plans in 2006, which has led some defined benefit pension plans to be overfunded.
• He stated however that the 2006 reforms had not been implemented in the largely union-utilized multiemployer defined benefit space.
  • He highlighted how many multiemployer defined benefit pension plans have struggled for years and asserted that many of these plans are “badly mismanaged.”
• He noted how Congressional Democrats had passed a $90 billion bailout for multiemployer defined benefit pension plans on a party-line vote and commented that this bailout did not require these plans to make reforms.
• He asserted that this bailout should have required multiemployer defined benefit pension plans receiving relief to adopt reforms.
  • He elaborated that these plans should have been subjected to funding level requirements, disclosure requirements, and financial health reporting requirements.
• He mentioned how the Central States Pension Fund had received a $127 million overpayment in their bailout because this pension plan had included thousands of deceased participants in their bailout application.
  • He noted that while International Brotherhood of Teamsters President Sean O’Brien had told the Committee that this money should be repaid, he indicated that the Central States Pension Fund now says it would be impossible to repay this money.
• He stated that workers covered by the Central States Pension Fund should be alarmed over the pension fund’s financial state.
  • He called it “infuriating” that this pension fund could be on the verge of collapse only a few years after receiving a government bailout.
• He remarked that the Committee will need to overcome labor union opposition to proposed reforms that seek to provide greater oversight and protections for defined benefit pension plans.
• He stated that Committee Republicans do not wish to favor either defined benefit pension plans or defined contribution retirement plans.
  • He expressed particular interest in how many defined contribution retirement plans are incorporating innovative lifetime income products.
• He then criticized Committee Democrats for planning the hearing on a partisan basis with no input from Committee Republicans regarding the hearing’s scope or legislative focus.
• He remarked that the Committee will need to pursue bipartisan reforms to the U.S. retirement system that are legislatively viable and mentioned how he had introduced two bipartisan retirement savings bills with Sen. Tim Kaine (D-VA): the Helping Young Americans Save for Retirement Act and the Auto Reenroll Act of 2023.
  • He explained that the Helping Young Americans Save for Retirement Act would remove barriers for workers between the ages of 18 and 20 to join an employer’s retirement plan.
  • He explained that the Auto Reenroll Act of 2023 would allow for businesses to periodically and automatically enroll employees back into their retirement plans and would provide employees with the option to opt out of these plans.
• He expressed hope that the Committee would hold a markup for these two bipartisan bills.
• He lastly expressed interest in exploring the current effectiveness of the SECURE Act 2.0’s provisions. 

Witness Opening Statements:

Ms. Sara Schambers (UAW Local 182, Ford Livonia Transmission):

• She mentioned how she is a fourth-generation autoworker and noted how she does not have a pension plan (unlike previous generations of autoworkers).
  • She commented that autoworkers hired post-2008 Financial Crisis do not receive the same level of economic security as pre-2008 Financial Crisis autoworkers.
• She stated that the discontinuation of pension plans fosters fear and anxiety and reduces people’s willingness to purchase homes and to establish long-term community and employment ties.
• She discussed how autoworkers used to view their jobs as long-term careers that would provide financial security in retirement.
  • She commented that the current lack of pension plans for autoworkers results in a lack of retirement security and called this situation “unacceptable.”
• She mentioned how her labor union, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), had won “major victories” during its recent six-week strike.
• She noted however that the UAW had failed to secure pension plans for their members as part of their recent strike.
  • She indicated that the automobile companies had raised concerns that the provision of pension plans could impact their stock prices and credit ratings.
• She mentioned how the UAW’s next contracts with the three U.S. largest automobile manufacturers expire in 2028 and expressed the UAW’s intention to fight for retirement security, pensions, and health care.
• She criticized financial firms for pressuring automobile manufacturers to not provide their workers with retirement pension plans.

Dr. Teresa Ghilarducci (The New School for Social Research):

• She remarked that the U.S.’s “inadequate” pension system has caused the U.S.’s elderly poverty rate to exceed the elderly poverty rate in peer countries.
  • She noted how the U.S.’s elderly poverty rate is 23 percent while the Netherlands’s elderly poverty rate is just 3 percent.
• She indicated that while the U.S.’s average retirement wealth is high and growing, she highlighted how the U.S.’s median retirement wealth has gone down for the bottom 90 percent of Americans.
  • She commented that policymakers should focus on the distribution of retirement wealth (rather than the average retirement wealth).
• She stated that Social Security benefits are most important for the typical American approaching retirement.
  • She noted how the stream of Social Security benefits for people in the bottom half of the wealth distribution is worth about $188,000 and indicated that these people typically have no retirement wealth and no home equity.
  • She noted how the people in between the 50th percentile and the 90th percentile of the wealth distribution typically have $20,000 in retirement wealth and have $129,000 in home equity.
• She indicated that only the top 10 percent of the wealth distribution has experienced a “rapid” increase in their retirement wealth and that the home equity of this group is four times greater than the home equity of the middle class.
• She remarked that many Americans are thus not ready for retirement, even though Congress has provided tax incentives for retirement savings and home owning incentives (which support retirement savings).
  • She added that there have been substantial investments into financial advice and various retirement products.
• She stated that the U.S. retirement system lacks three fundamental elements of a well-designed pension system.
  • She indicated that the first fundamental element is support for Americans to accumulate enough money for their retirement accounts.
  • She indicated that the second fundamental element is support for Americans to invest well into their retirement accounts.
  • She indicated that the third fundamental element is a good mechanism for allowing people to de-accumulate their retirement accounts and lifetime benefits.
• She noted how Congress has proposed several pieces of legislation to protect the status quo.
  • She mentioned how Full Committee Ranking Member Bill Cassidy (R-LA) and Sen. Tim Kaine (D-VA) had proposed allowing workers into ERISA plans at age 18 (rather than at age 21).
  • She also mentioned how Full Committee Ranking Member Bill Cassidy (R-LA) and Sen. Tim Kaine (D-VA) had proposed the Auto Reenroll Act of 2023 to reinvigorate autoenrollment provisions in retirement plans.
• She further discussed the use of automatic individual retirement accounts (auto IRAs) at both the state and federal levels.
• She stated however that individual retirement accounts (IRAs) permit “leakages” and do not pool investments.
  • She also noted how people often access their IRAs for emergency savings, home buying, and other life events, which undermine their use as a retirement savings vehicle.
• She expressed support for a bipartisan and bicameral proposal that would expand retirement accounts to all workers that do not have such accounts.
  • She explained that this proposal would use thrift savings plans, include automatic enrollment features, include portability features, provide good investment options, and support sensible de-accumulation.
  • She added that this proposal would include a 5 percent match.
• She lamented how retirement is now being viewed as a luxury and applauded the Committee for working to address retirement security.

Mr. Dan Doonan (National Institute on Retirement Security):

• He noted how his organization, the National Institute on Retirement Security (NIRS), is a non-partisan and non-profit think tank whose membership includes financial services companies, plan sponsors, labor unions, and non-profit organizations (including AARP).
• He remarked that Congress has made progress in addressing the U.S.’s retirement “crisis” and described the SECURE Act and the SECURE Act 2.0 as positive developments.
  • He asserted however that more work remains to ensure that Americans can achieve retirement security.
• He stated that Americans face an “alarming” retirement savings shortfall and that the movement away from pensions is largely responsible for these problems.
  • He commented that while 401(k) plans are an important part of the retirement equation, he asserted that these plans were not designed to replace pension plans.
• He remarked that pension plan designs and management can be beneficial for employers, workers, and the economy more broadly.
• He asserted that pension plans are the most economically efficient way to deliver retirement income and offer workforce advantages for employers.
  • He mentioned how pension plans had paid out more than $600 billion in 2020 and had supported $1.3 trillion in economic activity.
  • He also commented that pension plans are user friendly for workers and face little leakage.
• He acknowledged that while employers have previously faced challenges regarding the unstable costs of pension plans, he stated that there now exist more sophisticated tools and benefit designs that address these challenges.
  • He commented that there do exist “win-win solutions” within the pension plan market.
• He then remarked that most Americans will not have enough money for a financially secure retirement and indicated that Americans are worried about this.
  • He highlighted how the bottom half of Generation X earners only have a few thousand dollars saved for retirement and how the median household only has $40,000 in retirement savings.
  • He added that retirement savings for Generation X are highly concentrated amongst the highest earners.
• He also noted how the National Retirement Risk Index (NRRI) finds that half of U.S. households will not be able to maintain their standard of living when they retire.
  • He highlighted how 79 percent of Americans agree that there exists a “retirement crisis” and 55 percent of Americans are concerned that they cannot achieve financial security in retirement.
• He discussed how the burden of preparing for retirement will increase due to greater life expectancies, the presence of larger risks (without risk pooling), and rising costs.
• He stated that research indicates that the U.S.’s individual savings-based retirement system is poorly suited for workers.
  • He commented that 401(k) plans were meant to supplement (rather than replace) traditional pension plans.
• He noted that while conventional wisdom suggests that 401(k) plans cost less than traditional pension plans, he argued that 401(k) plans simply involve putting less money into a less efficient retirement system.
  • He added that this is occurring in a rising cost environment.
• He stated that post-retirement brings the biggest challenge in inefficiencies for 401(k) plans.
• He mentioned how the NIRS’s research had found that only 8 percent of workers could provide an accurate projection of the annual retirement income generated by a $100,000 nest egg for a person at age 65.
  • He testified that most people had “wildly overestimated” the amount of income generated under this proposed scenario.
• He also remarked that there exists an incorrect perception that pension plans have similar benefit designs.
• He then discussed how there is growing demand among employers for pension plans.
  • He mentioned how the UAW has expressed interest in returning to a pension plan system and how IBM has readopted a pension retirement system.
  • He stated that IBM’s readoption of a pension retirement system will produce “substantial” cash savings for the company.
• He lastly remarked that there exist policies that can facilitate a pension plan “renaissance.”
  • He stated that this would involve enabling companies to employ fiscally cautious funding strategies that reduce cost volatility over time without a “major disincentive” to employ safe practices.

Ms. Rachel Greszler (The Heritage Foundation):

• She remarked that the financial well-being of older Americans is strong based on historic standards and highlighted how the share of older Americans with no retirement savings had fallen to 12 percent in 2022.
  • She noted how the real incomes of retirees are up more than 30 percent over the previous 35 years, even considering the impact of “excessive” inflation on retirement savings.
• She emphasized that the lowest earners have the highest income replacement rates in retirement.
  • She noted how households in the bottom 20 percent of income average 123 percent of their pre-retirement incomes in retirement while the highest income households average 75 percent of their pre-retirement incomes in retirement.
• She discussed how older Americans report greater financial well-being than any other age group and indicated that the percentage of people over the age of 65 that report financial struggles had fallen by half over the previous ten years.
• She stated that assets have “surged” as retirement savings have shifted from defined benefit pension plans to defined contribution plans.
  • She noted how the inflation-adjusted retirement assets of Americans have increased 330 percent over the previous 35 years to $41.5 trillion.
• She remarked that while both defined benefit and defined contribution retirement plans can provide secure retirement, she warned that improperly managed defined benefit pension plans can turn into Ponzi schemes.
  • She asserted that Social Security and multiemployer pension plans have turned into Ponzi schemes.
• She criticized previous and current Congresses for failing to properly manage Social Security and for failing to require sound funding rules for union pension plans.
  • She commented that both Social Security and union pension plans cannot fulfill their promises to retirees.
• She noted how Social Security is set to become insolvent within nine years and will need to implement 23 percent across-the-board benefit cuts.
  • She indicated that these cuts would amount to $5,300 annually for the average retiree.
  • She also indicated that Social Security has amassed a $22.4 trillion unfunded obligation, which amounts to $172,000 for every U.S. household.
• She stated that simply maintaining current Social Security benefits would require the average household to pay at least $3,000 more per year in taxes and asserted that this money would be better off in a personal account.
  • She mentioned how her analysis finds that allowing young people to put their Social Security taxes into personal accounts would result in the people receiving three times as much money in retirement after purchasing an annuity.
• She called on U.S. policymakers to reform Social Security before it becomes an “even worse deal” for younger workers.
  • She commented that moving Social Security to a universal benefit and making other “common sense” changes would improve the program, increase economic growth, and enable greater personal savings.
• She then remarked that private union pension plans have even greater problems than Social Security and noted how multiemployer pension plans had $823 billion in unfunded obligations as of 2021.
  • She indicated that multiemployer pension plans can only provide 41 percent of their promised benefits.
• She stated that the underfunding of multiemployer pension plans is systemic and noted how 96 percent of multiemployer pension plan participants are in a plan that is less than 60 percent funded.
  • She attributed this underfunding to union exploitation of preferential rules that enabled unions to increase benefits without requiring higher contributions to fund said benefits.
• She criticized Congress for bailing out the multiemployer pension plan system (rather than reforming the system).
  • She commented that this bailout picks winners and losers, fails to address underlying problems, and encourages future recklessness.
• She noted that while approximately 15 percent of union pension plans are now eligible for taxpayer bailouts, she indicated that about 10 million workers are in union pension plans that will not receive bailouts and that will become insolvent.
  • She called on Congress to reform the PBGC and apply the same funding rules to union pensions as it applies to non-union pensions.
• She asserted that Congress should not put more retirement savings into accounts that people neither own nor control and that are managed by groups of people who have repeatedly prioritized their own interests over the interests of retirees.
• She recommended that Congress enact universal savings accounts to make it simpler and easier for workers to save for all types of expected and unexpected life events.

Mr. Eric Stevenson (Nationwide Retirement Solutions):

• He discussed how his company, Nationwide Retirement Solutions, provides a range of insurance and financial services products.
• He testified that Nationwide Retirement Solutions administers 26,000 retirement plans protecting nearly $200 billion in participant assets and helps to secure the financial futures for over 2.5 million participants.
  • He also testified that the company is the top provider of public sector 457 retirement plans with 7,600 plans serving 1.84 million workers.
  • He further mentioned how the company focuses on helping small businesses and indicated that the company is responsible for nearly 25,000 small business employee 401(k) plans.
• He remarked that the retirement planning space has changed significantly since Nationwide Retirement Solutions was founded in 1973.
  • He noted how employers offering pensions in 1973 had assumed the risk and burden of managing their pensions on behalf of their employees.
• He highlighted however that there were two defined contribution retirement plans for every one defined benefit retirement plan in the market by 1975.
  • He commented that the growth of defined contribution retirement plans had shifted the burden of managing retirement assets away from the plan sponsor’s employer toward the retirement saver.
• He stated that neither defined benefit retirement plans nor defined contribution retirement plans are perfect.
  • He noted how traditional defined benefit retirement plans had kept employees tied with their employers through vesting requirements and service-based benefits calculations.
  • He noted how defined contribution retirement plans imposed expectations on employees to have the knowledge and the confidence to manage their own investment choices with little support.
• He remarked however that both defined benefit retirement plans and defined contribution retirement plans have “significant upsides.”
  • He noted how traditional defined benefit retirement plans offer the security of a predictable and reliable income stream throughout retirement and often include survivor benefits.
  • He noted how defined contribution retirement plans are portable and can be moved with the worker across jobs as workers pursue higher pay and new opportunities.
• He stated that the U.S. can take elements from both defined benefit retirement plans and defined contribution retirement plans to create better retirement plan options.
  • He commented that the passage of the SECURE Act and the SECURE Act 2.0 created opportunities to improve retirement plans and provide offerings that did not previously exist.
• He discussed how modern defined contribution retirement plans come with a host of education, support, and financial planning tools.
  • He noted how there now exist tax incentives that encourage small businesses to offer retirement plans to employees and to make employer contributions to employee retirement savings.
  • He also noted how student loan matching programs help young workers contribute to their retirement plans early and how auto enrollment features help more workers save for their retirements.
• He highlighted how retirement plans can now easily integrate protected retirement income into employer-sponsored plans.
  • He indicated that workers with access to these products can select to invest in said products knowing what their guaranteed income will be upon retirement.
• He testified that Nationwide Retirement Solutions has dedicated “significant resources” to build out a comprehensive suite of products on its platform to specifically meet the needs of retirees.
  • He stated that encouraging plan sponsors to offer at least one protected retirement income solution in their plans will help to ensure that people have guaranteed income during retirement.
• He discussed how 4.4 million Americans will turn 65 in 2024, which will be the largest number in U.S. history.
  • He commented that this trend underscores the importance of providing a secure retirement for U.S. workers.

Congressional Question Period:

Full Committee Chairman Bernie Sanders (I-VT):

• Chairman Sanders remarked that millions of Americans are now entering retirement and facing financial insecurity. He commented that Ms. Schambers’s testimony is emblematic of the experience of these Americans. He asked Ms. Schambers to discuss her experience working for a major corporation for 17 years without access to a retirement plan.
  • Ms. Schambers noted how she does receive a 401(k) retirement plan from Ford and mentioned how the UAW had recently received increased funding for these retirement plans. She raised concerns however that the performance of 401(k) retirement plans is linked to the stock market’s performance. She noted how the stock market has experienced numerous downturns throughout her lifetime and stated that the stock market’s volatility makes her “uneasy.” She also discussed how she has faced employment uncertainty while working at Ford and recounted how she had initially been a full-time temporary employee.
• Chairman Sanders interjected to ask Ms. Schambers to explain the concept of a full-time temporary employee. He highlighted how Ms. Schambers had been considered a temporary employee for six years.
  • Ms. Schambers discussed how she had been considered a full-time employee during the time when she was classified as a temporary employee. She testified that she had worked between 40 and 60 hours per week during this period and that her wage was locked in at $14 per hour. She stated that she had the responsibilities of a full-time employee during this period without the benefits. She further stated that Ford had selectively applied their employment rules to her during this period.
• Chairman Sanders then stated that the U.S. is considered the wealthiest country in the history of the world. He asked Dr. Ghilarducci to discuss how the status of older Americans compares to that of older people in other wealthy countries.
  • Dr. Ghilarducci remarked that 50 percent of current Americans will not be able to meet the same retirement standards that Americans had experienced 30 years ago. She asserted that the U.S. retirement system falls “way behind” the retirement systems of peer countries. She added that Kazakhstan has a lower elderly poverty rate than the U.S.
• Chairman Sanders interjected to note that some of the hearing’s witnesses have claimed that the U.S.’s retirement system is performing well.
  • Dr. Ghilarducci remarked that many of these positive assessments of the U.S.’s retirement system focus on averages rather than medians. She stated that the financial success of wealthy Americans has brought up the U.S.’s average retirement wealth. She attributed this financial success of wealthy Americans to the fact that these Americans have received retirement tax cuts, benefited from the strong stock market, and had not needed to withdraw their retirement savings to purchase their homes.
• Chairman Sanders interjected to discuss how Social Security taxes are only paid on the first $168,000 of a person’s income. He asked Mr. Doonan to indicate whether this situation is sensible (especially considering the U.S.’s income and wealth inequality).
  • Mr. Doonan largely attributed Social Security’s current financing problems to the declining percent of income captured by Social Security taxes. He noted how Social Security taxes had previously captured 90 percent of total income and how rising income inequality has caused Social Security taxes to capture around 81 percent of total income. He stated that some of the Social Security program’s projections from the early 1980s did not come true.

Sen. Tommy Tuberville (R-AL):

• Sen. Tuberville mentioned how he had paid an estimated $1 million in Social Security taxes throughout his lifetime and indicated that he currently receives around $3,000 per month in Social Security benefits. He also noted how Congress had voted to tax Social Security benefits in 1983. He described Social Security as a “scam” and stated that it is impossible for retirees to live on $3,000 per month. He asserted that the U.S. cannot afford Social Security given its large national debt. He added that the U.S.’s large amount of credit card debt further compounds the U.S.’s fiscal challenges. He remarked that Congress must work to address Social Security’s solvency before the Program can no longer provide its promised benefits to U.S. retirees. He stated that he could have invested the money he had paid in Social Security taxes into the stock market and estimated that this money would have been worth between $8 million and $10 million. He asserted that the federal government had “wasted” his Social Security taxes. He asked Ms. Greszler to discuss the current state of Social Security and how Social Security benefits are being taxed. He expressed frustration with the fact that Social Security benefits are being taxed.
  • Ms. Greszler noted how Social Security taxes were originally 2 percent of income and how the Program’s developers had claimed that Social Security taxes would never exceed 6 percent of income. She indicated that Social Security taxes are currently 12.4 percent of income. She noted how the U.S. Congressional Budget Office (CBO) and the Social Security Board of Trustees project that the Social Security tax will need to be raised to between 15.8 percent of income and 17.5 percent of income. She also mentioned how the originally recommended Social Security taxable income limit would be $66,000 in current U.S. dollars. She stated however that Social Security has “massively” expanded over time and noted how much of Social Security’s funding has already been spent. She explained that collected Social Security taxes over the previous 13 years have not been set aside and have instead been spent on promised benefits to current retirees. She commented that this system enables current policymakers to pass along financial obligations to future generations. She further argued that the growth of Social Security has particularly harmed lower-income workers because they have little money available for retirement savings after they pay their Social Security taxes. She also noted how low-income and African American workers have the lowest life expectancies, which makes them less likely to receive Social Security benefits in retirement. She indicated that one-quarter of African American men die between the ages of 45 and 64 and that these men will thus never collect their Social Security benefits.
• Sen. Tuberville asked Ms. Greszler to recommend a solution for Social Security’s problems.
  • Ms. Greszler remarked that the U.S. will ultimately need to shift Social Security to a universal benefit system. She asserted that Social Security should not be paying the biggest benefits to the highest earners. She stated that the U.S. should gradually reduce Social Security benefits for middle- and upper-income earners and gradually increase Social Security benefits for lower-income earners. She also suggested that the U.S. consider indexing Social Security’s retirement age to life expectancy and adopting a more accurate inflation index for Social Security. She further stated that U.S. workers should have an option to put their money into a vehicle that receives a positive rate of return and that cannot be spent by Congress.
• Sen. Tuberville asked Ms. Greszler and Mr. Stevenson to indicate whether his children (who are in their late 20s) will ever be able to benefit from Social Security.
  • Ms. Greszler predicted that Sen. Tuberville’s children will eventually receive some Social Security benefits. She stated however that these benefits will likely not match the promised benefits.
  • Mr. Stevenson discussed how both Social Security and pensions both provide guaranteed income. He stated that there are now retirement products that provide guaranteed income and protect against market volatility. He commented that the SECURE Act and the SECURE Act 2.0 have enabled retirement plan providers to offer these features and protections. He stated that 401(k) plans, 457 plans, and 403(b) plans should add at least one protected retirement income solution so that U.S. workers can access guaranteed income in retirement.
• Sen. Tuberville asked the witnesses to address why young people cannot put their money in their own 401(k) plans instead of contributing to the Social Security system.
  • Mr. Stevenson remarked that retirement savings in any way are beneficial. He stated that Social Security, pension, and 401(k) plans all have a place in the U.S. retirement system.

Sen. Maggie Hassan (D-NH):

• Sen. Hassan remarked that the U.S. can increase retirement savings through supporting small businesses that offer retirement plans to their employees. She mentioned how she is working on bipartisan legislation with Sen. Ted Budd (R-NC) to improve the existing Retirement Plans Startup Costs Tax Credit. She explained that this legislation would ensure that the smallest businesses receive tax cuts that fully cover the costs of starting a retirement plan. She asked Mr. Stevenson to discuss how expanding retirement-related tax incentives for small businesses would help to increase access to retirement security for their workers. She also asked Mr. Stevenson to provide recommendations for how Congress can continue to support small businesses in their efforts to provide retirement plans.
  • Mr. Stevenson stated that tax credits to support small businesses in creating retirement plans are “very important.” He expressed broad support for efforts to encourage small businesses to start 401(k) plans. He mentioned how he is a former small business owner and noted how small business owners often have numerous tasks to complete. He called it important for there to exist an easy process for people to set up their 401(k) plans.
• Sen. Hassan then discussed how Congress has passed two pieces of bipartisan legislation since 2019 to increase access to retirement savings options (particularly for military spouses, part-time workers, and student loan borrowers). She noted however that 57 million Americans still lack access to a workplace retirement plan. She asked Mr. Stevenson to address how Congress can build upon its bipartisan work to increase retirement options for U.S. workers.
  • Mr. Stevenson remarked that the SECURE Act and the SECURE Act 2.0 have expanded access to retirement options for U.S. workers and applauded these laws. He stated that the U.S. must ensure that U.S. workers are able to take advantage of these new retirement options. He thanked Congress for its work to expand retirement options and commented that the U.S. must further build upon this work.
• Sen. Hassan expressed interest in monitoring the implementation of the SECURE Act 2.0 so that Congress can respond to any challenges that may arise. She also expressed interest in working to make it easier for Americans to save for their retirements earlier in their careers. She then mentioned how a recent DoL report had found that mothers lose an average of nearly $240,000 in income over their lifetimes because of the time that they spend caring for their children. He noted how this lost income in turn reduces retirement savings for mothers by nearly $60,000. She stated that the U.S. must do more to help mothers and caregivers save for retirement. She noted how Ms. Schambers is a mother of two children. She asked Ms. Schambers to discuss her experience working to care for her children and save for retirement.
  • Ms. Schambers stated that it is important for parents to have the ability to leave their careers and still provide for their families. She noted how cost of living increases impact various parenting-related expenses, including babysitting and daycare. She stated that UAW wages had not kept pace with inflation prior to the recent UAW strike. She also noted how parents often must take time off of work to care for children when school and daycare are out. She stated that taking time off of work limits her ability to contribute to her 401(k) plan. She further highlighted how her employer only matches up to 40 hours per week of wages when contributing to her 401(k) plan. She indicated that she will not receive her full 401(k) plan contribution from her employer if she does not work 40 hours in a week.

Full Committee Ranking Member Bill Cassidy (R-LA):

• Ranking Member Cassidy expressed interest in improving the U.S.’s retirement system for low-income Americans. He noted how Dr. Ghilarducci had asserted that the low-income people are facing the greatest challenges in retirement. He noted however that Ms. Greszler had stated that households in the bottom 20 percent of income average 123 percent of their pre-retirement incomes in retirement. He asked Ms. Greszler and Dr. Ghilarducci to respond to each other’s claims.
  • Ms. Greszler attributed the differences in the assessments of the U.S.’s retirement landscape to the fact that some analyses use survey-based data (which relies upon self-reporting) while other analyses use administrative-based data, such as U.S. Internal Revenue Service (IRS) tax records. She stated that IRS data is more accurate than survey-based data because people are less likely to lie on their tax returns and IRS data captures information that might not be asked for in surveys. She noted how studies indicate that the median female in retirement will appear to have 45 percent less income in retirement than in reality when using a survey-based methodology. She mentioned how IRS data indicates that households in the bottom 20 percent of income average 123 percent of their pre-retirement incomes in retirement while households at the median income average 93 percent of their pre-retirement incomes in retirement. She concluded that most people appear to have significant income in retirement based on their tax records.
  • Dr. Ghilarducci stated that the study that Ms. Greszler is referencing is old and that the U.S. Current Population Survey (CPS) has corrected this study’s information. She testified that her analysis is based on a more comprehensive University of Michigan study that considers how much people have when they are about to retire. She indicated that this study considers IRS data and administrative records. She expressed confidence in her testimony’s assertions that the bottom 50th percentile of the wealth distribution has limited retirement funds, that the middle of the wealth distribution has about $200,000 in retirement funds, and that the top of the wealth distribution has almost $1 million in retirement funds.
• Ranking Member Cassidy provided Ms. Greszler with an opportunity to respond to Dr. Ghilarducci’s assertions.
  • Ms. Greszler stated that the data she cites is publicly available on the U.S. Federal Reserve’s website.
• Ranking Member Cassidy interjected to then note how Mr. Doonan had highlighted how some employers (including IBM) are now offering defined benefit pension plans. He stated however that U.S. employees tend to move jobs frequently. He noted how defined contribution plans enable people to take their retirement plans across jobs and do not subject workers to a vesting period to qualify for retirement benefits.
  • Mr. Doonan noted how younger workers have always been more prone to switch jobs.
• Ranking Member Cassidy interjected to highlight how data indicates that workers in their 30s are now frequently changing jobs.
  • Mr. Doonan acknowledged that workers in their 30s are also frequently changing jobs. He noted how private employers have moved away from encouraging long-term careers and commented that this has resulted in fewer employees staying with a given company for a long period of time. He noted how the public sector by contrast has continued to encourage their employees to have long-term careers and indicated that public sector workers tend to work longer for their employers.
• Ranking Member Cassidy interjected to ask Mr. Doonan to indicate whether he is arguing that the adoption of defined benefit pension plans would make workers more likely to stay with companies for longer periods of time.
  • Mr. Doonan answered affirmatively.
• Ranking Member Cassidy noted how companies often need to layoff large numbers of employees and emphasized that the employees in these instances are not choosing to leave their jobs. He then noted how Ms. Schambers had highlighted how workers are concerned over having their retirement funds be very dependent on the stock market’s performance (especially when the workers are on the cusp of retirement). He asked Mr. Stevenson to discuss how adoption of step-up and lock-in tools for retirement plans can help to alleviate worker concerns about the stability of their retirement funds.
  • Mr. Stevenson stated that step-up and lock-in tools are retirement solutions that address worker concerns about the stability of their retirement funds. He noted how 60 percent of Americans do not have a financial advisor. He stated that making protected retirement income solutions available within 401(k) and 457 plans would expand access to these solutions. He also indicated that this approach would provide financial expert oversight of the funds in 401(k) and 457.
• Ranking Member Cassidy interjected to indicate that his question period time had expired.

Sen. Robert Casey Jr. (D-PA):

• Sen. Casey discussed how major corporations have phased out secure and reliable pension plans over time and stated that these corporations are pursuing budget cuts that harm their workers. He commented that these reductions in pension plans have impacted worker retirement savings. He asked Dr. Ghilarducci to confirm that half of Americans between the ages of 51 and 64 have no wealth in retirement accounts.
  • Dr. Ghilarducci confirmed that half of Americans between the ages of 51 and 64 have no wealth in retirement accounts.
• Sen. Casey also asked Dr. Ghilarducci to confirm that half of Americans between the ages of 51 and 64 do not have home equity.
  • Dr. Ghilarducci confirmed that half of Americans between the ages of 51 and 64 have no home equity. She remarked that the U.S.’s debt creating institutions have overwhelmed the U.S.’s wealth creating institutions for most U.S. workers. She elaborated that student loans, home equity lines of credit (HELOCs), no-down payment mortgages, credit card debt, and the ability for people to withdraw funds from their retirement accounts have all undermined wealth creation.
• Sen. Casey then mentioned how he had proposed the 401Kids Savings Account Act of 2024, which would automatically create savings accounts for all children at birth. He indicated that this proposal would provide federal support for the savings accounts of low- and moderate-income families. He stated that the funds from these savings accounts could be used for education, small business formation, a first home purchase, and retirement when the savings account holder reaches the age of 18. He also stated that starting the savings process at birth will enable families to take advantage of compound returns, which will lead to greater assets later in life. He noted how the Aspen Institute had found that starting savings at birth (rather than at age 32) results in an additional $473,000 for retirement. He asked Dr. Ghilarducci to opine on the 401Kids Savings Account Act of 2024. She also asked Mr. Stevenson and Mr. Doonan to discuss the importance of building savings starting at birth.
  • Dr. Ghilarducci noted how Albert Einstein had quipped that the power of compound interest is one of the most powerful forces on earth. She stated that compound debt can also create immense challenges for Americans. She expressed support for the 401Kids Savings Account Act of 2024’s approach toward fostering wealth generation for Americans.
  • Mr. Stevenson remarked that Nationwide Retirement Solutions encourages savings at any rate and at any level. He stated that auto enrolling all Americans in retirement savings plans at age 21 would significantly address the U.S.’s retirement challenges.
  • Mr. Doonan noted how too many people start saving for their retirement at age 40. He commented that this late start results in a short investment time frame and limits sufficient investment returns. He stated that starting retirement savings earlier would better position people to retire with financial security and would promote wealth equity.

Sen. Mike Braun (R-IN):

• Sen. Braun asked Dr. Ghilarducci and Ms. Greszler to indicate whether it is ever sensible for a person to borrow money for consumption purposes (rather than investment purposes).
  • Dr. Ghilarducci remarked that it is rarely sensible for a person to borrow money for consumption purposes.
  • Ms. Greszler stated that a person should only borrow money for investment purposes.
• Sen. Braun raised concerns that the current generation is overly focused on short-term consumption at the expense of long-term investments. He noted how the U.S.’s borrowing has doubled over the previous five years and added that Social Security and Medicare will run out of money within the next decade. He remarked that the U.S. must shift its fiscal behavior toward savings and investments from consumption and spending. He asked Dr. Ghilarducci and Ms. Greszler to respond to his concerns.
  • Dr. Ghilarducci expressed agreement with Sen. Braun’s concerns and asserted that the U.S. government and businesses are very good investors.
• Sen. Braun interjected to ask Dr. Ghilarducci to confirm that she is asserting that the U.S. government is a good investor.
  • Dr. Ghilarducci asserted that the U.S. government is a good investor and cited the U.S. government’s investments in infrastructure and human capital (including education) as examples of good investments.
• Sen. Braun interjected to ask Dr. Ghilarducci to indicate whether the U.S.’s excessive spending in other areas diminishes the U.S.’s credibility when it claims that it can manage its current fiscal challenges.
  • Dr. Ghilarducci stated that the U.S. has not abused its spending authority. She remarked that U.S. should borrow money to make investments.
  • Ms. Greszler expressed disagreement with Dr. Ghilarducci’s assertion that the U.S. government is a good investor. She stated that while it would be beneficial to have children start saving for retirement at birth, she noted that U.S. children come into the world burdened by the significant national debt. She remarked that U.S. policymakers must work to not burden children with excessive federal debt.
• Sen. Braun expressed agreement with Ms. Greszler’s response. He called it hypocritical for Congress to criticize the borrowing patterns of Americans for consumption when Congress currently borrows money to fund the U.S.’s current consumption. He then recounted how the U.S. had arbitrarily chosen which automobile companies it would bailout during the 2008 Financial Crisis. He asked Ms. Greszler to indicate whether the U.S. should arbitrarily select which companies to bailout during periods of economic turmoil. He also asked Ms. Greszler to indicate whether the U.S. can financially afford to select companies for bailouts given its current financial situation.
  • Ms. Greszler called it unfair for the U.S. to arbitrarily select which companies to bailout during periods of economic turmoil. She recounted how only the unionized workers at Delphi Automotive Systems had received a bailout during the 2008 Financial Crisis. She indicated that the company’s non-union employees had not received a bailout during this period.
• Sen. Braun indicated that his question period time had expired. He reiterated his assertions that people should never borrow money for consumption and that Congress is currently ill-suited to fix the U.S.’s retirement system.

Sen. Tim Kaine (D-VA):

• Sen. Kaine first remarked that many government programs have a select number of beneficiaries and commented that this approach is not necessarily bad. He defended Congress for its decision to help certain groups facing pension insolvency. He mentioned how the American Rescue Plan Act of 2021 had protected the pension plans of 2 million workers and expressed support for this policy. He also stated that protecting these pension plans would reduce the likelihood that these pension plans will require a PBGC bailout, which would benefit all pension plan recipients. He then discussed how he had proposed the Auto Reenroll Act of 2023 with Full Committee Ranking Member Bill Cassidy (R-LA). He explained that this bill would periodically autoenroll workers in their company retirement plans and would include an opt-out option. He then noted how 2.7 million Americans between the ages of 18 and 20 work full-time hours and how 40 percent of workplace retirement plans set a minimum age threshold of 21. He asserted that this minimum age threshold should be lowered to 18. He mentioned how he had also proposed the Helping Young Americans Save for Retirement Act with Full Committee Ranking Member Cassidy to reduce this age threshold. He then expressed support for ESOPs and commented that these plans provide strong retirement security for workers. He noted how ESOPs have historically been concentrated in certain industries (such as construction and contracting) and highlighted how ESOPs are increasingly being offered within the retail and hospitality industries. He stated that the U.S. should promote ESOPs through the U.S. tax code and other strategies.

Sen. Ted Budd (R-NC):

• Sen. Budd noted how Congress has provided explicit instructions to the DoL on numerous occasions regarding how to encourage Americans to save for their retirements. He stated however that the DoL’s currently proposed fiduciary rule contradicts these instructions. He warned that the DoL’s proposed fiduciary rule would further restrict access to retirement planning, increase costs for consumers, limit personalized financial advice, and only allow for consideration of basic investment products. He asserted that the DoL’s proposed approach to retirement investors is incompatible with the U.S.’s current retirement system where individuals can make retirement decisions for themselves. He asked Mr. Stevenson to indicate whether the DoL’s proposed fiduciary rule undermines the bipartisan work of the SECURE Act and the SECURE Act 2.0.
  • Mr. Stevenson first remarked that financial literacy efforts are largely ineffective and asserted that autoenrollment and automatic escalation approaches are effective at promoting retirement savings. He then warned that the broad nature of the DoL’s proposed fiduciary rule will diminish the retirement industry’s ability to implement the SECURE Act and the SECURE Act 2.0. He also warned that the proposed rule would impose major expenses on retirement plans.
• Sen. Budd asked Mr. Stevenson to indicate whether the DoL’s proposed fiduciary rule would harm people given how people are living longer and inflation is “rampant.”
  • Mr. Stevenson remarked that the DoL’s proposed fiduciary rule has a potential to harm people. He stated that the SECURE Act 2.0 has many beneficial provisions and recommended that the U.S. prioritize implementing these provisions. He warned that the DoL’s proposed fiduciary rule would undermine the SECURE Act 2.0’s implementation.
• Sen. Budd then mentioned how the SECURE Act 2.0 had contained several incentives to help small businesses cover the costs associated with setting up employer retirement plans. He stated that while these bipartisan measures were important, he commented that a “simple” miscalculation means that this tax credit does not work for very small businesses. He mentioned how he is working with Sen. Maggie Hassan (D-NH) to introduce the Senate companion bill to the bipartisan Retirement Improvement and Savings Enhancement (RISE) Act, which would address this miscalculation. He asked Mr. Stevenson to indicate whether tax credits (such as the ones contemplated under the RISE Act) will help boost retirement savings for people.
  • Mr. Stevenson answered affirmatively. He noted how many Americans work for small companies and asserted that removing barriers for these companies to offer retirement plans would be helpful. He also stated that autoenrollment and automatic escalation features will further support employee participation in retirement plans.