[Senate Hearing 115-834]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 115-834

                          FINANCIAL LITERACY:
                         THE STARTING POINT FOR
                          A SECURE RETIREMENT

=======================================================================

                                HEARING

                               BEFORE THE

         SUBCOMMITTEE ON PRIMARY HEALTH AND RETIREMENT SECURITY

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                                   ON

  EXAMINING FINANCIAL LITERACY, FOCUSING ON THE STARTING POINT FOR A 
                           SECURE RETIREMENT

                               __________

                            AUGUST 21, 2018

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions
                                
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


        Available via the World Wide Web: http://www.govinfo.gov
        
                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
31-329 PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------       
        
        
        
          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                   LAMAR ALEXANDER, Tennessee, Chairman

 MICHAEL B. ENZI, Wyoming		PATTY MURRAY, Washington
RICHARD BURR, North Carolina		BERNARD SANDERS (I), Vermont
JOHNNY ISAKSON, Georgia			ROBERT P. CASEY, JR., Pennsylvania
RAND PAUL, Kentucky			MICHAEL F. BENNET, Colorado
SUSAN M. COLLINS, Maine			TAMMY BALDWIN, Wisconsin
BILL CASSIDY, M.D., Louisiana		CHRISTOPHER S. MURPHY, Connecticut
TODD YOUNG, Indiana			ELIZABETH WARREN, Massachusetts
ORRIN G. HATCH, Utah			TIM KAINE, Virginia
PAT ROBERTS, Kansas			MAGGIE HASSAN, New Hampshire
LISA MURKOWSKI, Alaska			TINA SMITH, Minnesota
TIM SCOTT, South Carolina		DOUG JONES, Alabama                   
                                    
               David P. Cleary, Republican Staff Director
         Lindsey Ward Seidman, Republican Deputy Staff Director
                 Evan Schatz, Democratic Staff Director
             John Righter, Democratic Deputy Staff Director
                                 
                                 
                                 ------                                

         SUBCOMMITTEE ON PRIMARY HEALTH AND RETIREMENT SECURITY

                   MICHAEL B. ENZI, Wyoming, Chairman
RICHARD BURR, North Carolina         BERNARD SANDERS (I), Vermont
SUSAN M. COLLINS, Maine              MICHAEL F. BENNET, Colorado
BILL CASSIDY, M.D., Louisiana        TAMMY BALDWIN, Wisconsin
TODD YOUNG, Indiana                  CHRISTOPHER S. MURPHY, Connecticut
ORRIN G. HATCH, Utah                 ELIZABETH WARREN, Massachusetts
PAT ROBERTS, Kansas                  TIM KAINE, Virginia
TIM SCOTT, South Carolina            MAGGIE HASSAN, New Hampshire
LISA MURKOWSKI, Alaska               DOUG JONES, Alabama
LAMAR ALEXANDER, Tennessee (ex       PATTY MURRAY, Washington (ex 
    officio)                             officio)
                            
                            
                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                        TUESDAY, AUGUST 21, 2018

                                                                   Page

                           Committee Members

Enzi, Hon. Mike, Chairman, Subcommittee on Primary Health, and 
  Retirement Security, Opening statement.........................     1
Jones, Hon. Doug, a U.S. Senator from the State of Alabama, 
  Opening statement..............................................     3

                               Witnesses

Carranza, Jovita, Treasurer, U.S. Department of the Treasury, 
  Washington, DC.................................................     5
    Prepared statement...........................................     6
Jain, Vishal, Financial Wellness Officer, Workplace Solutions, 
  Prudential Financial, Inc., New York, New York.................     7
    Prepared statement...........................................     9
Dudley, Lynn, Senior Vice President, Global Retirement and 
  Compensation Policy, American Benefits Council, Washington, DC.    11
    Prepared statement...........................................    12
Astrada, Scott, Federal Advocacy Director, Center for Responsible 
  Lending, Washington, DC........................................    17
    Prepared statement...........................................    18

 
                          FINANCIAL LITERACY:
                         THE STARTING POINT FOR
                          A SECURE RETIREMENT

                              ----------                              


                        Tuesday, August 21, 2018

                                       U.S. Senate,
    Subcommittee on Primary Health and Retirement Security,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m. in 
room SD-430, Dirksen Senate Office Building, Hon. Michael Enzi, 
Chairman of the Subcommittee, presiding.
    Present: Senators Enzi [presiding], Young, Scott, and 
Jones.

                   OPENING STATEMENT OF SENATOR ENZI

    The Chairman. Good afternoon and welcome to the 
Subcommittee on Primary Health and Retirement Security. The 
hearing we are having today is, ``Financial Literacy: The 
Starting Point for a Secure Retirement.''
    To begin with, I want to extend my gratitude to Senator 
Jones for agreeing to host this hearing with me. I appreciate 
the bipartisan way that this roundtable was organized.
    Roundtables are a little different than hearings. They are 
a little more relaxed and we have a series of things that we 
want to learn about that we hope you will talk about. We limit, 
a little bit, the amount of opening statements.
    The card you have in front of you will stand on end. So any 
time a question is asked and you want to comment on it as well, 
stand it on end and we will recognize you also.
    There is not the normal set order of the questioning 
because we jointly agreed on all the panel Members and we 
jointly agreed on a number of questions.
    We do have today before us an important issue that I have 
been engaged in since I was the Mayor of Gillette, and that is 
financial literacy. I even had headed up the Financial Literacy 
Caucus for a long time. I always asked the questions, ``What 
are we trying to do?'' And, ``How will we know if we got it 
done or to what extent we have gotten it done?''
    As Mayor of Gillette, I remember seeing firsthand the power 
that individuals had over their finances when purchasing a home 
and the impact that transaction could have on a family and a 
community. When they got a home, they were a participant. Up to 
that time, they were a worker.
    The reality is that in the time since I was mayor, peoples' 
personal finances have only become more complicated. Financial 
literacy, just like standard literacy, is fundamental to 
successfully navigating our world and yet, we appear to be 
failing in our efforts to expand this knowledge.
    According to the most recent financial capability study, 
financial illiteracy is as high as 63 percent among adults.
    As if navigating the universe of savings options was not 
difficult enough, it seems that a majority of adults lack an 
understanding of the core concepts that underlie money 
management, such as basic budgeting, and that ``Eighth Wonder 
of the World,'' which is compounding interest and returns.
    The importance of teaching these lessons to children early 
is well understood. In fact, just over 5 years ago, I joined my 
friend, former Senator Kay Hagan, in this very room in a 
hearing on just that topic.
    The conversation I would like to have today, however, is 
one about the efforts that are currently underway to promote 
financial literacy specifically as it relates to retirement 
security--the title of our Committee--retirement security among 
working adults, and how current resources are being deployed, 
and how we can improve those efforts.
    To further underscore the importance of this conversation, 
Price Waterhouse Coopers, an accounting firm, published the 
results of an employee survey which found that nearly half of 
the Baby Boomers had $100,000 or less set aside for retirement, 
an amount that may be expected to yield about $4,000 in annual 
cash-flow, maybe.
    Even more astounding, when asked whether they were stressed 
about their finances, only 21 percent of the Boomers indicated 
that they were.
    Individuals cannot be expected to make prudent decisions or 
correct an existing problem if they are unaware that the 
problem exists at all. Luckily, if there are any benefits of 
the 2008 financial crisis, it is that it served as an awakening 
for many, including employers.
    Since the crisis, employers have recognized that not unlike 
physical and mental health, employee financial health can have 
significant impacts on productivity. A person cannot be 
expected to give 100 percent when they are trying to resolve 
their own financial crisis, particularly when they do not have 
the tools to do so.
    Of course, developing financial literacy resources, or a 
full financial wellness program, takes significant expertise. 
Luckily, benefit providers have recognized the necessity of 
promoting financial literacy and have begun to innovate new 
solutions for plan sponsors and their participants.
    Third parties, too, are stepping up and innovating in this 
area as well.
    I have long been a fan of the financial discipline 
advocated by Dave Ramsey. In addition to providing advice 
through his writings and radio show, he has developed an 
employer-based financial literacy program called SmartDollar 
that has been adopted by over 2,000 companies, ranging from 
small businesses to firms as large as Costco.
    He makes the case, and provides the way, to get to zero 
debt. Yes, no debt. I have even seen that work with a number of 
couples.
    Finally, nonprofit organizations of all sizes and missions 
are active in promoting financial literacy. A study by the 
Consumer Financial Protection Bureau estimated that in 2012 
alone, nonprofits spent more than $472 million in direct 
financial literacy services.
    What of the Federal role? This, too, is something that I 
have been interested in for quite some time. In fact, in 2003, 
I cosponsored legislation that was largely adopted in the Fair 
and Accurate Credit Transactions Act creating the Financial 
Literacy and Education Commission, or FLEC, which we will talk 
about more later.
    FLEC was created to develop a national strategy on 
financial literacy efforts, and to promote private and state 
and local efforts. Unfortunately, despite some significant 
progress in coordination and building of partnerships, 
significant overlap and ineffective resource allocation 
persists, a fact that has not gone unnoticed by the current 
Administration.
    That is why I am looking forward to introducing the current 
U.S. Treasurer who has been tasked with leading the effort to 
streamline our Government and its financial literacy programs 
to ensure that we are not only promoting these skills as 
effectively as possible, but also better able to measure their 
effectiveness.
    I would now like to invite Senator Jones to offer his 
opening remarks and then we will do a brief introduction of the 
witnesses.

                   OPENING STATEMENT OF SENATOR JONES

    Senator Jones. Thank you, Mr. Chairman, and I very much 
appreciate you and your staff pulling this roundtable together 
today to focus on this, what I think is a vitally important 
issue.
    I also want to thank each of the witnesses for your 
appearance today. Each of you comes at this issue and problem 
from different perspectives, and that is also very important 
that we hear.
    I truly believe that there is no single, silver bullet to 
solving the retirement crisis we face in our country. It has to 
be all hands on deck. We are going to need the private sector, 
Government, nonprofits, and advocacy organizations to all be 
part of the solution.
    I want to emphasize, I do believe that we are facing a 
retirement crisis. I do not say that just to be an alarmist, 
but I do believe it is important to place the proper emphasis 
on the challenges that we are facing.
    For the generation nearing retirement, which until December 
of this past year, I included myself, they have seen the 
retirement industry change considerably since folks like my 
parents retired. There are less pensions, less defined benefit 
plans, less opportunities for wealth accumulation, health care 
costs have risen dramatically, and there was a financial crisis 
a few years ago to boot.
    For the generation now in their early careers, I fear that 
student loans are taking the place of critical years of 
retirement savings. While we face challenges, there are also 
incredible opportunities.
    There are more options available for savers. Congress and 
the private sector are both working to provide more access to 
savings plans and investment opportunities have become more and 
more affordable.
    But with more choice than ever in the marketplace, I 
believe it is absolutely critical, more now than ever, that we 
make choices to keep people informed. I believe it starts early 
and I am working on legislation to help enable more young 
people to receive personal financial education.
    We know that retirement planning is about continued 
education: when to save, how to save, what to invest in. 
Lifelong learning in this arena is key and I hope we hear more 
from you today about all of those issues.
    Again, Mr. Chairman, thank you for this roundtable, but 
also for your continued work and interest in this very, very 
important area.
    Thank you.
    The Chairman. Thank you, Senator Jones.
    I would now like to briefly introduce our witnesses, ask 
them to give a 3 minute opening statement on the topic, and 
then we will begin the discussion.
    However, before I introduce the panel, I would remind 
Members of the Committee and our panel that our focus today is 
retirement security. Financial literacy is a broad topic that 
affects all parts of peoples' lives. However, for the sake of 
this conversation, I hope we can concentrate mostly on 
retirement.
    Also, we are fortunate to have a representative of the 
Administration here in Treasurer Carranza. I would ask my 
friends, again, to keep their questions to the topic at hand.
    With that said, I will begin by introducing the United 
States Treasurer, Jovita Carranza. Treasurer Carranza has 
extensive experience in both the private sector and in 
government, having served as Deputy Administrator of the Small 
Business Administration under President Bush.
    As I mentioned earlier, her office has been tasked with 
leading the reform of Federal financial literacy programs, and 
I look forward to discussing her findings so far.
    I would also like to congratulate Treasurer Carranza on her 
recent nomination to be a member of the Women's Suffrage 
Centennial Commission. I am always proud to remind folks that 
Louisa Swain, the first woman in the United States to cast a 
general election ballot, did so in Laramie, Wyoming, part of 
the effort that gave women the right to vote, to own property, 
and to hold office.
    Ms. Carranza. She did vote for you, did she not?
    [Laughter.]
    The Chairman. Unfortunately not, and she was actually from 
Maryland, but she was in Wyoming and registered to vote.
    Also, I would mention that if any of you get a new dollar 
bill or a new bill of any denomination, you will probably find 
her signature on the bottom left-hand side. You might also be 
able to get her to sign a dollar for you.
    Next, I want to welcome Vishal Jain, who is the Financial 
Wellness Officer in Prudential's Workforce Solutions Group. As 
both an employer and a financial services firm, Prudential has 
been a leader in providing innovative financial wellness 
resources to its employees and customers.
    Next is Lynn Dudley, a senior Vice President with the 
American Benefits Council. Lynn is one of the foremost experts 
in retirement and compensation policy. I appreciate the 
Council, again, lending its expertise through her to one of our 
roundtables.
    Finally, we have Mr. Scott Astrada here from the Center for 
Responsible Lending, where he serves as the Federal Advocacy 
Director. I am looking forward to his testimony.
    Thank you all, again, for joining us in this discussion. 
After our witnesses give a brief opening statement, Members 
will be able to pose questions to them. We want this roundtable 
to be discussion focused. If anybody has a comment on what 
somebody else said, that is why we do a roundtable.
    At the conclusion, those that are not here, as well as 
those that are here, will be able to pose additional questions, 
which I hope you will be willing to respond to.
    With that, we will begin with Treasurer Carranza.

STATEMENT OF JOVITA CARRANZA, TREASURER, U.S. DEPARTMENT OF THE 
                    TREASURY, WASHINGTON, DC

    Ms. Carranza. Chairman Enzi, Senator Jones, and Members of 
the Subcommittee.
    Thank you for the opportunity to testify on Treasury's 
efforts to improve the Federal Government's financial literacy 
and education programs.
    One of the highest priorities in this Administration, and 
the Department of the Treasury, is to promote economic growth 
in America. Our economic success is predicated on the financial 
well-being of individual consumers and households. As we 
enhance economic opportunities across our Nation, we must also 
improve and expand access to quality financial literacy tools 
necessary to properly manage economic prosperity.
    Treasury leads the Financial Literacy and Education 
Commission. The FLEC was created by statute in 2003, and 
comprises 23 Federal entities with the unifying purpose of 
developing a national strategy for improving financial literacy 
in the United States.
    The Office of Consumer Policy, which administers the FLEC, 
reports directly to the Office of the United States Treasurer.
    Although the FLEC was established to centralize and 
coordinate Federal financial literacy efforts, many agencies 
continue to administer their own standalone programs and 
educational tools. In 2017, the FLEC agencies collectively 
spent an estimated $250 million on financial literacy and 
education activities; some of these efforts were duplicative 
and lacked clear measures of effectiveness.
    Since assuming leadership of Treasury, Secretary Mnuchin 
has prioritized the need to revise our national strategy on 
financial literacy in order to better meet the needs of our 
communities. FLEC reform is focused on merging duplicative 
programs and initiatives, implementing best-in-class financial 
education tools, setting assessment standards for financial 
literacy, and developing a new governance structure that will 
facilitate the FLEC's central role in coordinating resources 
and financial literacy efforts.
    While consolidation and allocation of resources are key 
themes of the proposed FLEC reform, there are a number of cases 
where consolidation may not be the best solution.
    The FLEC reform is assessing existing programs to make 
strategic decisions about when consolidation is most 
beneficial. Coordination among agencies is the best path to 
promote and create effective financial literacy efforts.
    In the coming months, Treasury will make recommendations to 
OMB on strategies for improving Federal financial literacy and 
education. We hope to work closely with Members of this 
Committee to better prepare our communities through effective 
financial literacy and education tools.
    Thank you, Chairman Enzi, and Members of the Subcommittee, 
for the opportunity to participate in today's roundtable 
discussion.
    [The prepared statement of Ms. Carranza follows:]
                 prepared statement of jovita carranza
    Chairman Enzi, Ranking Member Sanders, and Members of the 
Subcommittee, thank you for the opportunity to submit written testimony 
on Treasury's efforts to improve the Federal Government's financial 
literacy and education programs.
    One of the highest priorities in this administration, and the 
Department of the Treasury (Treasury), is to promote economic growth in 
America. Our economic success is predicated on the financial well-being 
of individual consumers and households. As we enhance economic 
opportunities across our Nation, we must also improve and expand access 
to quality financial literacy tools necessary to properly manage 
economic prosperity.
    Treasury leads the Financial Literacy and Education Commission 
(``FLEC''). The FLEC was created by statute in 2003, and comprises 23 
Federal entities with the unifying purpose of developing a national 
strategy for improving financial literacy in the United States. The 
FLEC is chaired by the Secretary of the Treasury and the Vice Chair is 
the Director of the Bureau of Consumer Financial Protection. The Office 
of Consumer Policy, which administers the FLEC, reports directly to the 
Office of the United States Treasurer.
    Although the FLEC was established to centralize and coordinate 
Federal financial literacy efforts, many agencies continue to 
administer their own standalone programs and educational tools. In 
2017, the FLEC agencies collectively spent an estimated $250 million 
dollars on financial literacy and education activities; some of these 
efforts were duplicative and lacked clear measures of effectiveness.
    Since assuming leadership of Treasury, Secretary Mnuchin has 
prioritized the need to revise our national strategy on financial 
literacy in order to better meet the needs of our communities. FLEC 
reform is focused on merging duplicative programs and initiatives, 
implementing best-in-class financial education tools, setting 
assessment standards for financial literacy, and developing a new 
governance structure that will facilitate the FLEC's central role in 
coordinating resources and financial literacy efforts.
    Significant engagement among internal and external stakeholders was 
involved in developing the reform recommendations that Treasury is 
planning to share with the Office of Management and Budget this year. 
The reform effort was initiated by creating a steering committee of 
FLEC agencies to assess the effectiveness of existing programs. 
Treasury then formed internal staff working groups to examine high 
impact areas of financial literacy. These working groups cover seven 
functional areas: savings and retirement, credit and borrowing, 
homeownership, student loans, unbanked and underbanked, wealth 
preservation and financial education for entrepreneurs. To-date, the 
staff working groups have met with over 60 stakeholders, including 
academics, nonprofits, financial services firms, and state and local 
governments.
    Although FLEC reform is still ongoing, I can share with you that we 
have identified several recommendations related to merging websites, 
programs, and research. With respect to websites, the Federal 
Government currently operates 40 websites with an array of financial 
literacy and educational content; 25 percent of these websites are 
duplicative. As part of FLEC reform Treasury is exploring consolidation 
of certain Federal financial literacy and educational content onto a 
single web platform.
    While consolidation and allocation of resources are key themes of 
the proposed FLEC reform, there are a number of cases where 
consolidation may not be the best solution. Some agencies have profound 
institutional knowledge and experience addressing a specific area (e.g. 
HUD and housing issues), and are natural conduits for providing 
information to certain populations (e.g. DoD and service members, HHS 
and senior citizens). The FLEC reform is assessing existing programs to 
make strategic decisions about when consolidation is most beneficial. 
The crosscutting nature of financial literacy renders it nearly 
impossible for one agency alone to address the issue entirely. 
Coordination among agencies is the best path to promote and create 
effective financial literacy tools.
    In the coming months Treasury will make recommendations to OMB on 
strategies for improving Federal financial literacy and education. We 
hope to work closely with Members of this Committee to better prepare 
our communities through effective financial literacy and education 
tools.
                                 ______
                                 
    The Chairman. Thank you and I want you to know that buzzer 
was not for you. That was actually a signal that there is a 
quorum call on the floor, which is where we have to formally 
give ourselves permission not to talk.
    Ms. Carranza. All right. Very good.
    The Chairman. Thank you.
    Mr. Jain.

STATEMENT OF VISHAL JAIN, FINANCIAL WELLNESS OFFICER, WORKPLACE 
   SOLUTIONS, PRUDENTIAL FINANCIAL, INC., NEW YORK, NEW YORK

    Mr. Jain. On behalf of Prudential, I want to thank you, 
Chairman Enzi, Senator Jones, and the Members of the 
Subcommittee for your commitment to improving the financial 
security of working Americans, and for the opportunity to 
participate in this roundtable discussion.
    The evolution of retirement and health care benefit 
offerings today has led to today's workers bearing more 
responsibility for their financial security. When coupled with 
other pressing financial obligations, such as mortgages and 
student loan debt, it is easy to understand why employees may 
be experiencing higher levels of stress about their financial 
situation.
    Employees' financial stress can negatively impact employers 
through higher health care costs, lower productivity, and 
poorer morale.
    Workplace financial wellness programs can play a 
significant role in helping individuals improve their financial 
security for two key reasons.
    First, many individuals' financial lives are centered to 
the workplace through the retirement, health care, and 
protection benefits offered by their employers.
    Second, the workplace provides a valuable opportunity to 
engage employees through a wide range of channels and around 
important life milestones such as marriage, starting a new job, 
or the birth of a child.
    We define financial wellness as helping individuals adopt 
the behaviors that enable them to manage their day to day 
finances, achieve long term financial goals, and protect 
themselves from key financial risks.
    This definition reflects the importance of the right 
behaviors in optimizing an individual's financial situation, as 
well as how interconnected financial wellness is across a wide 
range of issues, from budgeting to investing for the long term.
    Workplace financial wellness programs aim to improve each 
employee's financial wellness through diagnostics, multichannel 
financial education and engagement services, careful benefits 
plan design, and new solutions to address needs such as 
budgeting or managing debt.
    Sophisticated participant engagement strategies are 
critical to driving robust behavior change and action at the 
individual level.
    As an employer as well as a financial services provider, 
Prudential has introduced comprehensive financial wellness for 
our own employees that include enhancing childcare and adult 
care benefits, introducing retirement plan design changes such 
as auto escalation and an automatic tune up for our company 
match, providing access to budgeting coaching, and implementing 
a comprehensive, onsite, free financial education program.
    Prudential's program has reduced the reported levels of 
financial stress across its employees by almost 50 percent, 
which also positively impacts health care costs, disability 
costs, and productivity based on the historical correlations 
that we have measured between financial stress and these 
factors.
    Beyond Prudential, close to 400 organizations have adopted 
our onsite financial education programs and nearly 200 
organizations are using our digital financial wellness 
platform, evidence of employers' strong interest in 
implementing financial wellness programs.
    Although we are in the early stages of assessing the impact 
of these programs, initial results are encouraging. For 
example, internal Prudential data suggests that more than 30 
percent of individuals who access digital financial wellness 
tools during benefits enrollment take action to close the gaps 
in their coverage. And more than 90 percent of individuals who 
have engaged in onsite financial education programs say that 
they plan to take at least one concrete step to improve their 
financial wellness.
    While we recognize the successes of today's workplace 
financial wellness programs and benefit programs, we also 
applaud and support legislative efforts, such as the Retirement 
Enhancement and Security Act, to further improve financial 
security for today's working Americans.
    Legislation that further encourages and facilitates the use 
of auto-enrollment and auto-escalation provisions can enhance 
both retirement plan participation and savings rates.
    Provisions that remove impediments to the inclusion of 
guaranteed lifetime and group solutions as part of a retirement 
plan can better ensure that employees have access to the 
products that they need to effectively manage investments and 
longevity risks during their retirement years, which may last 
anywhere from a few years to a few decades.
    We also support legislation that would support the offering 
of emergency savings opportunities in conjunction with a 401(k) 
plan similar to the bipartisan bill Strengthening Financial 
Security Through Short-Term Savings Accounts Act introduced by 
Senators Young, Heitkamp, Cotton, and Booker.
    In closing, I again want to thank Chairman Enzi and Members 
of the Subcommittee for this opportunity to participate in this 
roundtable, and I look forward to our discussion.
    [The prepared statement of Mr. Jain follows:]
                   prepared statement of vishal jain
                              INTRODUCTION
    Good afternoon, I am Vishal Jain. I am a vice president with 
Prudential Financial, Inc.'s Workplace Solutions Group.
    On behalf of Prudential, I want to thank you, Chairman Enzi and 
Ranking Member Sanders, for your commitment to improving the financial 
security of working Americans and for the opportunity to participate in 
this roundtable discussion.
    It should come as no surprise that, with the evolution of 
retirement and healthcare benefit offerings, today's workers are having 
to assume increased responsibility for their financial security. When 
coupled with day-to-day financial obligations, such as mortgages and 
student loan debt, it is easy to understand why employees may be 
experiencing higher levels of stress about their financial situation. 
\1\ Employee financial stress can lead to physical health problems and 
increased healthcare costs, as well as increased absenteeism, decreased 
productivity, and low morale. \2\
---------------------------------------------------------------------------
    \1\  Prudential found that 57 percent of U.S. workers are very or 
somewhat stressed about their financial situation. See Prudential's 
survey entitled ``The State of Financial Wellness in American,'' 2017, 
at: https://www.prudential.com/media/managed/documents/rp/
Financial_Wellness_Self-Assessment.pdf.
    \2\  See the International Foundation of Employee Benefit Plan's 
``Financial Education for Today's Workforce: 2016 Survey Results'' at 
http://www.ifebp.orn/pdf/financial-education-201_6-survey-results.pdf.
---------------------------------------------------------------------------
    Building upon employers' recognition of the value of employees' 
health wellness over the past decade, there is a growing realization on 
the part of employers that there is significant value in employees' 
financial wellness.
    My goal today is to share Prudential's experience with financial 
wellness from the perspective of an employer and as a leading benefits 
provider, with an expertise in both retirement and group benefits. To 
this end, I'll briefly discuss how Prudential defines financial 
wellness, why we believe it is so important today, the critical role 
that the worksite can have in improving financial wellness, and how we 
are bringing financial wellness capabilities to a wide range of 
organizations.
                           FINANCIAL WELLNESS
    We believe that financial wellness is about helping individuals 
adopt the behaviors that enable them to manage their day-to-day 
finances, achieve long-term financial goals, and protect themselves 
from key financial risks. This definition reflects the importance of 
the right behaviors and decisions in optimizing an individual's 
financial situation, as well as how interconnected financial wellness 
is across a wide range of issues from budgeting to investing for long-
term goals, such as retirement.
    Financial wellness challenges are growing, in part because 
individuals face more complexity and risk in managing their financial 
lives than they did twenty or thirty years ago.
    For example, today more individuals own the responsibility for 
saving for retirement, investing their savings wisely, and ensuring 
that these savings last through a retirement that could span a few 
years to a few decades. While recognizing the successes of the current 
system, we applaud and support legislative efforts, such as the 
Retirement Enhancement and Security Act (RESA), \3\ to mitigate these 
challenges for today's working Americans. In particular, legislation 
that further encourages and facilitates the use of auto-enrollment and 
auto-escalation provisions can enhance both retirement plan 
participation and savings rates. And, provisions that remove 
impediments to the inclusion of guaranteed lifetime income solutions as 
part of a retirement plan can better ensure employees have access to 
the products they need to effectively manage investment and longevity 
risks during their retirement years. \4\
---------------------------------------------------------------------------
    \3\  See S. 2526, H.R. 5282.
    \4\  See Sections 111 (Portability of lifetime income option) and 
204 (Fiduciary safe harbor for selection of lifetime income provider) 
in S. 2526 and H.R. 5282.
---------------------------------------------------------------------------
    In addition to retirement-related challenges, more families, even 
insured families, must carefully manage healthcare expenses due to 
higher deductibles which may require families to annually fund the 
first several thousand dollars of health expenses. Finally, continued 
growth in the cost of higher education means that many families must 
juggle a complex mix of financial aid, student loans, and personal 
loans to fund a college education for themselves or their children.
    We believe the worksite can have a significant role in helping 
individuals improve financial wellness for two key reasons. First, many 
individuals' financial lives are centered at the worksite through the 
retirement, healthcare, and protection benefits that they access at 
work. Second, the worksite provides an opportunity to engage employees 
through a wide range of channels and around important life milestones, 
such as marriage or the birth of a child. \5\
---------------------------------------------------------------------------
    \5\  For background on financial wellness generally, see 
Prudential's ``The Power of the Wellness Effect--Seeing the Real Value 
of Employee Financial Health'' at: http://research.prudential.com/
documents/rp/SI25_Financial_Wellness_Whitepaper_Final_ADA_1-11-17.pdf.
---------------------------------------------------------------------------
    Prudential started measuring the financial stress of its employees 
about ten years ago. With the goal to reduce the determined financial 
stress levels of our employees, Prudential developed a comprehensive 
financial wellness program that included enhancing child care and adult 
care benefits, introducing retirement plan design changes such as auto-
escalation and an automatic true-up feature for our company match, 
providing access to budgeting coaching, and implementing comprehensive 
free onsite financial education programs, called Prudential Pathways. 
This program has been extremely popular, with over 5,000 employees 
participating in at least one session by the end of 2017.
    Prudential's financial wellness program has significantly improved 
reported levels of stress among employees. The percentage of 
Prudential's employees reporting financial stress has been cut in half-
from a high of 34 percent in 2009 to 17 percent in 2018. This 
improvement also impacts healthcare costs, disability costs and 
productivity, based on the historical correlations that we have 
measured between financial stress and these factors. \6\
---------------------------------------------------------------------------
    \6\  An overview of Prudential's journey along the financial 
wellness path is set forth in ``Pioneering Workplace Financial 
Wellness'' at: http://research.prudential.com/documents/rp/
SI25_Financial_Wellness_Whitepaper_Final_ADA_1-11-17.pdf
https://www.prudential.com/media/managed/documents/rp/
Pioneering_Workplace_Financial_Wellness.pdf (copy attached).
---------------------------------------------------------------------------
    Beyond Prudential, we are seeing an increasing number of employers 
begin to focus on financial wellness, both to help employees and to 
address key employer outcomes such as productivity and workforce 
engagement. In a recent survey of financial executives, 82 percent 
agreed that their companies would benefit from having a workforce that 
is financially secure, and 78 percent felt that employers should assist 
in achieving financial wellness during working years. \7\
---------------------------------------------------------------------------
    \7\  See CFO Research/Prudential Financial, Inc. ``Value of 
Employees Financial Wellness'' 2016 at: http://www.prudential.com/
media/managed/documents/rp/CFO-Employee-Financial-Wellness-012516.pdf.
---------------------------------------------------------------------------
    In response to this growing interest, Prudential is now offering 
organizations a comprehensive set of capabilities to implement 
financial wellness programs including:

          Diagnostics to prioritize financial wellness needs.

          Solutions to address specific financial wellness 
        needs. These solutions include a wide range of traditional 
        BRISA-based employee benefit products, as well as new solutions 
        such as student loan assistance capabilities and budgeting 
        tools. In addition, we have developed capabilities that 
        leverage existing benefits to address unmet financial wellness 
        needs, such as incorporating an emergency savings feature into 
        retirement plans. \8\
---------------------------------------------------------------------------
    \8\  Recognizing the role of emergency savings as part of a 
holistic approach to financial wellness, Prudential recently released a 
white paper entitled ``Increasing Financial Security with Workplace 
Emergency Savings, available at: https://www.prudential.com/media/
managed/documents/rp/Building_Employer_Aided_Emergency_Savings.pdf 
(copy attached).

          Multi-channel capabilities to engage individuals 
        about their financial needs, provide education and guidance, 
---------------------------------------------------------------------------
        and motivate action.

    To date, close to 400 organizations have adopted our onsite 
financial education programs and nearly 200 organizations are using our 
digital financial wellness platform, evidence of employers' strong 
interest in implementing financial wellness programs. Although we are 
in the early stages of assessing the impact of these programs, we are 
seeing encouraging results in terms of both engagement and the actions 
individuals take to improve their financial wellness after engaging 
with digital and/or onsite financial wellness services.
    In fact, internal Prudential data suggests that more than 30 
percent of individuals who access financial wellness resources during 
benefits enrollment take action to close gaps in their coverage, and 
more than 90 percent of individuals who have engaged in onsite 
financial education programs say they plan to take at least one step to 
improve their financial wellness.
                                COVERAGE
    Finally, we would be remiss if we did not acknowledge that, while 
workplace-based retirement plans--a critical component to overall 
financial wellness--are helping tens of millions of working Americans, 
tens of millions more of today's workers do not have access to 
retirement savings plans in the workplace. This gap in retirement plan 
coverage is particularly problematic for workers employed by small 
employers and ``gig economy'' workers. Small businesses often do not 
sponsor a plan due to concerns about costs, administrative 
complexities, and fiduciary liability. And, the nature of gig work 
typically doesn't afford access to a quality retirement plan. Multiple 
employer plans (MEPs), in our view, offer a promising means of 
narrowing the retirement coverage gap for both small business and gig 
workers. For this reason, Prudential has been a strong supporter of 
RESA, as well as similar legislation, that would promote both 
sponsorship of and participation in MEPs. \9\
---------------------------------------------------------------------------
    \9\  See Prudential's ``Multiple Employer Plans--Expanding 
Retirement Savings Opportunities'' at: http://research.prudential.com/
documents/rp/mep_paper_final_2015.pdf.
---------------------------------------------------------------------------
                                CLOSING
    In closing, I, again, want to thank Chairman Enzi and Ranking 
Member Sanders for the opportunity to participate in this roundtable. 
We hope you will view Prudential as a valuable resource as you continue 
to consider these issues so critical to working Americans. I look 
forward to today's discussion.
                                 ______
                                 
    Chairman Enzi. Thank you.
    Ms. Dudley.

    STATEMENT OF LYNN DUDLEY, SENIOR VICE PRESIDENT, GLOBAL 
RETIREMENT AND COMPENSATION POLICY, AMERICAN BENEFITS COUNCIL, 
                         WASHINGTON, DC

    Ms. Dudley. I am Lynn Dudley with the American Benefits 
Council.
    The American Benefits Council, for those who are not 
familiar with our organization, is a public policy 
organization. Our members are Fortune 500 plans, sponsors, and 
providers that service plans of all sizes. So we really run the 
gamut in terms of size of employer.
    Our members tend to be best of class and strive for best of 
class. They are leaders in innovation. In a recent survey of 
our plan sponsors, we learned that more than 95 percent of them 
offer financial education and tools that are directed at 
accumulating retirement savings.
    Over 73 percent of them responded that they also provide 
financial tools and education around retirement income and 
managing money in retirement.
    A significant and growing number of them have expanded 
their financial education programs to include basic financial 
education and budgeting, which we found was lacking amongst 
many of our workers today and helping them to address barriers 
to savings.
    Our employers feel so strongly about this issue, and have 
such terrific stories to share, I included a number of the 
stories in my written testimony, but we also have initiated 
something called the IDEA Institute. It is housed on our 
Website.
    We hold forums and panels for our members to exchange 
information and learn from each other. By sharing their 
stories, and being able to post them on our Website, our 
members are able to learn from each other and expand their 
programs, and learn what works and what they could try next.
    Some of the things that they are doing, with respect to 
barriers, relate to concerns about student loans and other 
barriers by helping employees know how to go about paying their 
student loans, helping them deal with the large amount of debt 
that they have with respect to student loans. Helping them 
utilize educational programs for their children, such as 529 
plans and other tuition assistance programs that the companies 
offer also, something that we find helpful.
    We also are spending more and more time helping people 
develop emergency savings funds and helping them have a pocket 
of money to deal with problems as they come up, and to address 
leakage. We oftentimes find that some of the same people have 
leakage over and over again through loans or hardship 
distributions, and it is because they do not have an emergency 
savings fund.
    We also are helping our employees understand the 
interrelationship between health and financial security. Many 
of our health well-being programs or wellness programs now 
include a financial stress test to help people recognize that 
your financial health is part of your overall well-being and it 
is important to address that. We have financial stress tests as 
part of our health assessment. Likewise, health care costs are 
an important thing to prepare for in retirement.
    We try to use diagnostics. You will see in some of our 
stories where companies have used diagnostics to really zero in 
and target on the problem areas. We typically test our programs 
and then we refine them further. We oftentimes try to monitor 
what we are doing to see if behavior changes, and who it 
changes, and what kind of changes they have, and then we refine 
the programs further.
    We really want to always ask ourselves: how can we do 
better? We strongly believe in a public-private partnership 
with respect to financial literacy and retirement planning.
    We want to be careful of our fiduciary duties, but we also 
want to be able to offer programs across the country and across 
state lines.
    [The prepared statement of Ms. Dudley follows:]
                   prepared statement of lynn dudley
    My name is Lynn Dudley and I am the senior vice president, global 
retirement and compensation policy for the American Benefits Council 
(the ``Council''). Thank you for the opportunity to share the American 
Benefits Council's perspectives on financial well-being, the 
innovations being undertaken by plan sponsors on behalf of their 
employees and ways that public policy can support the success of those 
efforts.
    The Council is a public policy organization representing 
principally Fortune 500 companies and other organizations that assist 
employers of all sizes in providing benefits to employees. 
Collectively, the Council's members either sponsor directly or provide 
services to retirement and health plans that cover more than 100 
million Americans.
    Many Council members engage in efforts to provide financial 
education and support programs for their employees. One reason 
companies do this is because they want their employees to get full 
value out of the retirement plans they offer. Budgeting and basic 
financial skills often help to remove barriers to savings in retirement 
programs and those have become increasingly included in programs 
offered by companies. And it is not just improved savings that results 
from helping employees achieve greater personal financial security, but 
such efforts also contribute to better health, less stress in and 
outside of the workplace and greater productivity.
    As these other aspects of financial well-being have emerged and the 
interrelationships between them have become clearer, many have expanded 
their programs to not only improve basic financial skills, but to more 
effectively deploy health care dollars and understand the use of and 
risks of income during their retirement years. Understanding the 
potential long-term outcomes for employees and employers, plan sponsors 
and providers who service employment-based retirement plans have taken 
the initiative and have been important innovators in the development of 
workplace financial well-being programs.
    It should be noted that financial well-being programs are founded 
on research that supports its value. Research in this area is growing 
as more attention is given to it.
    As part of an initiative undertaken by the Council to highlight 
successful innovations by plan sponsors in both the retirement and 
health areas, the Council has begun to collect examples of programs 
offered by Council members. The innovative practices described below 
demonstrate the positive difference employers are making in helping 
workers, retirees and families achieve financial security.
    For example, the Council recently conducted an informal survey of 
its members regarding lifetime income options and included a question 
concerning the use of financial tools and/or education in connection 
with their plans. The responses exceeded expectations. Over 95 percent 
of respondents use tools or education that help participants plan for 
accumulating assets and over 73 percent use tools and/or education that 
help participants plan for distributions. Other features used by member 
companies included entire retirement portfolio evaluation, education on 
longevity risk, investment advice, onsite meetings with financial 
advisors, financial management, basic budgeting and financial plans and 
financial planning seminars and webinars.
           Using Technology to Make Retirement Saving Easier
    One large, multinational member company has been innovative in 
combining a strong retirement savings plan design with a comprehensive 
communication approach to achieve notable results for its employees. 
This company offers its regular U.S. employees the opportunity for 
immediate enrollment and full vesting with a 50 percent match of 
regular contributions, well above the average match formula for most 
401(k) type plans. Partnering with its service provider, the company is 
able to offer simplified enrollment, comprehensive communications and 
coaching to maximize participation and savings levels.
    The company's simplified enrollment is comprised of three main 
components that address the key behavioral elements driving positive 
outcomes. This is a technically advanced company and in keeping with 
its digital culture, it has adopted the service provider's ``Easy 
Enroll'' program that offers new hires a simple ``three-click'' 
enrollment process which places them in a pre-established framework of 
a high default savings rate, automatic annual increases in salary 
deferral, and investment in low cost age appropriate target date funds. 
A standard enrollment process that enables participants to opt for 
higher rates or tailor specifics to their particular circumstances is 
offered as an alternative for those seeking greater engagement. More 
than half of new employees are now using this simplified enrollment 
process which has resulted in a significant increase in both the speed 
with which new hires are enrolled and their resulting savings rates.
    This underlying framework is supported through a coordinated suite 
of information and consultation programs. This includes targeted and 
personalized communications to ensure employees understand the 
potential value of the plan to their particular circumstances, 
individualized assessment and tracking of results using customized 
online tools that enable workers to define their financial goals and 
track progress, personalized onsite coaching by licensed advisors from 
the service provider, onsite and virtual workshops and weekly question 
and answer sessions, and the availability of phone advice and online 
planning resources to all employees.
    This integrated approach has enabled the company to demonstrate how 
technology and integration of communications can leverage a strong 
program design. In 2017 the company was able to achieve a 92 percent 
participation rate in its US 401(k) plan (up from an already very high 
87 percent in 2012) with a median deferral rate of 10 percent (up from 
7 percent in 2012). A strong indication of the effectiveness of the 
combined enrollment and communications program is indicated by the 58 
percent of participants that were maximizing the matching contribution, 
nearly twice the level of 31 percent just 5 years earlier. A quarter of 
participants had signed up for automatic increases by early 2017, more 
than four times the share than just 4 years earlier, and the average 
account balance reached $205,584 during the year.
       Achieving Synergies in Communications and Behavior Change
    Another large multinational member company has demonstrated how 
employer-sponsored retirement plans can serve as effective cornerstones 
to broader financial well-being education programs. In partnership with 
a service provider that is a federally registered investment advisor, 
the company uses communications, personal conversations, and in-person 
and online resources to help employees evaluate their personal 
financial situation and take steps to improve it--both today and in the 
future.
    This second company has provided employees with access to 
retirement planning resources through the investment advisor for 8 
years, with a focus on 401(k) savings and investments. In response to 
employees' requests for more holistic financial planning support, the 
company enhanced its educational offerings in late 2017. Through the 
expansion, the company had both short-term and long-term goals: First, 
it wanted to help employees address their day-to-day financial needs--
building a budget, saving for college, and getting ready for 
retirement, for example. Second, the company ultimately wanted to 
improve employees' overall financial picture through reduced financial 
stress and greater financial confidence.
    In addition to the online planning tools already provided by the 
investment advisor, the company rolled out new ``retirement 
checkups''--one-on-one discussions with investment advisors that enable 
employees to take a more comprehensive look at their overall financial 
goals and progress.
    To drive awareness of the new retirement checkup program and to 
encourage employees to sign up for an appointment, the company 
distributed comprehensive communications across a variety of print, 
email and online channels. The company also offered onsite live events 
and advisor sessions so employees could further discuss a range of 
important topics, including debt management, college planning, Social 
Security payment strategies, estimating health care costs, estate 
planning, and saving for retirement.
    The communications and onsite support drove very strong engagement 
across the company's population. In just the first 3 days following the 
retirement checkup rollout, 700 employees signed up for an 
appointment--and by the end of the first quarter of 2018, over 2,700 
employees had. Additionally, over 2,000 employees participated in a 
live event in the first 2 months they were offered, more than 1,000 
employees became new users of the investment advisor's online advice 
service and 600 employees received personal advice from an advisor for 
the first time. Both the company and its investment adviser are closely 
monitoring a range of metrics to monitor engagement and measure ongoing 
success. These metrics include overall program utilization rates as 
well as changes to employee behavior, such as increased 401(k) 
contribution rates and/or improved 401(k) investment allocations. To 
maintain momentum over time, the investment advisor's offerings are 
also being promoted through a web-based well-being program offered by 
the company through which employees and their eligible spouses can earn 
points for completing healthy behaviors.
    This company's innovative partnership with its investment advisor 
illustrates how employer-sponsored financial well-being programs tied 
to available retirement plans can be instrumental in helping employees 
navigate complex financial needs. It also demonstrates the importance 
of taking a holistic approach to communications strategies, planning 
tools, and ongoing financial discussions. Together, technology and 
personal conversations can help employees define and reach their 
financial goals.
    Customizing Education and Information to the Specific Needs of 
                               Employees
    Another large company with thousands of employees throughout the 
United States and globally has partnered with another service provider 
to provide an example of how employer sponsorship creates powerful 
synergies to enhance financial wellness. After undertaking an 
assessment of the behavior and perceptions of engagement with its 
retirement savings programs in 2015 and 2016, this Fortune 500 company 
was able to identify specific areas in which retirement savings 
outcomes were below a national baseline or its workers expressed a need 
for financial capability support. This diagnostic analysis was then 
matched to a suite of financial education and behavior enhancement 
programs developed by the service provider who was providing the 
investment management and other services underlying the company's 
employee savings programs.
    This resulted in a targeted deployment of educational modules 
through webinars and onsite seminars tailored to the identified needs 
of the workforce that were delivered in May and June 2017. Nearly 3,000 
workers participated in these sessions delivered by the company's in-
house education and outreach team and service provider staff. These 
were designed to raise awareness and understanding of the savings plans 
offered, increase the level of funds directed to these plans, teach 
effective debt management methods, introduce the concept of emergency 
funds, and motivate employees to update their beneficiary designations.
    About a quarter of the roughly 2,000 participants in the webinars 
and onsite sessions were tracked over the ensuing 30 day period to 
assess changes in behavior. A meaningful proportion of these 
participating in a webinar (16 percent) increased their elective 
deferrals from an average of 10 percent of earnings to 14.3 percent and 
a similar proportion of participants in onsite sessions (12 percent) 
increased their savings rate in the plan from 8.7 percent to 11.4 
percent. A somewhat smaller proportion added or enhanced the automatic 
annual increase in the share of their earnings directed into the plan. 
Among the nearly 900 employees who participated in sessions presented 
by the sponsor's team, similar proportions (8.5 percent for onsite 
sessions and 12.2 percent for webinars) increased their savings 
allocations. Webinar participants making a change moved to an average 
of 17.2 percent of earnings directed into the plan. Nearly one in ten 
participants in these sessions changed their investment fund 
allocations within 30 days of the program and many increased automatic 
escalation and updated beneficiary information.
    These substantial improvements in savings and financial behavior 
illustrate some of the unique advantages of employment-based savings 
programs in improving financial well-being. Large employers are 
particularly well positioned to undertake the diagnostic work necessary 
to target interventions in a cost-effective manner. Employers are then 
able to deploy well-developed programs and complete timely impact 
assessments with a large enough sample to validate outcomes. The 
company partnered with its service provider to provide participants 
with a personalized retirement journey that is rooted in behavioral 
finance, adult learning theory and participant analytics. The 
monitoring and evaluation undertaken in conjunction with the programs 
has had the additional advantage of informing the strategy going 
forward. In their assessment of the experience, workers articulated a 
need for a personalized and holistic approach to enhancing their 
financial skills that adjusted to the evolving needs across life 
stages. The company is developing are developing the next phase of the 
program that is reflective of this learning.
              Providing Guidance to and Through Retirement
    Enabling and empowering plan participants to make the most 
effective use of the opportunities provided by employer-sponsored 
retirement plans has always been a central challenge as defined 
contribution and hybrid plans become the source of new coverage. In 
2014, another large member company found that only 17 percent of its 
plan members were on pace to retire with suitable income replacement. 
Despite a generous employer contribution, most members were not saving 
enough toward retirement, with fewer than 20 percent of plan members 
making their own pre-tax retirement contributions. While employees were 
offered access to external financial planners and planning tools, very 
few took advantage of these offerings.
    The company addressed this challenge by requiring its members to 
more frequently consider and update their retirement savings plan, 
providing easy access to expert guidance and extending the plan 
sponsors' support through the equally important years in retirement. 
Beginning in 2013, plan members were required to annually complete a 
new benefits enrollment process, including reconsidering and specifying 
their pre-tax retirement contribution. In late 2016, the company 
implemented a customized retirement planning tool designed for active 
plan members along with an in-house financial planning service.
    Credentialed planners who understand the investment and 
distribution options help individuals make best use of the planning 
tool at no out-of-pocket cost to the member. This enables them to 
easily generate a comprehensive retirement plan, project any potential 
income gap or surplus and adjust their future contributions and 
investments accordingly by recommending a specific pretax contribution 
amount and asset allocation strategy. To maximize participation the 
company offers active members a $200 wellness incentive if they 
implement a retirement plan.
    In early 2018, the company extended support to participants by 
implementing a planning tool that enables retirees to better manage 
retirement income. This allows them to plan for expenses while they are 
in retirement, model lifetime income options, plan for a financial 
legacy, as well as generate and adjust an asset allocation and 
withdrawal strategy consistent with their evolving needs.
    The combination of these enhancements has achieved remarkable 
results. In 2017, 65 percent of members made pre-tax retirement 
contributions--representing a 329 percent increase from 2012. Over 
7,000 active members have benefited from using the retirement planning 
tool to create a plan. Of those who have implemented a plan, 51 percent 
increased their pre-tax contributions and, perhaps even more 
importantly, 61 percent of those previously not making pretax 
contributions started saving toward retirement. Over 3,500 members have 
worked with a company-provided financial planner with 100 percent of 
the planners receiving high satisfaction scores from members. As a 
result, the percentage of active members on pace to retire well has 
nearly doubled since 2014. Incentivizing participation, making guidance 
cost free and extending access to planning expertise throughout the 
entire retirement process is shown by this innovation to be a very 
effective integration of essential elements that are linked to a long-
term employment relationship.
                 Preserving Savings in Retirement Plans
    Like many other plan sponsors, another multinational company member 
was concerned about the potential for employee loans to result in 
leakage from their 401(k) plan and diminish the retirement savings of 
their workers. To address this challenge the company introduced a 
number of innovations in the design of the plan by adding educational 
content through pop-up messages in the automated transaction flow 
through which a loan request is processed. During the application and 
approval process through the plan website a message now appears telling 
the participant the estimated dollar reduction in their account balance 
and expected reduction in monthly income at retirement that is likely 
to result from taking the loan. A second pop-up message asks if the 
participant has considered other options and repeats that they will 
have less money in retirement if they are unable to completely repay 
the loan. The participant must click through each of these messages to 
request a loan. In addition to the pop-up messages, there are links to 
more educational content about plan loans, their costs and the 
consequences of taking a loan. In conjunction with the timely 
availability of this information, the interest rate on loans was 
increased by 1 percentage point and a flat loan fee was imposed 
regardless of the amount or duration.
    The website's educational content is specific to the participant's 
requested loan amount and other parameters, giving them a dollar impact 
on their retirement that is more meaningful than a generic educational 
piece could provide. The higher interest rate increases the total loan 
repayments to the plan, with a goal of also increasing the 
participant's account balance at retirement. The loan fee is added to 
the principal amount the participant repays, to avoid reducing the 
retirement account balance permanently by the fee amount. All three of 
these features are intended to cause participants to limit plan loans 
or seek other sources of funds, or if they do take a loan to end up 
with a higher account balance after repayment than might be otherwise.
    In the first 11 months after these three features were implemented, 
the plan saw reductions in average monthly loan amounts for each month 
compared with the same period in the prior year. These reductions were 
as high as 20.7 percent between comparable months. The average loan 
balance also decreased. The reduction in loan amounts indicates that 
participants are giving more deliberation to taking plan loans that 
will reduce their account balance at retirement. This coordinated set 
of innovations demonstrates how employers can take advantage of timely 
individualized information to improve retirement savings outcomes in a 
way that would not be feasible in another environment.
    In addition to these examples, other Council members have initiated 
other programs such as one that provides a 401(k) match based on 
student loan repayment, maintaining a not-for-profit trust that serves 
as an employee emergency fund for employees that have encountered 
immediate financial difficulty, educational programs to help employees 
obtain their high school equivalency or associate degrees and trade 
certificates. Employers have integrated features of health and 
retirement, by including financial well-being as a component of their 
health assessments and providing a wide range of employee assistance 
programs, all of which have an impact on the overall financial security 
of the employee and their families.
    While plan sponsors and their service providers report significant 
progress, there is more that can and should be achieved. The need for 
public and private sector partnership is critical in order to help 
Americans and their families achieve personal financial security. While 
we have talked about the value to the employer and the employee, the 
government is also an important stakeholder.
    For example, tax favored employer retirement plans provide an 
efficient way to complement Social Security benefits. Employer-
sponsored retirement benefits are something of a bargain for the 
Federal Government. The Council calculates that for every $1 of wages 
deferred retirees will take into taxable income at retirement $7.18. 
Likewise, the tax expenditure for health insurance provides a similarly 
high ratio of benefits in relation to the value of the exclusion of 
employer payments for group health insurance. Employees gain $4.45 in 
health benefits from every $1 in health tax expenditures.
    The Council's strategic report, A 2020 Vision: Flexibility and the 
Future of Employee Benefits, outlines goals and provides 
recommendations that we believe will lead to greater personal financial 
security for Americans. Given the focus of this roundtable on financial 
well-being we would like to offer the following policy suggestions:

        1. Protect the ability of employers and providers to innovate 
        in the workplace. ERISA preemption is a critical component for 
        employers who have operations in multiple states and want to 
        provide programs on a national basis.

        2. Make it easier to use technology to provide information in 
        the workplace and to use technology as it becomes available.

        3. Allow people to make up savings they may have missed.

        4. One of the big challenges for Americans in retirement is how 
        to calculate the amount of money they will need to have on hand 
        to meet healthcare needs and risks. Recognizing the 
        interrelationship between health care risk and financial 
        security is key to important component of financial education. 
        Integrating information from Medicare and Social Security also 
        would help people think about their retirement income more 
        holistically.

        5. Many struggle with understanding the risk of longevity and 
        how to plan for retirement and managing their money to last 
        through retirement. Employers report that there continue to be 
        significant barriers to offering lifetime income products as 
        part of the defined contribution plans. Let's work together on 
        the most fundamental of these challenges--educating about the 
        importance of saving, the need to prepare and how to prepare 
        for longevity and the impact of leakage. Providing fiduciary 
        safe-harbors and innovation in products that are practical, 
        affordable, explainable and portable is critical.

    Thank you for the opportunity to share the Council's views. We are 
confident that together we can more effectively meet the retirement 
policy challenges we face.
                                 ______
                                 
    Chairman Enzi. Thank you.
    Mr. Astrada.

 STATEMENT OF SCOTT ASTRADA, FEDERAL ADVOCACY DIRECTOR, CENTER 
            FOR RESPONSIBLE LENDING, WASHINGTON, DC

    Mr. Astrada. Thank you, Chairman Enzi, Ranking Member 
Jones, and the Members of the Committee for inviting me to 
today's roundtable.
    I would like to open with a statistic that shows just what 
we are up against when it comes to closing the wealth gap and 
its impact on retirement security.
    If current trends continue, it will take 228 years for the 
average Black family to reach the level of wealth that white 
families own today. For Latin X families, it will take 84. This 
important hearing provides a timely discussion on the 
challenges facing Americans as they plan for retirement and the 
role financial literacy has in that preparation.
    In my written remarks, I discuss in detail the barriers 
faced by millions of Americans that result in an uncertain and 
precarious retirement future. The underlying conclusion of that 
analysis is that financial literacy as a tool to drive equity 
and financial capability is unequivocally limited as the 
primary solution for retirement planning needs. Both as a 
consumer tool, but also in its lack of efficiencies to empower 
vulnerable Americans as they struggle against systemic and 
historic inequity.
    To be more specific, the complex interconnectedness of race 
discrimination and equity require a fundamental reassessment of 
the underlying narrative of personal responsibility, 
opportunity, and financial literacy in their roles in 
retirement planning.
    The stark inequities that plagued the financial market and 
threaten retirement security present the conclusion that 
financial literacy is not a substitute for meaningful oversight 
of abusive lending practices, many of which target individuals 
and push them into products using deception and misinformation.
    It is my hope to present as a starting point on how to 
rethink financial literacy and consumer savings in the role in 
complementing but not replacing policies that build the 
foundation for equity and inclusion.
    This discussion is complicated because unfortunately when 
it comes to financial literacy, the first step of our approach 
is riddled with paradoxes. Those that need a savings buffer the 
most are the ones that cannot afford it. The idea of a rigidly 
defined level playing field by definition excludes the 
realities of systemic and historical disenfranchisement. In the 
age of big data, economic theories that do not reflect evolving 
economic research still dominate the policy narrative of many 
proposals.
    What I hope to accomplish in my written testimony and 
discussion here today is outline the challenges faced by 
Americans every day as they face hard decisions about their 
finances, and oftentimes, no matter what they do, they fall 
farther behind.
    Ultimately, the limits of financial literacy in the context 
of this discussion bring us into direct view of the biggest 
threats to retirement security, burdensome student loan debt, 
predatory lending, and homeownership disparities.
    These threats to retirement security underscore the fact 
that strong regulators and sound consumer protection policy 
must remain at the heart of retirement readiness.
    While these threats can be quite overwhelming for 
policymakers, advocates, and employers as they try to formulate 
discreet collaborative policy solutions, I am sure this 
frustration pales in comparison to the fear, anxiety, and 
despair facing millions of Americans as they look toward a 
financial future plagued with uncertainty and loss.
    Therefore, I am unreservedly committed to working with this 
Committee, and the other participants here today, to build a 
pathway to a secure and dignified retirement.
    Thank you.
    [The prepared statement of Mr. Astrada follows:]
                 prepared statement of scott b. astrada
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                                 ______
                                 
    Chairman Enzi. Thank you. Thank all of you for your brief 
presentation of testimony. I appreciate even more the extensive 
testimony that you provided, which will all be part of the 
record as well.
    To kickoff the first question, I will start, and that is in 
reforming the Federal financial literacy programs, Treasurer 
Carranza and the Administration are focused on increasing 
program effectiveness. That is something I have been asking 
questions about since I first got here. Unfortunately, 
measuring effectiveness can be difficult and requires selecting 
the appropriate metrics and collecting relevant and reliable 
data.
    Can each of you, or any of you, describe the metrics you 
use in evaluating wellness effect programs and how these 
metrics are evaluated? Mr. Jain, you mentioned them. Ms. 
Dudley, you mentioned them.
    We will start with Mr. Jain.
    Mr. Jain. Thank you.
    Absolutely, I think overall we believe we are in the early 
innings of the worksite financial wellness trend and the 
majority of these programs. And as a result, certainly the 
early stages of defining the metrics that need to be used.
    But in our view, the metrics should really be in three 
areas. One is first measuring engagement, so how engaged are 
employees with the financial wellness services being offered to 
them, whether that be educational services, coaching, or 
digital capabilities? Are they engaged with them? Are they 
using these capabilities because that is a first threshold that 
needs to be evaluated?
    The second layer, we think, is to look at what actions do 
these financial wellness services motivate? Do people change 
their benefit selection? Do they save more for retirement? Do 
they create a budget? Do they stick to a budget? Because that 
is ultimately a measure of what impact we actually are having 
on the individual.
    Then the last of the metrics that we think will be very 
important to the employers that are ultimately sponsoring these 
financial wellness programs is, how does financial wellness and 
improved financial wellness lead to better outcomes for the 
employer in terms of improved productivity, lower absenteeism, 
lower health care costs?
    There are employers today that are connecting the dots 
across all of these levels. It does require a fair amount of 
data work to do that, but we are hopeful over time, as these 
programs and capabilities and technology mature, that it will 
be easier to connect the dots across these various types of 
metrics.
    The Chairman. Thank you.
    Ms. Dudley.
    Ms. Dudley. I actually agree with everything Mr. Jain said. 
It is, first and foremost, engagement. Then you look to see how 
their behavior is changing.
    Just by way of example, one of our plan sponsors went in 
and looked at how many people were not on track with what they 
thought was the right amount that they should be saving in 
order to reach a retirement goal if they were to retire from 
the company. And they found only 17 percent were meeting that 
goal.
    The first thing they did was try to engage those people. 
Then they refined when they go back and they look at how many 
more people are participating, and then they refined it and 
added a customized tool where people could have one-on-one 
attention. Then that lifted it further. Then they added a 
retirement planning tool.
    There are no definite metrics. There is nothing out there 
that says, ``This is the way you do it.'' So a little bit of it 
is trial and error, but they refine, refine, refine.
    Typically, it is not unusual to look at a 5-year period to 
see how peoples' behavior is changing. It is not instantaneous.
    The Chairman. But you mentioned a financial stress test.
    Ms. Dudley. Yes.
    The Chairman. Can you tell me a little bit more about that?
    Ms. Dudley. Sure, I would be glad to.
    A financial stress test will go in; typically it evaluates 
how much debt you have. That is first and foremost.
    It will ask you questions like, ``Do you own your own home? 
What is your mortgage? What is your income?'' It will look at 
how much debt you have relative to your income. It will look at 
your savings rate and it will even look at your monthly payment 
on your student loan.
    What we have found quite often is that people shift their 
money to payoff their student loan, and then do not max out 
what they can put into their retirement plan, and then they 
miss out on their matching contribution. Right then, they know 
they need to talk to this person so that they are paying the 
right amount down on their student loan at the right pace, so 
that they are not losing out on their cumulative savings for 
retirement.
    It will also look at how much pressure you feel. It will 
ask you some questions about productivity, whether you have 
taken days off to deal with financial issues, things like that, 
to get a sense of whether it is affecting you from a health 
standpoint.
    The Chairman. Is that what you are referring to with 
diagnostics as well?
    Ms. Dudley. Yes. Part of the diagnostics is evaluating who 
in your employee base needs help. You do have to go in and 
look. Maybe it is the same group of people.
    Maybe you have 2,000 employees or 10,000 employees and 20 
percent of them are the ones that seem to be taking a loan all 
the time or they have taken repeated loans. The financial 
assessment stress test will ask you how many loans have you 
taken. Whether you have had a hardship, have you experienced a 
natural disaster, those kinds of things? So that they know if 
multiple things are happening to you, then they can target the 
help directly to those problems.
    The Chairman. If it is in at the leakage that you also 
mentioned.
    Ms. Dudley. Right.
    The Chairman. Does anyone else want to comment on that?
    Senator Jones. Mr. Astrada, I would just like to focus, we 
talked about the student debt. People focus a lot on the 
student debt and they think that this is a problem, and it is, 
for younger folks who are shifting to try to pay it and they 
are not starting early enough.
    But the statistics that I have seen show that there are a 
lot of people over age 60 that are still paying on student debt 
and it is like billions and billions of dollars.
    What can we do to focus to try to help? That is a shorter 
term problem for people of my generation and completely 
different than the stress test for a younger person to try to 
help them and give them the good basics.
    I will start with Mr. Astrada, but anybody please chime in 
on that.
    Mr. Astrada. Thank you for that question. That is a growing 
issue that we have seen and a lot of it is either related to 
kind of the parent plus loans as cosigners for borrowers, or 
the parents who take out loans in their own name to provide 
tuition assistance for their children.
    Again, I want to keep it focused, but I think you have to 
realize where the wealth gap plays into this whereas it is kind 
of the average white family with about $114,000 of median 
wealth versus under 20 for minority communities. So that will 
not even cover 1 year at most public universities including 
tuition and books. So it drives the need to take on debt.
    The interest rates on the Government loans not only cuts 
into the expense of overall discretionary income for the home 
but, again, it is that kind of anchor on the balance sheet that 
will carry generations, we can see in this instance. And that 
also for those families that might have that extra 
discretionary wealth will cut the ability to provide other 
support systems for other children in college.
    I think to kind of come back to a direct answer is that it 
is really a systemic issue in terms of the wealth divide that 
drives the need to take on loans from the parent. But it is 
also an issue that threatens retirement security because many 
times as you get closer to the age where you are considering 
retirement, if you still have student loan debt for your 
children that provides a huge anchor on any type of growth that 
might threaten current assets in terms of housing, if that goes 
into default and then there is a whole other slew of data about 
who is defaulting and why. I will not go off into a tangent on 
that, but I think those are questions of equity that have to be 
asked in that context as well.
    Senator Jones. Anybody else want to add to that? That must 
have touched a nerve.
    Ms. Dudley. Well, the one thing that I would add, sir, is 
that one of the things that we are seeing more of in our 
financial education program is helping parents plan for college 
a little bit more and to know what their options are, and to 
utilize some of the resources. Some companies have even 
expanded their tuition assistance to accommodate family members 
and things like that. So there is some good thinking.
    It is a big problem, even for the older. It is a 
significant problem for older workers as well, but we are 
trying to help address that problem a little bit through trying 
to help people know what the options are.
    Mr. Jones. Mr. Jain.
    Mr. Jain. I would echo Ms. Dudley's comment that there is 
an opportunity to help people before they even take on the 
debt, evaluate either for themselves or for their children, 
which colleges to choose, how to navigate the financial aid 
process, how to navigate those negotiations which can certainly 
help older workers in the workforce today who have children 
that are going to college.
    But I would agree completely with the comment that I think 
the outstanding student loan debt issue applies across all 
generations. Obviously, it is most acute, certainly, for 
younger, but it applies for many workers who are 20, 30 years 
into their career. I think there is a positive trend that more 
and more employers are seeking to help their employees with 
this.
    The solutions, I think, can range everything from just 
basic guidance to helping employees potentially explore 
refinancing options that may provide more attractive terms.
    Ultimately, helping particularly older workers, who might 
be navigating a range of financial issues, really think through 
what is the right way to pay down the outstanding debt they 
have. How do they manage paying down debt versus saving for 
retirement? Making those tradeoffs which offer the right 
decision will likely vary from individual to individual based 
on their circumstances.
    But that is where we think there is an opportunity to 
provide people with personalized help and guidance at the 
workplace to help them navigate those decisions based on their 
needs.
    Senator Jones. Great. Thank you.
    Ms. Carranza. Yes, Senator. As part of the FLEC reform what 
we have recognized is that there is that particular issue. As 
we are developing strategies for senior protection and security 
of their retirement savings, that is going to be an area of 
focus for the FLEC reform as well, so that we can also work 
with and partner with the private sector who already are ahead 
with some of the solutions.
    Senator Jones. Great, thank you.
    Ms. Dudley. Not to delay this topic or extend it even more, 
but it is such an important issue.
    I do think it is worth calling to folks' attention that 
more and more companies, as Mr. Jain said, are trying to help 
their employees with student debt. One of the ways that they 
are doing that is really seeing how they can provide matching 
contributions when a student loan is being paid.
    Just recently, the IRS issued a private letter ruling 
giving guidance on how to go about doing that. So you will 
probably see more uptake on that.
    Senator Jones. Good, thank you.
    The Chairman. Senator Young, did you have a question you 
wanted to ask?
    Senator Young. I do, Chairman. Thank you to you and the 
Ranking Member for helping to convene this hearing. It is a 
really important issue.
    My staff brought to my attention, just some weeks ago, a 
statistic I found pretty sobering. The Employee Benefit 
Research Institute predicts that over 40 percent of Gen Xers 
are going to run short of money in retirement. And just under 
half of all private sector workers are not participating in a 
retirement savings plan through their employer. So that 
actually came from BLS data.
    I think it is really important that we continue to elicit 
more ideas from experts like yourselves on this. I have offered 
legislation to create a commission that would deeply study some 
of these issues and assess our current retirement system, make 
recommendations to Congress. I will just ask each of you.
    Is this something worth exploring? We set up a lot of 
commissions and studies around here, but this one strikes me as 
fertile for our exploration as Members of Congress.
    Ms. Carranza, do you support this?
    Ms. Carranza. Yes, absolutely. We have workgroups and one 
of them is dedicated for retirement and we have savings 
protection.
    We have also reached out to not-for-profits that are 
focused on senior citizens. One example is AARP that has 
already highlighted that particular stat. That is to say, 
seniors are very committed to financing their families' 
college. And so now, less of them will be able to address what 
they call outliving their retirement funds because they are 
already expended.
    It is an area of concern that we will be focused on.
    Senator Young. Would you recommend that we focus on those? 
I refer to those eight different working groups and what each 
of them is focused on is, I think, about what key issues the 
commission should focus on?
    Ms. Carranza. I would like to address that by indicating 
that we have met with about 60 different entities throughout 
the United States. Anywhere from not-for-profit, the private 
sector, academics. They have assisted us in identifying 
problematic areas or barriers to success on savings, improving 
credit scores, saving long term for retirement.
    I believe that there is going to be ample opportunity to 
address those particular areas of concern from K to 12, to 
homeownership, to entrepreneurs, to retirement. So we are 
covering the entire gamut.
    Senator Young. Fantastic. Thank you.
    Mr. Jain, do you have anything to add? I think you nodded 
affirmatively with the rest of the panel that you support the 
notion of creating a commission to provide recommendations to 
Congress.
    What key issues should such a commission focus on?
    Mr. Jain. Sure, absolutely. I think you touched on a lot of 
the key issues which is in addition to the fact that many 
individuals are not saving enough for retirement, many 
individuals do not have access to the vehicles to save for 
retirement.
    Senator Young. Yes.
    Mr. Jain. We believe that is an area where legislation can 
significantly help.
    In particular, we believe the RESA legislation by providing 
more flexibility to creating multiple employer retirement plans 
will allow more individuals--particularly those working for 
smaller businesses that typically do not start a retirement 
plan due to cost or complexity considerations--to more easily 
offer those plans and expand retirement access.
    Senator Young. Thank you.
    Ms. Dudley, do you have something to add?
    Ms. Dudley. I completely agree with that and I would add 
looking at automation to the extent that automatic enrollment, 
automatic escalation does not fit and RESA also includes some 
improvements in that area as well.
    But if it does not fit a particular employer, looking at 
what we call easy enrollment, ``quick click'' enrollment so 
that people can enroll by clicking on an icon.
    Senator Young. Thank you.
    The Chairman. Since this is a roundtable, I am going to 
jump in here and ask a question too.
    Senator Young. Yes, please.
    The Chairman. Both you and Mr. Jain mentioned auto-
escalation.
    Could you explain that a little bit?
    Ms. Dudley. Sure, I am happy to.
    Right now, when someone enters into a plan, sometimes they 
have automatic enrollment and they are automatically put in a 
plan.
    The Chairman. Yes.
    Ms. Dudley. Sometimes they have to actually enroll in the 
plan. But once they are in the plan, they are asked 
periodically if they want to increase their contribution level. 
But in some cases, it automatically increases. You get a salary 
increase, your contribution to your plan increases.
    There is a current safe harbor that caps how much you can 
escalate someone up to 10 percent and legislation included in 
RESA would lift that cap and allow you to continue escalating 
people because people really actually need to save more than 10 
percent to reach their retirement goals, particularly when they 
do not save over their whole career.
    Senator Young. Mr. Astrada.
    Mr. Astrada. Thank you. One of the things we work a lot 
with at CRL is predatory lending and I would think that would 
be a key focus of the commission. Just some idea of how much is 
extracted from peoples' savings, bank accounts, it is something 
to the tune of $8 billion a year in fees.
    According to the CFPB, it shows a systemic issue in terms 
of cash-flow and expenses because something about 80 percent of 
all payday loans are renewed within 14 days and are usually in 
a series of ten in a row, which shows a more systemic 
shortfall.
    Those states, 15 plus the District of Columbia that have 
limited the cap on what you can charge in small dollar loans to 
36 percent or less, have saved over $2 billion a year in fees. 
If you include the amount from car title loans, that is another 
two-point-three. So that is $5 billion a year that can go 
directly back to consumers and can provide some of the options 
that financial literacy is geared toward solving in terms of 
money that can be invested, saved, or put toward retirement.
    Senator Young. Well, thank you for all of those ideas.
    Mr. Chairman, I of course have more questions, but I want 
to give others an opportunity to chime in.
    The Chairman. Senator Scott, do you want to take a turn?
    Senator Scott. Thank you, sir. Thank you and the Ranking 
Member for holding this very important hearing or roundtable 
discussion on a very important topic.
    I remember my days back in the insurance and financial 
services arena there was a book. It was called, ``The Number: 
What Do You Need for the Rest of Your Life and What Will It 
Cost?'' There was a number that you were supposed to have so 
that you could live comfortably in retirement.
    I wish someone had written a book called, ``The Magic of 
Compounding Interest.'' It would be a far better book for us to 
understand and appreciate the impact, long term, of starting 
early and not later.
    Someone gave me an example one time a while back where a 
person who saves money over the first 10 years from 25 to 35, 
they save like $30,000 and they compound it at 7 percent. By 
the time they are 65 years old, it is worth $335,000.
    A person who starts at 35 instead of 25, and saves from 35 
to 65, $90,000 they invest in. That same 7 percent only has 
about $315,000.
    The first 10 years were more valuable than your last 30 
years and you only saved for 10 on the first example, and you 
saved for 30 on the second example, and you save $30,000 on the 
first example, and you save $90,000 on the second example, and 
you have 7 percent return on both examples. And yet, on the 
first 10 years, because of the magic of compounding interest or 
the appreciation of the time and value of money, you end up 
with more money accumulated than you did on the second example 
that took you literally 30 years versus 10.
    How do we get people to understand and appreciate that 
important distinction or delineation?
    What I have seen happen was a partnership between the NFL 
and Visa to teach financial football or financial literacy in 
high schools throughout South Carolina. I brought them to my 
old high school and we played a game against football players 
from the NFL from the Carolina Panthers. It turned out to be a 
really good opportunity for folks, high school students, to 
know the importance of financial literacy.
    To know the difference between a savings account and a 
checking account. To know the difference between a mortgage, a 
no interest, low interest 30-year mortgage versus something 
that goes up every three or 4 years.
    They are receptive if we can find the right environment or 
the right vehicle to communicate this message of financial 
literacy. And so I would ask a question.
    What positive, constructive, and perhaps entertaining 
examples have you run into that have been meaningful in getting 
people to have the spark? When the light comes on, it rarely 
goes off if you fully appreciate the importance of financial 
literacy. I know that there are a number of examples.
    I and Joe Donnelly have worked on--although he is not 
here--financial literacy as it relates to college education. 
What do you get for a political science degree? I got lucky the 
last 5 years, but for the first 20 years I was in business not 
using a political science degree.
    Understanding the value of each degree is incredibly 
important and that should be a part of the financial literacy 
conversation, since we are spending so much time on this 
trillion dollar student loan debt that we have as a country. 
Perhaps some of that could have been solved if we understood 
the ROI on different degrees.
    Happy to hear any examples that you may have of 
constructive programs that are entertaining that would get 
younger people involved and create headwinds for the natural 
inclination to buy things that you cannot afford with money you 
do not have to impress people who are not going to be 
impressed.
    Ms. Dudley. Should I start?
    Senator Scott. Thank you, ma'am.
    Ms. Dudley. I will start with a couple of them. Since you 
mentioned the football one, I am from the great State of 
Alabama.
    I do not know if you have noticed, but whenever Alabama is 
playing on television, Coach Nick Saban does a commercial that 
talks a student out of buying a very expensive dress. In that 
commercial, he talks her out of buying the dress and tells her 
why she should save that money instead.
    One thing that I highly recommend is that we reach out to 
as many of our universities and our schools to see if we cannot 
start a public-private partnership to get more of those 
educational messages out there.
    There are some other terrific things that employers are 
doing. They are playing some team games and what we find is 
that employees like being on a team and they like to win. They 
particularly like to win tee shirts, but they will also take 
other things like money and other things too, gift cards, but 
playing games that teach them some of these kinds of basic 
financial concepts.
    The other thing that we have seen success in is online, 
some video gaming and incorporating gaming in the financial 
education.
    Senator Scott. Thank you.
    Mr. Astrada. I think that is the perfect question to kind 
of illustrate not if financial literacy works, because there 
are plenty of examples that it does, but that who it works for.
    I think that when you have individuals kind of making 
tradeoffs between rent, medical care, or food even 20 or 30 
bucks on the frontend is going to be impossible to come up 
with. And I think that any savings that you are able to make, 
and if you account for kind of income volatility and unexpected 
expenses are always going to be in danger of being moved from 
the savings account to the checking account even if you have 
full knowledge of what that is.
    I think if you are in an auto-enrollment or in a retirement 
plan, it might actually be more expensive to have to pullout 
that money or if you have to go to more higher cost payday 
alternative loans.
    I think that the financial literacy to create that spark 
really needs to be more nuanced in terms of which communities 
that are being targeted. And that, like, compound interest is a 
phenomenal tool if you have $50 a month and this is not 
strictly for individuals that are living under the poverty 
line. This is increasingly an LMI, a rule even in the middle 
class issue because of income volatility itself.
    I think that access to that kind of income smooth impact as 
whether it is to an employer, an employee benefits package one 
not directly related to this Committee and its jurisdiction 
but, like, public benefits usually have an asset threshold 
which, by its logic, punishes individuals for not saving for 
retirement.
    I think that creating competent and relevant financial 
literacy curricula for communities broken down by the 
challenges they are facing you will have no shortage of 
individuals ready for that knowledge coupled with an actual 
tool.
    Senator Scott. Target marketing works.
    Mr. Jain.
    Mr. Jain. Thank you. I would echo and support the comments 
of my colleagues and add two things.
    One is I think technology is giving us more flexibility in 
how we engage with individuals to deliver messages that are 
more personalized, more just-in-time so that we are catching 
somebody maybe when they are first starting a job. That is that 
critical moment where if we can engage with them, we can set 
them on a path that will be very productive from a retirement 
savings perspective.
    Then second, I think there is a lot of opportunity around 
how we apply real finance and what drives the interchange. In 
particular, we have seen showing people what their savings will 
translate into as in income in retirement and how that compares 
to what income they likely will need can be quite motivating in 
driving people to save more for retirement just because it 
makes it very simple.
    It takes all the math that is hiding behind the scenes and 
boils it down into a number which says, ``You are going to need 
an income of X, but this is really what you are on track for.'' 
And, ``What do you want to do about it?''
    Senator Scott. I know I am way out of time.
    That is such an important point because the reality of it 
is that so many people think that their savings will match 
their retirement. The quality of life that they are 
experiencing when they are working will be the same 
uninterrupted.
    When, in fact, in South Carolina, and I think it is true 
around the country, that the average person in their 401(k) has 
about 1 year of income that is in the 401(k). Take $60,000 or 
$100,000 as an average income and at 3 percent that produces 
$3,000. At 7 percent, it produces $7,000. And if you are making 
$30,000 or $40,000 it is obvious that the pieces do not fit 
very well.
    But one of the challenges, I think, we are going to face 
with the current dynamics is that the average person coming out 
of college today will have between seven and nine different 
jobs. So unless we are creating a transition auto-portability 
of those smaller 401(k)'s or savings and retirement dollars to 
be able to transition the transfer without being exposed to the 
10 percent penalty in ordinary income, then we are going to 
find ourselves having to explain why the dollar does not go any 
further.
    To the extent that we can also understand and appreciate 
the nuance of multiple employers, multiple retirement plans, if 
you are working for a large company, a smaller company, they 
have simple filing 401(k)'s, we are going to miss a golden 
opportunity for two-thirds or more of our workers.
    Ms. Carranza. Senator, Treasury has identified eight best 
practices, and I will just target on three that you have 
referred to.
    That is, not only knowing your population, which 
demographic do you really want to target, not only the 
underserved, the served, the military, we have the 
entrepreneurs. But understanding the population that we want to 
serve, reach, and identify the gaps.
    The other is not just provide programs, literacy programs 
that inform, but actually change the behavior. What skill sets 
they have developed and develop some metrics.
    The agencies that currently have metrics measure more, how 
many strokes on the Website, what information access has been 
reached by the particular communities. But more importantly, 
what we are looking to promote is evidence-based, much like 
what you have cited. And not buying the dress on the 
commercial, but some other very tangible evidence that they now 
consider credit scores and student loan debt as a family 
liability not just individual choice or condition.
    The other is not only make it easy to make good decisions, 
when I say ``make it easy,'' it is automation. We have talked 
about automation, the facilitation of applications have been 
discussed in some of the roundtables that we have participated 
with.
    Then finally, it is about evaluating the impact. So without 
metrics, without particular analytics, it is all talk. And so 
we are looking and addressing with the private sector what best 
practices there are. What mechanisms, what frameworks are 
available to promote.
    Thank you.
    Senator Scott. Thank you.
    Can I continue this conversation? I would just say----
    The Chairman. Ms. Dudley wanted to comment yet.
    Senator Scott. I have to say this. It cannot wait, sir. I 
will say that had it been a Clemson television commercial about 
the dress, it would have had more credibility. Crimson Tide has 
won too many national championships already.
    Thank you very much.
    Ms. Dudley. A couple of things. I would like to underscore 
Mr. Astrada's point about not letting the accumulation of 
assets interfere with subsidies.
    We have run across that with some of our employers where 
the employees were really reluctant to be automatically 
enrolled out of fear of the impact that would have on other 
things that they might be taking advantage of or need. And so, 
making that very clear is something that we would strongly 
support as well because it is really true.
    You need to target your population, and you really need to 
look at and know your population, and be evidence-based, and 
look to see and monitor whether behavior is being changed or 
not.
    But we could help people a lot with technology and with 
just access, the Multiple Employer Plan provision. Just access 
and automatic enrollment would help people. But we have to make 
sure that people are not perceiving that there is a barrier 
even if it is not there.
    Senator Scott. That is excellent. Yes, ma'am.
    The Chairman. I have a question that Senator Alexander 
thought he would be here for, but he is not. He wanted to have 
the question asked about something that is in the RETIRE Act, 
which is Receiving Electronic Statements to Improve Retiree 
Earnings that would allow the electronic delivery of required 
retirement plan documents.
    As individuals receive more and more information online, it 
only seems reasonable that the way the retirement plan 
documents are delivered should keep up with the times with 
robust consumer protections, of course. Unfortunately, not 
everyone sees it that way, but I am hopeful that Congress will 
pass the legislation.
    I am speaking on behalf of Senator Alexander, and I agree 
with him, which not only provide plans with hundreds of 
billions of dollars in annual savings, but would be 
environmentally friendly.
    Can any of you comment on allowing electronic delivery or 
E-delivery of plan documents? And how it might complement or 
complicate current and future efforts for financial literacy?
    Ms. Dudley, do you want to start?
    Ms. Dudley. Yes, I will start, but I do not want to take 
away from other people.
    We feel very strongly about harnessing technology. 
Technology you can see in the examples that I included in the 
testimony. Employers are embracing technology to deliver tools 
to our employees and they are asking for more tools. I feel 
very confident.
    I have worked in this business for a long, long time now, 
many decades, and I really feel this is something that we can 
find common ground on with everyone. This is a bipartisan 
initiative to take advantage of technology in delivering 
information and in utilizing applications on telephones to 
facilitate peoples' access to information.
    One of the things that we have discovered is people like to 
be able to find things quickly and they want to be able to do 
it in any hour of the day, and they do not want to dig through 
a box to find the document. They want to be able to just go 
online and find it.
    We would strongly support. We think the need is there, the 
time is right to do this.
    The Chairman. Anyone else wish to comment on that? Thank 
you.
    Senator Jones.
    Senator Jones. I would like to go back for a moment to 
something Mr. Astrada said and some of the three tiers of 
problems. We talked about student loan debt, but you all 
mentioned predatory lending. That is a particular problem in 
Alabama, and I know it is in other states as well, and 
something I have been really interested in even before I got to 
the Senate.
    I would like for you to just talk about that a little bit 
and how that affects potential retirees because in Alabama the 
numbers are staggering, the amount of loans being taken, the 
number of loans per person.
    It seems like the consumer financial protection bureaus 
have not been as aggressively pursuing predatory lending as I 
would like. It is rolling back some now and it is leaving the 
state.
    If you would just discuss a little bit and I know it is a 
little bit beyond the jurisdiction of this Committee, but other 
committees are looking too.
    What is it that we can do that might help? What can we do? 
What tools can we give to states, if necessary? What can we 
give here in Congress to try to help this problem? Because it 
is a snowballing effect, it really just damages so many people.
    I will let everybody answer, but you brought it up 
particularly, I think.
    Mr. Astrada. Thank you for that question and I will try to 
keep it as tailored to this Committee, or at least the issues 
on retirement. But that is a foundational threat to retirement 
security as we see it.
    As I mentioned, it is billions of dollars a year siphoned 
off by these predatory loan products. The most concerning 
aspect is that this kind of flies in the face of any type of 
responsible lending or how credit should work.
    The very business model of a payday loan is reliant on the 
inability of the borrower to payback the principle and that it 
is never just kind of one and done. It is unequivocal. The 
research is there. We have done it. Our coalition partners have 
done it. The first payday loan is really just the first in a 
debt trap cycle.
    We have seen in our research report, we just put one out 
today in Michigan, but we have done it in Colorado, the real 
impacts of this because it is a domino effect. Another big 
aspect of the loan is that they have a superior lien against 
your bank account through an ACH, so that comes out first 
before anything like rent or bills.
    We have seen the domino effect of you get overdraft, and 
then your bank account closes, and then you lose. You cannot 
pay your car. We have seen it escalate all the way into 
bankruptcy. It really is a parasitic product because any 
savings, any discretionary income is automatically eaten away 
with these products.
    The reality is that you can make affordable products in the 
regulatory framework we have now. This speaks again to the 
economic rethinking that we need on how to regulate this space. 
Competitive markets do not function in this industry. Usually, 
that is the big driver for bringing down prices. You compete on 
service.
    But in every single case in every single state the more 
actors you have, in fact, it is worse because everyone charges 
right up to what the competitors are, the state interest rate 
caps are.
    A lot of what we relied upon in the past is the CFPB's 
aggressive regulation of this, especially in the culmination of 
the payday rule that is being implemented next summer.
    One of our big concerns is that under the current 
leadership, a lot of that has been scaled back not only with 
indications from the director to the late implementation reopen 
rule, but also concerning actions such as dropping lawsuits 
against payday lenders that have been proven to be defrauding 
customers or charging more than legally permissible.
    The director has also joined a lawsuit against or did join 
a lawsuit against the bureau itself to stay the rule. So we 
have definitely seen a shift in the direction of the CFPB's 
priority of payday lending and we are very much concerned with 
that.
    To kind of just bring it back to what we can do especially 
on the state level is that one of the biggest protections we 
have against predatory lending is state interest rate caps. It 
is the ability for states to police their own consumers and to 
determine what works for them. And many states like South 
Dakota, by popular referendum, the citizens have already spoken 
to push out these predatory lenders and limit a loan.
    The integrity of the state interest rate caps that are 
there must remain intact and for those states that do not, it 
is really, and I do not want to get too in the weeds with Dodd.
    Dodd-Frank allows state attorney generals to implement 
certain parts of Dodd-Frank, and where they can kind of fill in 
the gap, and then have the rule go into effect as planned with 
continued work on the long term a rule of 45 days or more.
    A really long answer, but a short summary is that it is one 
of the biggest detriments to financial security and it has a 
domino effect of siphoning off any ability of savings before we 
even have the privilege of asking, ``Should I spend or should I 
save?'' These products prevent you from ever arriving at that 
question because you are constantly behind and you are 
constantly threatened.
    The Chairman. As kind of a follow-up on that, in your 
testimony you mentioned your organization's affiliation with 
Self-Help Credit Union.
    Can you describe what that is, and what services it 
provides, and how widespread it is?
    Mr. Astrada. Correct. So CRL is an affiliate of Self-Help 
Credit Union based in Durham. It is a CDFI primarily geared 
toward low income, rural, female headed families to provide 
access to credit.
    We have provided $6 billion to nonprofits, small 
businesses, LMI customers and serve through retail branches 
consumers in about five or six states now including Wisconsin, 
North Carolina, Florida, California.
    It was really started in itself as a credit union in the 
1980's as a response to the lack of lending to African-
Americans in the Durham area. And that the legacy of red lining 
was real, and it was undisputable, and our CEO started this 
credit union with that mission.
    We are very much carrying through that mission on the 
policy side and have had that kind of input from an industry 
perspective of kind of what works, what products have worked, 
what products do not, what is kind of a threat to financial 
stability, and what would directly compromise that.
    The Chairman. Good step. Good, positive action.
    Ms. Dudley.
    Ms. Dudley. I just wanted to add one thing. I would 
underscore the importance of addressing the issue of these 
lending practices, but as a barrier to retirement savings and 
bring it back a little bit to retirement savings.
    We recognize that this serves as a barrier to savings and 
employers have increasingly embraced this by trying to address 
the emergency savings funds or trying to help people address 
problems where they are caught up in payday loan cycle.
    One of our members--and really many more of them have 
this--but one of our members even established a not-for-profit 
trust to provide emergency payments so people did not have to 
go to a payday loan. They would like to see some public policy 
support, particularly from a tax standpoint, for the 
individuals that may have to utilize it.
    Senator Jones. Would that be in the form of a grant?
    Ms. Dudley. Or it could be like a grant or it could be 
something----
    Well, typically they are just, they do not have to pay it 
back. They rely on contributions.
    Senator Jones. Okay.
    Ms. Dudley. But facilitating those contributions where 
people maybe can make those contributions on a tax deductible 
basis to encourage more employees to contribute, or helping the 
person who gets a payment, instead of going to a payday loan, 
by giving them a tax break if they do have to take it. There 
are a variety of ideas that we could explore if people wanted 
to.
    But they find that maintaining this trust through the 
contributions of all employees helps to push down the number of 
their employees that are caught up in the payday cycle.
    Senator Jones. Interesting.
    The Chairman. Mr. Jain.
    Mr. Jain. I would echo Ms. Dudley's comment that I think 
one of the root causes for payday lending is a lack of 
emergency savings. A number of consumer surveys have pointed to 
roughly half of Americans cannot fund a few hundred dollars in 
an emergency expense.
    From a worksite financial loans perspective, we think there 
are some really interesting opportunities to leverage existing 
retirement plans to create emergency savings funds for 
individuals. What that does is it leverages the convenience of 
existing payroll deductions. Participants are already familiar 
with these plans. It is easy for the employer.
    But it is a way to help employees build a buffer of $1,000 
or $2,000 in savings that when an emergency hits that they have 
to fix their car, or there is a medical expense, they can tap 
that source of savings instead of going to a source such as a 
payday lender.
    We also think that will have the benefit of reducing 
retirement plan leakage because in addition to accessing payday 
lenders, many individuals take loans from their 401(k) plans, 
which often then permanently impacts their retirement 
preparedness.
    The Chairman. Do you have an additional question?
    Mr. Astrada. I do not want to monopolize the time, but I 
just wanted to give some context also that every year we, along 
with our coalition partners, do a nonpartisan poll. That this 
regulation and concern over predatory lending is a nonpartisan, 
broadly supported issue like across Republican, Democrat, 
independent on a sense of equity. This is something that 
everybody supports across the political spectrum and we work 
widely with our faith community across many denominations that 
this is a very broad and unified coalition in terms of our 
concern.
    Senator Jones. One thing, before we get to Senator Scott, 
one thing that I have got a concern about at least the 
statistics that I have seen in Alabama, we can talk about 
emergency loans, but so many of them are not, it just depends 
on your emergency.
    I mean, paying the power bill sometimes, and just making 
ends meet, and putting food on the table for your children, in 
many instances, is what a lot of people, how this starts. As 
opposed to the car that breaks down and you cannot get to work, 
or you have emergency medical bills.
    Ms. Dudley. We recognize that. We know that.
    In fact, this one employer that I was mentioning, they can 
pay out in 24 hours. They have a group of folks that are 
employees with the same company, and they administer it, and 
they meet typically almost every day because somebody has 
almost always got something. And they have it down to about 24 
hours, but it is a real problem.
    The Chairman. I will shift the gears a little bit again, 
because I know the American Benefits Council has some 
enthusiasm for the open Multiple Employer Plans, small 
businesses can pool their retirement plans.
    We have a couple of glitches with that yet, but I think 
they hold a lot of promise for expanding access to retirement 
savings options for employees of small businesses, which is 
usually the administrative part of that creates a lot of 
difficulties and a lot of additional expense. But if we can 
group them together, they can do something with it.
    Under these plans, would sponsors have greater access to 
the financial literacy resources for 401(k)'s that you talked 
about today?
    Ms. Dudley. That is a great question and I am so glad you 
mentioned those. We are huge fans of the Multiple Employer Plan 
and it is included in RESA as well.
    The reason we are is because we do think it will reduce 
costs and make it easier for people to have access. Not only 
small employers, but individuals, people that maybe have 
multiple jobs can treat themselves as if they are self-employed 
and can participate.
    We have a lot of companies that are poised to provide 
Multiple Employer Plans including financial education, 
financial tools, financial tools in budgeting, basic budgeting 
information to work with people that are participating in 
Multiple Employer Plans. And also, to address the lifetime 
income, the period of time in retirement to help people 
understand those options as well.
    It is actually a door that we need to find a way to open 
and let people in.
    The Chairman. Thank you.
    For Treasurer Carranza, the role of nonprofits, I know you 
will be looking at in promoting financial literacy in 
retirement security. They have a variety of missions, as many 
as the organizations themselves, I think.
    But based on any of your work so far, is there any 
consistent coordination between Federal agencies and 
nonprofits?
    Ms. Carranza. Yes, the term duplicative I use very 
cautiously, but most definitely we have agencies that do very, 
very good work in that area, but it is done between several 
agencies. We are looking to try to better collaborate and 
coordinate those efforts.
    One, because I believe that some of the agencies design 
their particular programs or products based on the constituency 
they may have. I will just give one big example which is D.O.D. 
They are very unique. They have different services. They have 
portals for the Navy and the Army and Air Force, and each one 
has a unique need.
    However, our reform efforts are to take advantage of the 
best practices and the best tools that are in place, 
measurements as well, and consider the population with the 
greatest need and focus in on those areas.
    But yes, it is a plethora of opportunities for us to 
improve the work, the body of work of the Financial Literacy 
and Education Commission.
    The Chairman. Well, I am really excited that you are in 
charge of this task force. I have seen your good work with the 
Small Business Administration and look forward to the results 
from it.
    Ms. Carranza. Thank you.
    Senator Jones. I think Senator Scott has----
    The Chairman. Senator Scott.
    Senator Scott. Thank you.
    I hope that we do not forget that while the Government can 
play a significant role in helping to educate the public, the 
reality of it is that there are a lot of private sector tools 
that are already available. So we are, in a way, trying to 
solve a problem that we cannot solve with our tools.
    One of the old sayings, ``Ignorance is bliss;'' ignorance 
is not bliss. The fact of the matter is in the private sector 
today, small employers--which two out of three new jobs are 
being created by small employers not by Government anywhere--
you can get a simplified 401(k) plan started for under $1,000.
    It is not that the expense is so high; sometimes the 
information that is being disseminated to the small businesses 
does not get to the desk of the guy or the gal who has to be 
the business owner/widget maker/human resources/the legal 
department.
    Part of our problem is disseminating information in a 
consistent way that allows a small business owner, and perhaps 
as part of our target market what we should be looking at is 
the small business owners, and so many of the folks who will be 
challenged in retirement will come from one of those 
businesses.
    But there is also an important role in the entire financial 
literacy conversation around certainty and predictability. 
There are a number of programs today, and I am not sure if you 
are familiar with them, but I would love to hear your 
perspectives on it if you are, that during the annuitization 
phase, you have a guaranteed return on the dollar; so 5 
percent, 6 percent, 7 percent.
    I think it is rather the Allstate's of the world, the 
Prudential's of the world guaranteeing the outcome, the money 
going out will be at 7 percent. So if you have $100,000 
accumulated, you can have a 5 percent, or a 6 percent, or a 7 
percent guarantee. That is part of the answer to, ``How do I 
know how much money I will have in my retirement?'' It is 
having a fixed dollar amount, a fixed interest rate that is 
guaranteed for the lifetime of the individual.
    If you want a lifetime income, typically the interest rate 
is lower. If you want a 20-year payout, the interest rate may 
be higher. But those types of plans and the dissemination of 
that information is critical for us to have the certainty and 
predictability that the average person is looking for.
    Mr. Jain. Thank you.
    I absolutely agree and just to build on or to respond to 
the Senator's comments, I think one of the key issues from a 
retirement preparedness standpoint is the very varying 
longevity outcomes that retirement participants are going to 
have.
    Some individuals might live until their late sixties, some 
might live until their late nineties. How do you then plan for 
a retirement that might last anywhere from 5 years to 30 years?
    Providing private sector solutions that help spread 
longevity risk across many individuals, we think, is going to 
be critical to helping maximize individuals' retirement assets. 
We think there is an opportunity to provide more of these 
solutions within worksite retirement plans. We think RESA can 
help with addressing some of the obstacles that currently 
prevent some plan sponsors from introducing these types of 
solutions.
    Senator Scott. Ms. Dudley, do you have a question or a 
response to that?
    Ms. Dudley. I would just underscore Mr. Jain's point.
    We also think that there are some real opportunities to 
address the concerns about longevity risk, which very few 
people really understand. When they retire, they do not really 
have an appreciation of the impact of longevity risk and the 
interrelationship of health care costs and longevity risk, and 
how those fit together.
    But we do think retirement plans, here is a wonderful 
opportunity to help people start preparing for that with their 
first dollar by embedding some of these solutions in the 
investment option. There are some barriers to doing that, but 
we think that together we can perhaps break down some of those 
barriers and help employers.
    A lot of employers are reluctant to put them in there 
because of their concerns about the fiduciary issues around it.
    Senator Scott. As I am running out of time in this question 
phase, which obviously I have not been phased about running out 
of time since I was 7 minutes over last time, so I will be a 
little more sensitive this time, Mr. Jones.
    Two final thoughts No. 1, our final market for this 
conversation is not the simple, default, those living in 
poverty or those in the bottom quintile of earners.
    The reality of it is that your target market for this 
conversation is the middle income earner because those living 
closer to poverty, the Social Security benefits included in, 
they are at the lowest risk of all of our folks, and we do not 
typically appreciate that.
    The folks who are actually the target market for us from a 
financial literacy perspective on retirement should be the 
average earner, not necessarily those folks who may be exposed 
to payday lending and other things that we are mostly concerned 
about or very concerned about.
    The second thing I would say is that because of that first 
comment the long term care aspect of retirement is one of the 
major concerns of any one in Middle America because the ability 
to outlive your income is one thing.
    If you find yourself needing assistance in your retirement 
through a long term care facility, if we are looking at 
complementary or harmonizing benefits that need to work 
together, your 401(k), your long term care planning or the lack 
of it could implode your entire financial plan if, in fact, it 
costs you $200 to $300 a day in a long term care facility.
    Once again, those folks at the threshold, right above the 
threshold of poverty, Medicaid is going to respond quicker than 
the person who has to deplete their assets down to $3,000 and 
totally destroy their financial plan.
    I am not sure if that is a question, but it certainly is a 
comment. I would say that if there was a question, how do we 
fuse together the important reality of long term care, 
providing for long term care and the 401(k)/financial literacy 
concerns that we have over just retirement, as if it is not a 
health care conversation as well?
    Ms. Dudley. Well, we think it is a health care conversation 
as well because as you age, health care takes up a bigger 
portion. And by health care, I am including personalized care, 
just help getting around, just physically getting around, and 
those kinds of tools that you need to get around. Those things 
take an increasing amount of your money and so, being prepared 
for that.
    That is one of the reasons that we have tried to integrate 
in our health well-being programs, the financial security 
includes addressing health care and vice versa. In our 
financial planning, we try to include health care.
    The other thing that we really think that we need to do all 
together, besides just educating people and we have a number of 
ideas about that, but also we need to let some of these 
products evolve a little bit. We need to give enough 
flexibility. We want to break down the barriers so companies 
can put these different investment options in the plans, but 
you do not want them to be limited in their innovation, so that 
they can evolve to do more things, if that makes sense.
    Senator Scott. Absolutely, we see that on the life 
insurance side already where you have seen the ability to use a 
part of the benefit before you pass away to pay for some of the 
long term care challenges.
    Ms. Dudley. Right and maybe there is a way to take some of 
the health care dollars and help you use that for retirement in 
retirement.
    Senator Scott. Only 3 minutes over, so I apologize, but 
thank you very much.
    The Chairman. That is fine.
    Mr. Astrada, I think, wanted to comment.
    Mr. Astrada. I just wanted to share some of our research 
especially to your first comment. A lot of the impact and 
dangers of payday lending is, in fact, for middle income 
individuals that have an income and a bank account. So it is, 
we are seeing the negative impacts across the full spectrum.
    Senator Scott. No doubt. When you study the figures, one of 
the things that I think manifests fairly quickly is the bottom 
two quintiles is where you see the greatest exposure and the 
damage from the payday lending cycle, the cycle that never 
ends.
    As you move up the income strata, you find that impact 
plateaus at some point in the top end or heading toward that 
middle income, that $55,000 to $58,000 you start seeing a 
different utilization, from my understanding, of the payday 
lending. Not to suggest that it does not exist there.
    That the most powerful impact that we see, especially in 
studying our troops to folks living in poverty is that E2, 3, 4 
and the folks under that $45,000 to $50,000 range is the 
research that we have done on that. But I am not here to debate 
that point.
    My point was simply that if you are looking at a target 
audience for this conversation, let us not forget Middle 
America. Not that you do not have a target audience beyond that 
or below that or above it, but that is an area that we see that 
Social Security that was designed for someone to live on for 
about 3 years in retirement because they are going to die 3 
years after they retired. We now have a situation where the 
average age is 15 years into retirement.
    Factoring all of that in to financial literacy and having a 
conversation about other things other than what that looks 
like, I think, is important to bring the focus back.
    That was only my point. Thanks.
    The Chairman. I want to thank everybody for their 
participation, your time, your insights and hopefully some 
answers to some questions that will also be submitted that will 
wind up with us doing some additional legislation or perhaps 
Ms. Carranza's committee will come up with the solutions for us 
and we will not have to do that. But I think we have the right 
person heading that up.
    I want to thank the Members of the Committee who 
participated today. I think we got a lot of information and 
ideas. I even have a few memories that I wrote down that are a 
little peripheral to all of it.
    When we were doing education planning, I took my oldest 
daughter to college and they found out that she had savings, 
because we made our children work. They said, ``You know you 
would have been better off if you would have bought a car with 
that.'' She would have qualified better for financial help. 
Then they suggested since we owned a shoe store that we could 
sell one-fourth of our store each year and pay for her college 
tuition. That did not work with our financial plans either.
    I will ask that the hearing record stay open for 10 days to 
accommodate additional questions that other Senators may have 
for the witnesses.
    The Chairman. If there is no further business to come 
before the Subcommittee, it stands adjourned.
    [Whereupon, at 4:04 p.m., the hearing was adjourned.]

                                 [all]