[Senate Hearing 116-524]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-524

                      INVESTIGATING CHALLENGES TO 
                      AMERICAN RETIREMENT SECURITY

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON SOCIAL SECURITY, 
                      PENSIONS, AND FAMILY POLICY

                                 OF THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            DECEMBER 9, 2020

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                     
                                     

            Printed for the use of the Committee on Finance

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
46-722 PDF                 WASHINGTON : 2022                     
          
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                          COMMITTEE ON FINANCE

                     CHUCK GRASSLEY, Iowa, Chairman

MIKE CRAPO, Idaho                    RON WYDEN, Oregon
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
TIM SCOTT, South Carolina            ROBERT P. CASEY, Jr., Pennsylvania
BILL CASSIDY, Louisiana              MARK R. WARNER, Virginia
JAMES LANKFORD, Oklahoma             SHELDON WHITEHOUSE, Rhode Island
STEVE DAINES, Montana                MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana                  CATHERINE CORTEZ MASTO, Nevada
BEN SASSE, Nebraska

             Kolan Davis, Staff Director and Chief Counsel

              Joshua Sheinkman, Democratic Staff Director

                                 ______

      Subcommittee on Social Security, Pensions, and Family Policy

                      ROB PORTMAN, Ohio, Chairman

CHUCK GRASSLEY, Iowa                 SHERROD BROWN, Ohio
BILL CASSIDY, Louisiana              MICHAEL F. BENNET, Colorado
JAMES LANKFORD, Oklahoma             ROBERT P. CASEY, Jr., Pennsylvania
TODD YOUNG, Indiana                  CATHERINE CORTEZ MASTO, Nevada

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Portman, Hon. Rob, a U.S. Senator from Ohio, chairman, 
  Subcommittee on Social Security, Pensions, and Family Policy, 
  Committee on Finance...........................................     1
Brown, Hon. Sherrod, a U.S. Senator from Ohio....................     4

                               WITNESSES

Barr, Scott, AAMS, financial advisor, Edward Jones, Zanesville, 
  OH.............................................................     7
Stevenson, Eric, president, retirement plans, Nationwide, 
  Columbus, OH...................................................     9
Kreps, Michael P., principal, Groom Law Group, Washington, DC....    11
Luskin, Joshua, president, National Association of Government 
  Defined Contribution Administrators, Lexington, KY.............    13

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Barr, Scott, AAMS:
    Testimony....................................................     7
    Prepared statement...........................................    41
Brown, Hon. Sherrod:
    Opening statement............................................     4
    Prepared statement...........................................    44
Kreps, Michael P.:
    Testimony....................................................    11
    Prepared statement...........................................    46
Luskin, Joshua:
    Testimony....................................................    13
    Prepared statement...........................................    48
    Response to a question from Senator Grassley.................    52
Portman, Hon. Rob:
    Opening statement............................................     1
    Prepared statement...........................................    52
Stevenson, Eric:
    Testimony....................................................     9
    Prepared statement...........................................    54

                             Communications

American Securities Association..................................    61
Financial Services Institute.....................................    63
T. Rowe Price Associates, Inc....................................    64

                                 (iii)

 
                      INVESTIGATING CHALLENGES TO 
                      AMERICAN RETIREMENT SECURITY

                              ----------                              


                      WEDNESDAY, DECEMBER 9, 2020

                           U.S. Senate,    
               Subcommittee on Social Security,    
                       Pensions, and Family Policy,
                                      Committee on Finance,
                                                    Washington, DC.
    The WebEx hearing was convened, pursuant to notice, at 
10:01 a.m., Dirksen Senate Office Building, Hon. Rob Portman 
(chairman of the subcommittee) presiding.
    Present: Senators Grassley, Lankford, Daines, Young, 
Carper, Cardin, Brown, Whitehouse, and Cortez Masto.
    Also present: Republican staff: Michael Sinacore, Economic 
Policy Advisor for Senator Portman; and Jamie Cummins, Tax 
Counsel for Chairman Grassley. Democratic staff: Chad Bolt, 
Legislative Assistant for Senator Brown; and Drew Crouch, 
Senior Tax and ERISA Counsel for Ranking Member Wyden.

  OPENING STATEMENT OF HON. ROB PORTMAN, A U.S. SENATOR FROM 
OHIO, CHAIRMAN, SUBCOMMITTEE ON SOCIAL SECURITY, PENSIONS, AND 
              FAMILY POLICY, COMMITTEE ON FINANCE

    Senator Portman. Well, listen, I do not have a big gavel 
here, so I am going to just pound my fist on the table and say 
this hearing will come to order.
    I can see a number of my colleagues are already on. I thank 
you for joining us, and a special thanks to Sherrod Brown and 
his staff for working together with us to plan this hearing. I 
have been looking forward to this hearing for a long time. I 
appreciate the Finance Committee allowing us to move forward 
with it now.
    We have some great witnesses. I am sorry we have to be 
remote, because I would love to be in person talking to you, 
but I think this is best given where we are with the COVID-19 
challenge. And we have opportunities to speak, and will 
continue to, but this I think is really exciting, because 
retirement security to me is not only just critically important 
for all Americans--and frankly savings has taken a hit, as you 
know, during the coronavirus--but also this is an opportunity 
for bipartisan work. And I think we will hear about this later 
from Senator Brown and Senator Cardin and others, but 
regardless of who gets the majority in the Senate come January, 
this is an area where I think we have the potential to make 
some real progress, because I think it has been and will be 
bipartisan.
    And when you look at the support it has among the American 
people, it is really impressive. I mean everybody talks about 
who supports what in terms of tax policy, but I can tell you 
that the idea of being able to save more for your own 
retirement is just broadly popular.
    So this is an opportunity for us. I have worked a lot with 
Senator Cardin over the years on these issues. I notice he is 
on the hearing--he is in his office today. I would not say he 
is in the hearing room, but he is joining us remotely. And you 
know, we have done some good things to help people save more 
for retirement, and it has improved retirement savings 
considerably.
    Last year we introduced the latest iteration of Portman-
Cardin, and that is called The Retirement Security and Savings 
Act, which has had some broad support, bicameral and 
bipartisan. In fact, 27 of the Portman-Cardin provisions were 
included in this new SECURE 2.0 legislation introduced by the 
Ways and Means chairman, a Democrat, Richie Neal, and the 
ranking member, Kevin Brady, on the House side. If that is not 
bipartisan, I do not know what is. So the two of them coming 
together, I think is terrific.
    There are some provisions in ours they do not include, and 
there are some in theirs we do not include, but that, in our 
view, is just an opportunity, when you have so much common 
ground between the two proposals. So I think it is a really 
good starting point. And again, it gives us a great opportunity 
to get something done.
    A lot of other colleagues have worked on this issue. 
Sherrod Brown has worked on it on a bipartisan basis. Senator 
Daines and Senator Warren have a retirement lost and found bill 
that is interesting. Senator Collins and Senator Hassan have 
their assistance to military spouses, which I like. So I think 
there is a lot of opportunity for members of the committee, and 
even outside the committee, to come together on something here.
    The one that Ben Cardin and I have introduced recently 
focuses on what I think are the four big problems that could be 
identified and addressed through legislation.
    One is to help lower-income and part-time workers, and this 
is an obvious issue. You know, you only have 20-some percent of 
people who are part-time and low-income saving now. So when 
people are living paycheck to paycheck, it is tough to set 
money aside. And so we help in that regard in a number of ways.
    Second, it focuses on small businesses. Why? Because that 
is where the opportunity is. Less than half of workers employed 
by small businesses have access to an employer-sponsored plan--
think about that--as compared to 88 percent of workers employed 
by large businesses. So it is small businesses that we really 
ought to target and focus on to expand coverage for so many 
working Americans. And Eric talks about his restaurant 
business. A lot of them are small businesses like that that 
just cannot afford to put together a plan. So we help in that 
regard. And they are also concerned about the complexity of it.
    Third, we have an issue with baby boomers. A few of us on 
this call would fit in that category. And we just are not 
saving enough, as a generation, and have not been. And 
therefore we do some things to help encourage people who are 
getting ready for retirement or are near retirement, to save 
more. And then finally, as folks are living longer, retirees, 
even those who have accumulated some savings, are finding that 
they are outliving those savings. And living longer is good 
news. Longer, healthier lives are great, but they are tough on 
our bank accounts, especially when current laws force Americans 
to start depleting their taxable retirement savings account at 
72. So that is an issue too. And that long-term savings piece, 
how you ensure that that nest egg is adequate for people living 
longer and healthier lives, is a key issue.
    So we have made progress on some of these issues, but the 
lack of sufficient retirement savings remains an urgent problem 
for our country. And it is an opportunity, again, for us. In 
2020, we moved this legislation to this point. Now in 2021, we 
have to get it across the finish line.
    Unfortunately, the pandemic, as we talked about, has just 
exacerbated the need to improve savings. We may not be seeing a 
V-shaped recovery in this pandemic. I think we are going to see 
more, as we have so far, a K-shaped recovery. And it is K in 
terms of savings, meaning it is not just going down like it 
normally would in a recession and back up the same way; you 
have some people who are doing well and others who are not. And 
many of those who are not are some of these low-income and 
part-time workers we talked about.
    So that is why we allow those workers to have more 
opportunities through both expanding savings plans for them, 
but also allowing part-time folks to be able to access plans 
more easily, lowering the number of hours someone works where 
they qualify, in particular, in retirement plans.
    We also make the Saver's Credit refundable, which is not 
without controversy, I understand that, and some of my 
Republican colleagues have concerns there. And we can talk 
later about why I think that is important as part of an overall 
balanced plan.
    We also have a provision that allows recent graduates to 
receive matching retirement contributions through their 
employers as they pay off student loans. This is a good 
connection between an obvious problem out there with student 
loan debt and retirement. So it is a way to approach both.
    A second set of solutions on small business I talked about 
makes it easier to establish the plans. We increase the tax 
credit. We have a lot of companies that want to adopt auto-
enrollment and encourage their employees to save more for 
retirement, but that can be expensive. And so it does enhance 
the start-up credit for small businesses. It makes offering 
auto-enrollment features much more cost-effective for 
employers. We like auto-enrollment. We make it more cost-
effective.
    For those near retirement, whom we talked about, we want to 
be sure that those who are saving money have the opportunity to 
be able to spread that out over time. And so that is part of 
what we do here through QLACs and also through changing the 
minimum required distribution laws to take it up to 75.
    By the way, before the pandemic, 9.7 percent of Americans 
75 and older were working. It is, I am sure, more than that 
now, but that is up from just about 7 percent 10 years ago. So 
we have more and more Americans, again, working into their 70s. 
That is just a reality.
    Like all good legislation, we have taken ideas from 
Senators in both parties. And we know there is more to do and 
more to improve on. I think we can learn a lot about that today 
in this hearing, because we have some great witnesses and great 
colleagues on the dais.
    So with that, let me recognize my colleague and my friend 
and fellow Ohioan, Ranking Member Sherrod Brown, for his 
opening statement.
    [The prepared statement of Senator Portman appears in the 
appendix.]

           OPENING STATEMENT OF HON. SHERROD BROWN, 
                    A U.S. SENATOR FROM OHIO

    Senator Brown. Thanks for doing this, and thanks for the 
spirit of cooperation in putting this hearing together. I am 
especially appreciative that Mr. Barr is here from Zanesville, 
OH, a town very similar to the one I grew up in, Mansfield. And 
I appreciate you, Mr. Stevenson, being here from Columbus, OH, 
from Nationwide. So thank you. And I appreciate our colleagues 
Senators Casey and Cardin and Cortez Masto for being on the 
call. And, Mr. Kreps, thank you for your public service and 
leading in this hearing. And Mr. Luskin, thank you.
    The focus, as Rob said, of today's hearing is retirement 
security. We cannot talk about that without acknowledging the 
looming crisis on the minds of millions of retired Americans 
and workers in Ohio and across the country. Literally tens of 
thousands of Ohioans are affected by this. These workers and 
retirees in the multiemployer pension system are in danger of 
losing their retirement security they have earned over a 
lifetime.
    This crisis affects thousands of Ohioans. It affects the 
massive Central States pension plan, Iron Workers Local 17 
pension plan, the Southwest Carpenters pension plan, the Bakers 
and Confectioners pension plan, and so many others. It touches 
literally every State in the country. It touches, maybe most 
strongly, or most destructively, the part of the country that 
Senator Portman and I represent. If this multiemployer system 
collapses, it will not be just retirees who feel the pain. 
Current workers will be stuck paying into pensions they will 
never receive. Small businesses will be left drowning in 
pension liability that they cannot afford to pay. Businesses 
that have been in the family for generations could face 
bankruptcy, and workers will lose jobs.
    These plans were already in danger before the pandemic. Now 
the economic emergency we are in has only put them in a worse 
position. They were hit by the financial crisis and the 
recession that followed. Now they are being hit again by an 
economic crisis disproportionately hurting small businesses and 
workers, as Wall Street has recovered.
    The House has done its part. They have passed a bipartisan 
solution. The Senate needs to do its part too. The pension 
system should be part of the work we are doing on COVID-19. 
There is no reason we should not be able to do this as part of 
a year-end deal.
    I ask my colleagues to think about the workers whose lives 
and livelihoods will be devastated if we do not do our jobs. 
These workers and retirees have rallied in the name of a 
gentleman named Butch Lewis, an Ohioan who helped lead this 
fight. He passed away far too soon, fighting for his fellow 
workers. Mr. Lewis was in Cincinnati. His wife, Rita, has 
continued this fight. She has become a leader and an 
inspiration to many. Rita once told me that retirees and 
workers struggling with this crisis--pre-pandemic--feel all too 
often like they are invisible.
    Those Americans should not be invisible to us. They are not 
to me. They are not invisible to my colleagues who have worked 
with us for years now trying to find a bipartisan solution. We 
just cannot give up on that. The multiemployer system is to me 
the most urgent retirement matter. We also have a lot of work 
to do, as Senator Portman said, to protect and expand security 
for all workers.
    Over the past few decades, we have watched what happens 
when Wall Street runs the economy. Corporate profits go up. CEO 
pay soars. Stock buy-backs explode. But wages are flat, and the 
middle class shrinks. That is the fundamental problem 
underlying this whole crisis, that wages are flat and the 
middle class shrinks. Americans' economic security has eroded, 
and so have their retirement options. Too many workers have no 
retirement account through their employers, as we all know. 
Fundamentally, our tax system is set up to reward the already 
wealthy with more wealth, instead of empowered to help everyone 
save and invest for their futures.
    Forty percent of adults do not have $400 to weather a 
financial emergency, let alone save for retirement. Instead of 
focusing on those who already have plenty saved, we have to do 
more to help everyone else get started in the first place. That 
is, I hope, what this hearing mostly will be about.
    We have had 4 years of an administration that made things 
worse, not better. In his first months in charge, President 
Trump, with help from the Republican-controlled Congress, made 
it harder for States to get auto-enrollment programs off the 
ground. President Trump and the congressional Republicans' 
massive tax cut in late 2017, early 2018, helped the wealthy 
and corporations and threatened deep cuts to Social Security 
and Medicare. Just yesterday, the Senate confirmed the Trump 
appointee to the Federal judiciary who has advocated for 
abolishing Social Security. This November, 80 million Americans 
rejected that approach. People are tired of a system where Wall 
Street runs the show. They voted for a new President and a new 
direction. Next year we will have an opportunity to do 
something concrete for middle-class families and low-paid, low-
wage workers who need help saving.
    We know what some of these solutions are. We have to do 
more with auto-enrollment, do more in auto-escalation. The 
States have introduced auto-enrollment plans, like Ranking 
Member Wyden's State of Oregon, which has seen real success in 
the early years. Auto-enrollment is the best practice in 
helping people save.
    As I conclude, we have to do more in portability so 
retirement policies reflect the workforce we have today. Job 
flexibility should not be a corporate PR term for having no 
economic security. We have an opportunity to do big things for 
the American people and fix the multiemployer pension crisis 
instead of allowing that crisis to get bigger; protect and 
expand the Social Security benefits that people earn, instead 
of threatening so-called ``entitlement cuts'' in the name of a 
new-found religion on the deficit; and build a defined 
contribution system that is inclusive, that is equitable, and 
that meets the needs of today's workforce, instead of relying 
on the status quo that works well for some but leaves so many 
behind.
    That is our mission. Those should be our goals. I thank 
very much Senator Portman for doing this hearing today. Thanks, 
Rob.
    [The prepared statement of Senator Brown appears in the 
appendix.]
    Senator Portman. Thank you, Senator Brown. And let me just 
say, the focus of this hearing, as you know, is on the defined 
contribution plans, and that is what we have folks here talking 
about. And we talked about the Portman-Cardin legislation that 
we have been trying to get a hearing on for some time.
    But I totally agree with Senator Brown on the multiemployer 
front. We have got to solve that problem. And my understanding 
is, there are discussions ongoing with the House leadership and 
the Senate leadership, and my fervent hope is that in this 
final package, whatever it is, whether it is a continuing 
resolution--I hope it is not--but whether it is that, or 
whether it is an omnibus spending bill, or whether it is a 
COVID-19 package in some way, that we include the small-time 
employer pension reform.
    It is time to get it done, and I think we have a good 
compromise that is consistent with the plan that we all talked 
about in connection with the Select Committee that was formed 
to look at this. But this is urgent for our businesses. It is 
urgent for retirees. And it is urgent for our economy. So we 
cannot let the PBGC multiemployer program go under water, which 
is what is going to happen if we do not solve the problem.
    So with that, again, thanks to my colleagues for being on. 
We will get to our witnesses. I thank you for your opening 
comments, Senator Brown.
    We have a great group of witnesses here who are, as I said, 
experts on this issue, particularly on the issue of how we help 
people save more for their retirement. I am going to take just 
a couple of minutes to introduce them.
    The first is Scott Barr. Scott is a financial advisor 
serving small businesses, their employees, and individual 
investors, at his Zanesville, OH branch. He began his career 
with Edward Jones in 1999. I really appreciate Edward Jones 
helping us on these bills over the years, and thanks for being 
here, Scott. He is a licensed, accredited asset management 
specialist. He is a 1984 graduate of Miami University.
    The next witness is Mr. Eric Stevenson. We talked to Eric 
earlier. Mr. Stevenson is president of retirement plans at 
Nationwide Insurance. Eric brings more than 15 years of 
industry experience to his position, currently managing the 
team responsible for Nationwide's retirement plans operations, 
with nearly $115 billion in assets under his management. Eric 
previously served as senior vice president of Nationwide 
retirement plans distribution across both the 401(k) and 457 
businesses. He joined Nationwide in 2006 in life insurance 
marketing, and soon after that joined the retirement plan area. 
Eric earned his bachelor's of business administration and 
finance from the University of Oklahoma and a master's of 
business administration degree from Northwestern University's 
Kellogg School of Management.
    Our third witness is Mr. Michael Kreps. Michael Kreps 
advises a wide variety of clients on issues related to 
retirement and health matters. He specializes in benefit plan 
governance, administration, investments, funding, and 
restructuring. Michael routinely represents clients before 
regulators. His professional experience includes serving as a 
Senior Pensions and Employment Counsel for the U.S. Senate 
Committee on Health, Education, Labor, and Pensions, the HELP 
Committee, from the 111th to the 114th Congress. He holds a 
J.D. with honors from the George Washington University Law 
School.
    Last but not least, we have Mr. Joshua Luskin. Joshua 
Luskin is director of plan administration for 12 governmental 
defined contribution and defined benefit funds. The funds 
represent more than 1,200 employers that include public-sector 
workers, teachers, university staff, and more. His past 
experience in the private sector was in retail banking, 
investment management, financial education, change management, 
and fiduciary oversight.
    So we have, again, some witnesses who have some real-world 
experience to bring to bear here, and we appreciate them 
coming.
    Mr. Barr, why don't we start with you? We are not going to 
ask witnesses to be sworn in today. We are going to move right 
to the testimony. Mr. Barr, you are up.

           STATEMENT OF SCOTT BARR, AAMS, FINANCIAL 
             ADVISOR, EDWARD JONES, ZANESVILLE, OH

    Mr. Barr. Thank you, Senator Portman. Chairman Portman, 
Ranking Member Brown, members of the subcommittee, thank you 
for inviting me to testify on the important issue of retirement 
security. My name is Scott Barr, and I have served as a 
financial advisor with Edward Jones here in my home town of 
Zanesville, OH for the past 21 years. As a native Ohioan, it is 
my pleasure and great honor to address both the men who serve 
me and the people of our great State.
    I would like to express right from the outset Edward 
Jones's strong support of the Retirement Security and Savings 
Act of 2019. Edward Jones offers a wide variety of products and 
services that help individual investors and small business 
owners achieve retirement security. Over 19,000 financial 
advisors serve more than 7 million clients and care for more 
than $1.3 trillion of their assets.
    I am here today because I have had the privilege of helping 
hundreds of my clients plan for and achieve financial security. 
My clients have confided in me what is most important to them, 
and they have trusted me to partner with them to guide them 
toward their financial goals.
    I have also found that my small business clients care 
deeply about helping their employees prepare for their own 
retirement. They really are interested in offering retirement 
savings options, both because they know it helps them attract 
and retain great employees, but also because they know it is 
just the right thing to do.
    Our Nation's private retirement savings system has been a 
tremendous success. It has enabled folks to build financial 
nest eggs that will help them supplement the retirement income 
that they expect from Social Security.
    Congressional efforts to promote and expand the private 
retirement savings system have clearly worked. Edward Jones is 
very encouraged by the recent congressional effort in the 
SECURE Act. The start-up tax credits and new tax credit for the 
adoption of automatic enrollment were significantly important 
to a small surveying firm I recently helped establish a new 
retirement plan.
    These efforts built on decades of bipartisan support for 
our Nation's private retirement savings system, spearheaded by 
the tireless work of Senators Portman and Cardin. And as 
somebody who works with clients every day and has tried to save 
for retirement, I would like to take this opportunity to say 
``thank you'' for these efforts.
    And, Senator Brown, thank you, sir, for your leadership and 
dedication in helping the working families of Ohio to save for 
a secure and dignified retirement. I would also like to thank 
Chairman Grassley and Ranking Member Wyden for their leadership 
on retirement savings.
    Although we have made progress, there is more work to be 
done. To further strengthen the retirement savings system, 
Edward Jones urges you to advance legislation that will, first, 
make it easier and less costly for businesses of all sizes, but 
especially small businesses, to offer workplace retirement 
plans; and second, increase opportunities and eliminate 
barriers that currently prevent Americans from adequately 
saving and preparing for their financial future.
    In pursuit of these goals, I reiterate our strong support 
for Portman-Cardin. If enacted, the retirement preparedness of 
the American worker would significantly improve.
    I would like to highlight our support for a few provisions 
we believe would be most effective in reducing the coverage gap 
for small business employees, as well as increasing the 
personal retirement savings of all Americans.
    Edward Jones supports the provision that would increase the 
start-up tax credit made available to small employers when they 
establish retirement plans. In my experience, employer cost is 
the most significant barrier to the creation of a workplace 
retirement plan.
    We support the new incentives for employers to offer more 
generous automatic enrollment programs by directly offsetting 
some of the employer costs. A tax credit based on employer 
contributions would be a game-changer for employees.
    We support expanding SIMPLE IRA offerings to allow the Roth 
components. There is no reason to deny SIMPLE IRAs, which are 
so important to small businesses, the same benefits enjoyed by 
participants in larger plans such as 401(k)s, 403(b)s, and 
government 457 plans.
    We support allowing employers to make matching 
contributions to their employees' retirement accounts based on 
their employees' student loan repayments, and would like to 
acknowledge Senator Wyden for his leadership on this provision. 
This provision, I think, would help workers burdened with 
student loan debt start saving for their retirement earlier in 
their careers.
    We support the provision permitting workers aged 60 and 
older to make additional contributions to their employer-
sponsored retirement plan. I have many clients who would take 
advantage of this important provision.
    And we support increasing the requirement-of-distribution 
age to 75. Americans are working and living longer. This change 
would help address the greatest concern I hear most often: that 
they will outlive their retirement savings and become a burden.
    In closing, on behalf of Edward Jones and myself, I again 
would like to thank Chairman Portman, Ranking Member Brown, and 
the rest of the subcommittee for holding this important 
hearing. Edward Jones fully supports Portman-Cardin. We believe 
it will strengthen Americans' retirement saving system and help 
more Americans enjoy the secure, dignified retirement they are 
working so hard to achieve.
    I would be happy to answer questions.
    [The prepared statement of Mr. Barr appears in the 
appendix.]
    Senator Portman. Thank you, Mr. Barr. I appreciate it. To 
all witnesses, we appreciate your trying to keep your oral 
comments to about 5 minutes, and then your full written 
statement of course will be made a part of the record.
    Thanks very much, Mr. Barr.
    Mr. Stevenson?

            STATEMENT OF ERIC STEVENSON, PRESIDENT, 
           RETIREMENT PLANS, NATIONWIDE, COLUMBUS, OH

    Mr. Stevenson. Good morning, Chairman Portman, Ranking 
Member Brown, and members of the subcommittee. Thank you for 
convening today's hearing. My name, as you mentioned, is Eric 
Stevenson. I am president of retirement plans for Nationwide, a 
Fortune 100 firm based in Columbus, OH, providing a full suite 
of insurance and financial services.
    We represent over 26,000 plans across the country--small, 
medium, large-sized plans--with over $150 billion in assets. 
And we are the number one provider of plans in the governmental 
457 space.
    I would also like to thank Chairman Grassley, Ranking 
Member Wyden, Chairman Portman, Ranking Member Brown, Senator 
Cardin, and members of the committee, for the work that you 
have done tirelessly over the years, or we would not be having 
this conversation. So thank you for your service and your 
leadership.
    One additional thing that we have in common with both you, 
Senator Portman, and Senator Cardin in particular, is around 
Ohio and in Ohio, we represent the Ohio Defined Contribution 
Plan for the State of Ohio, and we protect 75,000 Ohioans, 
their assets, almost $7 billion across the State, on the 
corporate side and the government side. And we employ 15,000 
associates here in Columbus.
    And, Senator Cardin, also in Maryland, we represent about 
$7 billion of assets for residents of Maryland, $7 billion in 
total assets, 100,000 of your residents, and importantly for 
the State of Maryland, Baltimore County, city of Baltimore, 
Howard County, a number of counties and corporations across the 
State. But most notably, the first governmental plan that was 
ever started was the State of Maryland's. They have been our 
client for 46 years, and are still our client today. And I will 
tell you a story about that a little later.
    On behalf of all that, we are Nationwide. And like myself, 
personally, we are proud supporters of S. 1431, the Retirement 
Security and Savings Act, which I will refer to going forward 
as Portman-Cardin.
    This important legislation builds on bipartisan work 
accomplished by the SECURE Act, with bipartisan solutions to 
help Americans prepare for and live in retirement. At 
Nationwide, we have been busy operationalizing the SECURE Act 
with new and innovative solutions, particularly around income 
solutions inside the retirement plans. And once the 
participants had done the hard work of saving for retirement, 
we help them take that income in a very smart and tax-efficient 
way, thanks to the SECURE Act.
    I would also like to, as I go forward, connect the 
conversation and the provisions that you have to three real 
categories. The first of those is meeting today's financial 
needs. Second, savings for retirement. And then third, living 
in retirement.
    And before you can start saving for retirement, the first 
thing you have to do is be able to meet your immediate needs. 
And one of the biggest obstacles, as we have talked about, is 
student loan debt. And it is not just kids graduating anymore 
around student loan debt, but it is those folks now into their 
20s, 30s, and even 40s who are burdened with this. And we 
believe the existing retirement system can play an important 
role in alleviating some of the pressure.
    In particular, we support the proposal permitting employers 
to make matching contributions to a retirement plan based on 
student loan repayments. This provision will help workers who 
otherwise could not, and would not start saving for retirement.
    And I mentioned the State of Maryland's plan. We have a 
participant who joined that plan 4 years after it started. The 
highest salary he ever made was $83,000. And I can tell you, 
today after 20 years in retirement, he still has $900,000 saved 
in that plan. And that is simply because he started early, and 
that is why we are so supportive of that legislation.
    When it comes to saving for retirement, the Portman-Cardin 
provisions to increase catch-up contributions and collective 
investment trusts are particularly beneficial.
    Someone mentioned it earlier, but we know that nearly half 
of Americans do not have $400 saved, and there are some who say 
this is just a lot higher. So anything we can do to get more 
people enrolled and help them get started and avoid some of the 
traps, is important.
    Along with our friends at NAGDCA, we are excited about the 
opportunity to make collective investment trusts available to 
403(b) plans to help more American workers save, especially 
those in education, health care, and charitable organizations. 
CITs are a proven, cost-effective way to help people save, and 
they are widely available in 401(k) plans, and we think they 
should be available in 403(b) plans as well.
    As reflected in my written testimony, we strongly support 
NAGDCA and their priorities around ensuring that government 
retirement plans have a level playing field compared to 401(k) 
plans and IRAs. It is through a partnership with NAGDCA and 
EBRI that we have helped to sponsor and fund the Public 
Retirement Research Lab that has provided much of the data that 
we have shared today.
    And finally, living in retirement--Nationwide is thinking 
about how we can help participants reach their goals. So we 
know that 25 percent of the people who are 65 years old now 
will live to be at least 90. So the provision to increase RMB 
to 75 helps by giving more time for those working and living 
longer.
    Hopefully, you can tell that Nationwide and I personally 
are very excited about helping Americans achieve financial 
wellness and security. I am proud of your work and the 
partnership, and we hope to be a resource today and ongoing.
    [The prepared statement of Mr. Stevenson appears in the 
appendix.]
    Senator Portman. Thank you very much, Mr. Stevenson. Great 
comments.
    Mr. Kreps, you are up.

           STATEMENT OF MICHAEL P. KREPS, PRINCIPAL, 
                GROOM LAW GROUP, WASHINGTON, DC

    Mr. Kreps. Good morning. I want to thank Chairman Portman 
and Ranking Member Brown for inviting me to testify today, and 
for their dedication to improving retirement security for all 
Americans.
    The topic of this hearing is critically important. I think 
we can all agree that after a lifetime of hard work, everyone 
deserves the opportunity to live out their golden years with 
dignity and financial independence.
    In 1935, at another time of great national hardship, 
President Roosevelt, working with Congress, created Social 
Security to stamp out elder poverty. It has been 85 years, and 
Social Security is still the bedrock of our retirement system. 
It is the most effective anti-poverty program in the United 
States.
    But Social Security benefits on their own are not enough to 
allow most older Americans to maintain their standard of living 
when they retire. That is why we need a robust, equitable, and 
inclusive private retirement system. Over the years, a private 
retirement system has evolved, and there have been many 
important improvements. The system is working well for a great 
many people, but there is still more work that needs to be done 
for those falling through the cracks.
    Many working people still do not have access to or are not 
participating in employer-provided plans. That is particularly 
true for private-sector employees who are younger, part-time, 
in lower-wage occupations, and not a member of a union. There 
is nothing stopping us from taking affirmative steps to reach 
this uncovered workforce and give them the opportunity to 
prepare for retirement.
    Several States, including California, Illinois, Oregon, and 
others, are already trying to address the problem through 
State-based systems to provide for universal, or near-universal 
access to payroll deduction savings plans.
    Similarly, Washington State, working with SEIU, established 
a savings plan specifically to help home-care workers, most of 
whom earn very little despite providing critical care to our 
sick, disabled, and elderly family members.
    We cannot forget that millions of working people struggle 
to pay their bills, let alone save for retirement. Congress 
took an important step to address that issue in 2001 by 
creating the Saver's Credit to provide a nonrefundable tax 
credit to low-income taxpayers for certain retirement plan 
contributions. But the Saver's Credit does not reach nearly 
enough people, because many lower-income workers just do not 
have taxable income.
    We can fix that. We can make the credit refundable. We can 
have it directly deposited into people's savings plans. That 
approach has bipartisan support, and I commend Chairman 
Portman, Ranking Member Brown, Senator Cardin, and committee 
Ranking Member Wyden, for their leadership on this issue over 
the years.
    We should also plug some of the holes that drain people's 
savings. Close to half of plan participants withdraw part or 
all of their retirement plan assets following a job change. The 
lost savings due to these cash-outs amount to between $60 and 
$100 billion annually. But fortunately, the development of 
auto-portability will help preserve savings for job-changers by 
allowing people's accounts to automatically follow them from 
one employer's plan to the next. Thanks to guidance from the 
Department of Labor and strong bipartisan support from members 
of Congress, including many members of this subcommittee, auto-
portability will be a reality for millions of plan participants 
early next year.
    Finally, and most importantly, we simply cannot ignore the 
fact that we are on the brink of over a million Americans 
losing their hard-earned pension benefits. Most multiemployer 
pension plans are secure, but some plans, including some very 
large plans, will become insolvent in the next few years.
    The Federal pension insurance program is administered by 
PBGC and only guarantees a fraction of multiemployer pension 
plan participants' benefits. Worse yet is that the 
multiemployer insurance program will be insolvent in 2026. When 
that happens, PBGC will only be able to pay pennies on the 
dollar, meaning participants and retirees in insolvent plans 
will see their benefits slashed to the bone.
    It is not these participants' fault their plans are 
failing. They worked hard. They played by the rules and made 
significant wage concessions, all so that they could have some 
measure of economic security in retirement. They did everything 
they could to achieve the American dream, but they are living a 
nightmare.
    Unless Congress acts soon, retirees, their families, and 
communities will be devastated. The crisis is upon us, and only 
Congress has the power to do something about it. We are the 
richest country in the history of the world, and we owe it to 
our fellow Americans to find a solution. That is going to 
require putting aside politics and ideology and doing what is 
right for retirees. There is simply no time left to lose, as 
every day that ticks by, the problem becomes more difficult and 
costly to fix.
    I urge members of the subcommittee, and every member of 
Congress, to act as soon as possible to address this crisis.
    Thank you for your time today, your attention to these 
issues, and for your commitment to making retirement more 
secure for Americans. I would be happy to answer any questions 
you have.
    [The prepared statement of Mr. Kreps appears in the 
appendix.]
    Senator Portman. Thank you, Mr. Kreps. I appreciate your 
insights.
    Mr. Luskin, you are up.

STATEMENT OF JOSHUA LUSKIN, PRESIDENT, NATIONAL ASSOCIATION OF 
 GOVERNMENT DEFINED CONTRIBUTION ADMINISTRATORS, LEXINGTON, KY

    Mr. Luskin. Good morning. My name is Joshua Luskin, and I 
am the current president of the National Association of 
Government Defined Contribution Administrators, or NAGDCA. 
NAGDCA members oversee plans in 49 States and territorial 
government entities and 132 local government entities including 
counties, cities, public safety agencies, school districts, and 
utilities. Our plan sponsors administer deferred comp on 
defined contribution plans, including 457s, 401(k)s, 401(a)s, 
and 403(b)s.
    On behalf of NAGDCA, we sincerely thank Chairman Portman 
and Ranking Member Brown and the members of the subcommittee 
for holding this important meeting to explore ways to improve 
Federal law that can create greater benefits for our plan 
participants. Additional appreciation is also expressed to 
Chairman Grassley, Ranking Member Wyden, and the members of the 
full Finance Committee, for their ongoing commitment to 
improving retirement systems for America.
    One of the most effective ways NAGDCA supports our 
government DC plans has been our long tradition of partnering 
with 
private-sector firms to help identify new opportunities to 
improve retirement health plans. We collaborate on an ongoing 
basis on everything from training and education to policy 
development.
    As an example, NAGDCA is excited about their new Public 
Retirement Research Lab, or the PRRL, which it recently co-
founded with EBRI. We are thankful for the critical support 
that PRRL receives from a number of our great corporate 
partners, including Nationwide, who is with us this morning. 
With the PRRL, we are building the largest aggregation of DC 
government retirement plan data that will allow plan sponsors 
to commit resources and time for data-driven decisions.
    NAGDCA is grateful for the opportunity to testify today in 
support of our bipartisan proposals. The proposals are directly 
aimed at improving retirement outcomes for approximately 60 
million teachers, first responders, public health-care workers, 
and hard-working middle-class Americans in State and local 
government service.
    Day in and day out, these individuals provide countless 
essential services that support the communities we live in. 
With the remainder of my time this morning, I will focus on a 
few of NAGDCA's six policy proposals. These proposals were 
developed and vetted by many dedicated NAGDCA volunteers over 
many years. We are happy to say that each one has been 
incorporated into the Retirement Security and Savings Act, 
which you introduced, Mr. Chairman, together with Senator 
Cardin.
    We thank you for all your passion and leadership in the 
retirement space, and for your partnership with NAGDCA. I will 
highlight one key proposal and briefly mention three more.
    One of the proposals that potentially communicates a 
significant improvement is to amend the IRC and securities law 
to permit 403(b) plans to invest in collective investment 
trusts, or CITs.
    NAGDCA members brought this proposal to the organization 
and pushed for it to be a priority because of the potential 
benefits for 403(b) participants--the same benefits that 
participants in other plans are currently benefiting from. 
403(b)s are currently limited by statute to just mutual funds 
and annuity contracts.
    DC plans that are able to invest in CITs can realize lower 
administrative costs, fees, and greater flexibility. This is 
one example: a paper by Blackrock estimated that lowering fees 
by just 20 basis points can result in more than $100 million in 
aggregate savings per year for these 403(b) plan participants. 
And for participants having 10-, 20-, 30-plus-year careers, the 
time value of those savings could really positively impact 
people's lives.
    I also want to mention two other provisions which we 
believe would make it easier for DC plan participants to 
consolidate their retirement assets. Consolidation of 
retirement assets is a proven method to help participants 
maintain a unified investment strategy, as well as potentially 
providing lower costs and fees within their employer plans, as 
opposed to many retail IRAs.
    The two changes we suggest are to permit non-spousal 
beneficiaries to roll inherited IRA assets into their DC plans 
and to allow participants with Roth accounts in their DC plans 
to roll Roth IRA assets into their employer-sponsored plans.
    We, finally, encourage Congress to help us clean up the 
anachronism in IRC section 457(b) known as the ``first day of 
the month'' rule. This rule requires participants, if they want 
to change their elected deferral, to make the change before the 
first day of the month in which then the change will go into 
effect. This provision was enacted as an administrative 
convenience prior to the advent of modern record-keeping 
technology. Not only will eliminating it make life easier for 
plan participants and record-keepers, but we believe it will 
also help participants make better savings decisions.
    Chairman Portman and Senator Brown, thank you again for 
this opportunity to share some of NAGDCA's ideas about how to 
improve DC retirement systems. I look forward to the Q&A and 
continuing to work together to support changes which can result 
in better retirement outcomes for so many hard-working people.
    Thank you.
    [The prepared statement of Mr. Luskin appears in the 
appendix.]
    Senator Portman. Mr. Luskin, thank you very much. And 
thanks to all the witnesses for their very helpful testimony. 
We are now going to go to questions. Because I will be here 
until the bitter end and enjoying every minute of it--except 
when I have to run out for votes--I am going to wait and ask my 
questions later because there are some colleagues on the line 
and they are going to have to run.
    We have votes scheduled for 11 o'clock, which is about 20 
minutes from now. And what I am going to ask my colleagues to 
do is, if you would work me, I can run up and vote in the 
Capitol, but some of you are going to have to take the gavel 
here so we can be continuous. I do not want to stop this 
hearing. There is such great information and so many people 
interested.
    The order we have is based on when colleagues showed up for 
the call. We are going to start with Senator Brown, and then 
Senator Grassley, Senator Bennett, Senator Lankford, Senator 
Cardin, Senator Daines, Senator Casey, Senator Cortez Masto, 
Senator Young, and Senator Whitehouse. Not all of you are on 
the line now, but as they come on, they will have opportunity.
    So let's start with you, Senator Brown.
    Senator Brown. Well, I mean, he is in the majority party 
and he is chairman of the committee, so if Chuck wants to go 
first, I am certainly fine with that.
    Senator Portman. Chuck, would you like to go first?
    [Pause.]
    Senator Portman. Are you on, Chuck?
    Senator Brown. I think he is on mute. I am fine to do it 
either way, but----
    Senator Portman. Senator Grassley, if you are on, we would 
love to hear from you first. If not, we will go to Senator 
Brown.
    Senator Grassley. I would like to go. And before I ask 
questions, there are a couple of short things I want to 
announce.
    First of all, thank you, Chairman Portman and Senator 
Brown, for this hearing. It is very important. And I applaud 
you and Senator Cardin for your leadership on retirement 
security issues. In the coming days, I plan to introduce 
legislation that builds on the SECURE Act and important 
provisions of Portman-Cardin, as well as stuff in the recently 
introduced House Ways and Means bill that Chairman Neal and 
Ranking Member Brady have put into place.
    And then, secondly, before I ask questions, just to follow 
on what Senator Portman had said about our efforts to get a 
multiemployer pension plan, we have been negotiating with our 
Democratic colleagues for more than a week to find a solution 
on the multiemployer pensions. And I would still like to find a 
way to reach a deal.
    Both sides have very much been working diligently and very 
much in good faith, and I appreciate that. And we plan to keep 
at this problem until we find a solution.
    I want to go to COVID-19's impact for my first question, 
for all witnesses. The pandemic continues to cause pain for 
many individuals and businesses, and I have heard from a number 
of Iowans that the pandemic has affected their retirement 
savings, or even reduced their retirement savings.
    And I know many provisions have already been mentioned. But 
which do each of you see as the most relevant and urgent need, 
given the current crisis that we have with the pandemic? Any 
order you want to, jump in, please.
    Mr. Barr. Senator Grassley, this is Scott Barr with Edward 
Jones here in Zanesville. I think I would like to take a shot 
at answering your question. I think it is a great question, and 
our firm believes that the Portman-Cardin bill was structured 
to address the needs of lot of different sectors of the economy 
and sectors of workers. So folks who are affected by the 
pandemic are, I think, going to benefit from the bill as it 
stands right now.
    I think it is a great question.
    Senator Grassley. Does anybody want to add to that?
    Mr. Kreps. This is Michael Kreps. Thank you so much for 
that question, and obviously the pandemic has had a pretty 
profound impact on working people, both moderate-, upper-, and 
lower-
income working people. In the CARES Act, Congress provided some 
helpful relief to allow people to have access to their 
retirement savings, and that will be helpful to re-up and to 
think about doing again. But at the same time, we have to 
recognize that a large portion of the population does not have 
a lot saved in their retirement plan, and we need a strong 
social safety net to take care of these folks and to support 
families in crises like this.
    Senator Grassley. Do either of the other two of you left 
want to----
    Mr. Stevenson. Sure, Chairman Grassley. I will try not to 
be redundant. A couple of things that I would call out, number 
one, the student loan provision--and Portman-Cardin will be an 
important piece to that. People have just got to get a habit of 
saving more. That is a great way to start.
    The second one I would mention is the volatility that we 
have seen through COVID, not just people taking money out, but 
people investing poorly. When the market goes down, they sell. 
When the market goes up, they buy. And in the first SECURE Act, 
the income allowance to put guarantees inside of retirement 
plans will really help us reduce some of that volatility for 
participants and help them be much better prepared over the 
long term in terms of retirement savings.
    Senator Grassley. Thank you. Go ahead, sir.
    Mr. Luskin. Like my colleague just mentioned, we do believe 
that the Portman-Cardin package was structured very carefully 
to address the different needs of many people struggling 
currently.
    There are a lot of different populations that are impacted 
and have felt the economic effects of the pandemic. Having 
multiple tools to be able to address this--there is some value 
too.
    So thank you very much for that question, Mr. Chairman.
    Senator Grassley. Before I go to the other question, I 
remind Senator Portman, I do not have a clock in front of me. 
So when I have used up my time, you will have to tell me.
    Mr. Stevenson, in your testimony you note that both the 
opportunity and the means to save are needed in what you call 
the ``beginning planning'' stage of saving. I agree with you 
that both are essential.
    The question: in your opinion, how important is automatic 
enrollment in this equation?
    Mr. Stevenson. Yes, I think it is very important. And I 
would add, another of the provisions in the bill is around the 
Saver's Credit. I think that is an important provision. They 
need both the means and the opportunity. And auto-enroll/auto-
escalate creates the opportunity and the means with the 
provision that we can expand the Saver's Credit, especially the 
part that allows that refund to go right into the account so it 
is for retirement savings and not spent, which I think is 
critical.
    Senator Grassley. Okay, I guess I have time for one more 
question. So, to Mr. Barr, in your testimony you cite data that 
says 37 percent of the businesses point to the cost as the main 
reason for not starting a retirement plan.
    The current-law small business startup credit seeks to 
defray some of those costs. In your view, what impact would be 
the most helpful in bridging the small business coverage gap?
    Mr. Stevenson. That is a great question, Senator. Thank you 
for your question. I think the startup credit is a major player 
in this. I think that the number one issue that I run into with 
my small business clients is cost. How much is the extra 
expense going to cost the business to start the plan up?
    The firm I think supports the entirety of Portman-Cardin 
because it really very closely addresses those issues. In 
addition, the auto-enrollment and the auto-escalation, both of 
those provisions go a long way toward encouraging businesses, 
with the tax credit that is associated with that, to make that 
part of their plan so that they can help their employees save.
    Senator Grassley. Thank you, Senator Portman.
    Senator Portman. Thank you, Mr. Chairman.
    Mr. Chairman, we gave you some leniency because you are Mr. 
Chairman, but thank you for raising the question of the clock. 
The Finance Committee was not able to put the clock on the 
screen today. However, we are keeping a clock here. And if it 
is okay, what I will do, colleagues, is limit the questions to 
5 minutes. And then at that 5-minute mark, I will indicate, 
when we are probably a minute out, or 30 seconds out--how about 
that, at 4\1/2\ minutes--so that we can try to get as many 
questions as we can get in today.
    And we are happy to have a second round, again, if people 
are able to stay. Senator Brown, you are up.
    Senator Brown. Senator Portman, there is a clock on the 
screen that at least some of us can see.
    Senator Portman. Oh, there is?
    Senator Brown. Yes, for some of us.
    Mr. Stevenson, we will start with you. You said in the 
response to Senator Grassley's first question that people 
should get in the habit of saving more. If you and Mr. Barr 
would both answer this question: what is Edward Jones, what is 
Nationwide doing to help lower-income families save for a 
dignified retirement?
    Mr. Stevenson. I will jump in. It is a great question, 
Senator Brown. The key for us is that we have to get people 
started early. And the education, how we show up, how we 
provide retirement education and engaging them--employers, the 
small businesses and large businesses have done a great job of 
providing incentives. And then it is up to us to make sure we 
go out and engage them and get them enrolled in the plans and 
get them started and keep them in the plans.
    The provisions in this bill around, again, whether it is 
the Saver's Credit, whether it is auto-enroll/auto-escalate, 
when people can see the progress they are making, that is 
amazing. And the previous SECURE Act, one of the provisions was 
that we start them out to show people what their savings look 
like in terms of monthly income. That has been a huge add to 
the plan. So now we can show them their pension, their 457, and 
Social Security, show them all that in one picture. It is very 
encouraging for people to get started and stay engaged in the 
process.
    Senator Brown. Mr. Barr, would you add to that?
    Mr. Barr. I think he had a great answer, and I would point 
out what Edward Jones is doing. In my practice, Edward Jones, I 
think as much as any firm out there, opens the doors to the 
serious long-term investor across the entire income spectrum, 
socioeconomic spectrum of folks who value the service and 
advice that we provide.
    In addition, as a firm we support the entirety of Portman-
Cardin, and we believe that the Saver's Credit provision and 
the enhancement to that Saver's Credit provision is a great way 
to help folks who are low- and middle-income savers saving for 
retirement.
    Senator Brown. Thank you both.
    Mr. Kreps, I wanted to ask you about the urgency of 
addressing the multiemployer pension crisis. And thanks for 
your comments during your testimony.
    What is the effect on the economy if Congress does not act 
soon? Would that impact be limited to union workers and 
retirees in these plans, or does it go broader than that?
    Mr. Kreps. Thanks for that question, Senator Brown. It is 
an important point. When 1 million participants, over 1 million 
participants, lose their pension benefits, that is going to be 
devastating to those families, obviously. People are going to 
be faced with the horrible choice of trying to decide whether 
to use the limited assets they have to keep the lights on or 
buy their medications. And that is not a position we want 
anyone to be in.
    But it is going to have a devastating impact on communities 
as well. In the Midwest and across the country, there are 
multiemployer plan participants who are affected by this--all 
over the country. And when their pensions are ripped away from 
them, it will be like kicking the leg out from a table. Whole 
communities will be destabilized. The whole system becomes 
wobbly.
    Children will have to support their parents, and they will 
be burdened. The governmental systems, the support systems we 
have in place, to the extent we have them, are going to be 
taxed trying to support these communities, the businesses that 
rely on the dollars being spent in the communities, the 
employers who are going to be faced with increasing liabilities 
and are unable to continue to keep people employed.
    It is going to have ripple effects that go across the 
economy, which is why it is so important to deal with it now 
and not wait any longer.
    Senator Brown. And not dealing with it now means it gets 
worse the longer we wait, correct?
    Mr. Krebs. It absolutely gets worse every day we wait.
    Senator Brown. I will note to my colleagues that for years 
we have been hearing this: the longer we wait to act, the worse 
it is going to be. It would have been cheaper to fix 3 years 
ago. It would have been cheaper to fix last year. And now we 
are in the middle of an economic crisis that is shuttering 
small businesses and draining people's savings, and retirees 
cannot wait.
    Let me, in the last minute, go one more place with you, Mr. 
Kreps. We know that people change jobs more often than they 
used to. When they do, they are often denied a chance to build 
the retirement savings that Mr. Barr and Mr. Stevenson talked 
about getting people into early.
    Many corporations have made part of their business plan to 
deny responsibility for millions of their workers by using 
independent contracting and subcontracting to get out of doing 
their part to contribute to their employees' retirement.
    What can Congress do about the so-called missing 
participant problem and improving portability for workers who 
move from job to job over a 20- or 30-year period?
    Mr. Kreps. This is a great question, and an important one. 
Oftentimes when people change jobs, they lose track of their 
retirement account. It has happened to my family members. I 
know they have missing accounts elsewhere. And that lost 
savings can add up over time.
    And so the best thing we can do, or one of the best things 
we can do, is to encourage the use of automatic portability so 
that as people change jobs, their accounts follow them from job 
to job, by negative consent.
    Additionally, there is some legislation about a lost plan 
registry that could be very helpful in addressing that problem.
    Senator Brown. Thanks, Mr. Chairman. Thanks to all four of 
you.
    Senator Portman. Thank you, Senator Brown.
    Senator Bennet?
    [Pause.]
    Senator Portman. Senator Bennet, are you on mute, or are 
you not with us any longer?
    [No response.]
    Senator Portman. Senator Lankford?
    Senator Lankford. Senator Portman, thank you very much--
Senator Portman and Senator Brown both--for hosting this 
hearing. It is a tremendous asset to be able to get in this 
conversation on Senator Portman's and Senator Cardin's piece of 
legislation that you have worked on for a long time. And I 
appreciate all the work on that that has gone into that.
    I have several questions, and I want to deal with this both 
on the retirement side and on the emergency fund side. But I 
have a really pressing question for Mr. Stevenson first.
    It is my understanding you were born in Oklahoma, but you 
now live in Ohio. Is that correct?
    Mr. Stevenson. That is correct.
    Senator Lankford. So if I were to say the letters ``O-S-U'' 
to you, is that Oklahoma State or Ohio State that we are 
talking about?
    Mr. Stevenson. With all respect, that would be Oklahoma 
State, my little brother.
    Senator Lankford. That would be my assumption as well. I 
just wanted to be able to clarify that, because that is an 
important feature in this particular hearing with those who are 
chairing it.
    Senator Brown. What is that flag, Mr. Stevenson? Because it 
sure looks like an Ohio flag.
    Mr. Stevenson. That is the Ohio flag. This is where I live, 
and this is where I work and pay taxes----
    Senator Brown. Okay; all right. I just thought I'd check.
    Mr. Stevenson. Senator Lankford is trying to get me in 
trouble.
    Senator Lankford. I am not trying to get you in trouble. 
Just trying to bring clarity into this hearing as well.
    Mr. Stevenson, let me ask you an important----
    Senator Portman. Senator Lankford, you have an additional 
30 seconds, if you acknowledge this mug [holding up an Ohio 
State mug]. [Laughter.]
    Senator Lankford. I will be careful with my time then.
    Mr. Stevenson, I want to ask you about emergency funds. I 
notice from your testimony that you are saying about 20 percent 
of the withdrawals that you are seeing right now from 
retirement funds are COVID-related issues, are for people who 
did not have an emergency fund.
    We talk a lot about retirement funds. I want to bring up 
the issue of emergency funds with you. How do we encourage 
people to set aside more liquid assets as an emergency fund 
while we are all still trying to deal with retirement funds as 
well?
    Mr. Stevenson. Senator Lankford, thank you for that 
question. And I think, while it is not a part of this 
provision, this bill yet, I think, is a very important piece 
that would go a long, long way.
    What we have seen is, we have seen almost $900 million in 
COVID-related withdrawals since April. I will say, the last 60 
days we have seen those numbers increase each week. And when we 
talk about how nearly half of Americans do not have $400, I 
think there is a pretty straightforward way that we could 
create some legislation that would allow that to be part of our 
401(k), 457, 403(b) plans where that money gets--the first 
$400, first $1,000 is available to that participant for 
emergency savings. Where it is not an unforeseen emergency, 
that would really encourage people to start saving early and 
remove one of the barriers. Because one of the barriers is that 
people feel like they cannot get access to the money.
    If we make that first $1,000 available, I think it will 
help. I think we would see less impact from an event like 
COVID.
    Senator Lankford. So is $1,000 the correct number on that? 
Or should that number be higher? Obviously, it sounds like you 
are saying at least $1,000. How did you come to the number of 
$1,000?
    Mr. Stevenson. I think, you know, we do not--I do not have 
a position yet on the exact number. I would love to work with 
Senator Portman, Senator Cardin, and yourself and others in 
terms of determining that number. But we think that is in the 
right ballpark.
    We do not want it to take away from the long-term savings, 
but we do think it is an important provision. And it is very 
expensive and time-consuming for a participant to go through 
the process of requesting a loan or to think about that. When 
you are right out of college and your transmission goes out and 
you need $400, right, or $800 to repair that, you go to credit 
cards, you go to your parents, or you go do a loan out of your 
401(k). We think there is a much easier, more efficient way to 
do that.
    Senator Lankford. Okay. Well, let me ask you one more 
question on this, and I want to be able to open this up to the 
whole group.
    Mr. Stevenson, you have experience both around small 
restaurants and the employees in them, and retirement. So you 
have a unique perspective in this. Many individuals who are in 
hourly jobs or who are just getting started, or in restaurants 
and other places--I would assume that many people who are even 
on this conference right now or in this hearing started work in 
a restaurant, as I did years and years ago.
    But very rarely would you actually start retirement 
planning at that point as well. It is not easy to do. You are 
part-time. You are hourly. Even setting aside small amounts is 
more complicated.
    Are there ways that we can actually engage with that 
individual who may be 19, 20, 21, 22 years old just getting 
started, or someone just out of college who is in an entry-
level job, to be able to do retirement savings? They assume 
that they are going to switch jobs, so it is difficult to do a 
retirement plan with an entity that you are then trying to be 
able to move from. Is there an easier way to do that?
    Mr. Stevenson. Yes, Senator Lankford; a couple of thoughts. 
A couple have already been talked about. One is the ability for 
portability. Adding that would make a big difference.
    Number two, we talked about emergency savings.
    Number three, any of those--and two of those are provisions 
that are already in the Portman-Cardin act. I think if we can 
move that forward, we can make a difference.
    The other one is reducing the time, from 3 years down to 2 
years, even 1 year, in terms of when those part-time workers 
can start saving. That is an important provision that is in the 
bill. At Nationwide, we are extremely supportive of that.
    Senator Lankford. Are there other individuals who have a 
response to that as well, for that part-time worker, or that 
person just getting started, for saving?
    Mr. Barr. Senator Lankford, yes, if you do not mind, I 
would like to respond to that also. We support the entirety of 
the Portman-Cardin bill, and that provision, I believe, in my 
experience, is something that is going to be very important for 
part-time employees, both because it offers them access, but 
also because they have done a great job of threading the needle 
on not having too much of an impact on the expense to the 
employer.
    So we support that provision of Portman-Cardin.
    Senator Lankford. Thank you for that, Mr. Barr. Any other 
responses to that, for the part-time worker just getting 
started, for retirement savings?
    [No response.]
    Senator Lankford. All right. Thank you, Mr. Chairman. I 
appreciate very much your indulgence and our conversation about 
the correct OSU initials as well. And I appreciate you all 
holding the hearing. It is extremely important to us.
    Senator Portman. Not at all. I am glad we had you 
outnumbered two to one today at least. Thank you, Senator 
Lankford.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    First, I really do want to thank you and Senator Brown for 
conducting this hearing. Senator Portman and I have been 
working on pension issues from the time we were in the House of 
Representatives. So it is really gratifying to have this 
hearing where we can really explore going to the next plateau 
on pension reform.
    And to Senator Brown, we really do need to deal with the 
multiemployer issues. I know it is not the subject for today's 
hearing, but I thank you for your leadership on that critically 
important issue.
    There are many provisions in the Portman-Cardin bill, and I 
am not going to go through all those provisions before I ask 
questions, but I want to sort of follow up on Senator 
Lankford's point.
    And that is, one of the challenges we have is getting 
younger workers to get engaged in savings. Some are part-time 
workers, so therefore extending and expanding eligibility for 
part-time workers will help in offering them an opportunity to 
start saving for retirement at an earlier age.
    Many of those work for small companies that do not have 
pension plans. And offering additional incentives for small 
businesses to set up plans will mean we will have more workers 
participating in plans. And again, a lot of these are younger 
workers who today do not have that opportunity.
    And although it is extremely important--the tax deferral 
concept of saving for retirement--we find the most effective 
way to get younger people engaged in saving for retirement is 
when there is a match. If that match comes from an employer, 
very few people want to leave money on the table. Very few 
workers want to leave money on the table.
    But if the employer does not offer the plan, there is not a 
match unless they qualify for the Saver's Credit. And the 
Saver's Credit has been a real godsend in getting people, 
younger people, engaged, as we can see in our own Federal plan 
that we have on savings, the Thrift Savings Plan.
    So my question is to--I believe Mr. Kreps brought this up, 
but I think others did as well. We have a provision in Portman-
Cardin that provides for a refundable Saver's Credit, with the 
refundability going directly into a retirement savings account. 
And I would like to get your view as to how effective you think 
that would be in getting younger workers and lower-wage workers 
to participate more in retirement savings, particularly at a 
younger age.
    Mr. Kreps. I will address that quickly, and maybe others 
can weigh in if we have time, but I think what you and your 
colleagues have done in that bill, to propose making the 
Saver's Credit refundable, is one of the most important things 
we can do.
    Right now, the Saver's Credit, while well-intentioned--and 
it definitely helps a lot of folks--it misses the people who 
probably need it the most and need the most help saving. And 
anything we can do to boost them up, to give them a shot to 
have a safe and secure retirement, is critically important. And 
I hope Congress will strongly consider moving not just your 
legislation, but in particular that piece of it to help lower-
income people, as soon as possible.
    Senator Cardin. And, Mr. Chairman, I wanted to highlight 
that, because I know that it is an area we are going to have 
further debate on in our committee. And I do think it is a 
measure that can have a major impact on reaching a population 
today that is just not saving for retirement at an early enough 
age.
    And I know other members want to ask questions, and I have 
had opportunities to talk to many of the people on this panel 
about our bill, but once again, to Senator Portman, thank you 
for your partnership, for your leadership on these issues, and 
I thank all our panelists.
    Senator Portman. Thank you, Senator Cardin. And we will 
have a chance to get into the Saver's Credit more later, I 
hope. As I said, I want to talk about that. And there is so 
much in this bill that helps to both deal with the small 
business issue and deal with the specific issue of lower-income 
and part-time workers who are not currently accessing plans, 
and therefore not saving.
    With that, we have votes that have started. I am going to 
continue to chair until Senator Young is ready to spell me. He 
said he was willing to do that. So let's move on to Senator 
Daines and Senator Young. If you are on, can you let me know, 
and I will run up and vote.
    Senator Young. Senator Portman, just so that you know, this 
is Senator Young. I am indeed here. I am happy to relieve you 
whenever you require it so that you might go vote.
    Senator Portman. Great. You have the gavel, and let us turn 
to Senator Daines.
    Senator Young [presiding]. Okay; Senator Daines.
    Senator Portman. Next we have Senator Casey, Senator Cortez 
Masto, and then you. So you can go in that order.
    Senator Young. Do we have Senator Daines with us?
    [No response.]
    Senator Young. If not, we will go with Senator Casey, if 
present. We are in the middle of votes, so it is understandable 
if some of my colleagues are not currently present.
    Senator Cortez Masto, are you present?
    Senator Cortez Masto. I am here, Senator Young. Thank you. 
Thank you. And let me just say again, thank you to Senator 
Portman and Ranking Member Brown for this great conversation, 
and a needed conversation, and to my colleagues as well for 
their legislation in this space.
    Can I--I know we are going to talk about this later, but I 
am interested in the refundable Saver's Credit. And, Mr. Kreps, 
I want to address it this way: I come from Nevada. We have been 
so hard-hit with our hospitality-based industry. There are 
60,000 fewer Las Vegans employed in the hospitality sector 
compared with this time last year, and that does not include so 
many workers who have seen their hours cut.
    The bottom line is, there are too many Nevadans who are not 
able to even put away for retirement right now. I am curious: 
if we had folks who have spent down their retirement savings 
during COVID, how do we help them catch up? Is the refundable 
Saver's Credit the answer to that? I would be curious to get 
your thoughts.
    Mr. Kreps. That is a very good question. I appreciate it. I 
do think the refundable Saver's Credit would help people. It is 
effectively a Federal support for savings that matches their 
contributions, so that would be incredibly helpful for them.
    But in the larger context, we have relied in part on 
addressing the pandemic through allowing people to tap their 
retirement accounts. That is fine, and that helps a lot of 
people, but at the same point it also highlights that maybe we 
do not have the strongest support system for folks who are 
suffering out there, and who were not prepared to address the 
pandemic in the way they should have been.
    The retirement system by itself cannot address all these 
problems. We have to think bigger, and in a broader context.
    Senator Cortez Masto. And I appreciate that, and that is my 
concern. And that is why we have put so much money in other 
areas to support individuals with direct payments and 
unemployment insurance to help them with their rent, to help 
them with food insecurity. I mean, there is so much that needs 
to be done right now.
    But this brings me to the next question. And maybe, Mr. 
Stevenson, I would like for you to speak to it. I believe you 
are the one who identified there is about 20 percent, or about 
$900 million in COVID-related withdrawals that you have seen. 
Is that correct?
    Mr. Stevenson. That is correct. Out of our plans, yes.
    Senator Cortez Masto. Just out of your plans. And I am 
curious, because during this pandemic, there is so much need 
right now. Should that not be higher? I mean, given the fact 
that we have provided opportunities through the CARES Act and 
the HEROES Act for so many to draw down or take advantage of 
their retirement accounts because of the lack of income coming 
in, that does not seem as high. And I am curious. And I am 
going to open it up to all of you. Is that a reflection of 
maybe they do not have retirement accounts, or they are 
unwilling to draw down on the retirement accounts?
    My concern is that they do not have retirement accounts or 
the emergency assistance they even need. And so I am curious to 
hear your thoughts on that.
    Mr. Stevenson. So, thank you for that. But as that relates 
to the $150 billion that we have, it is about 20 percent of the 
total withdrawals that people normally would take; 20 percent 
of them are COVID-related. So we thought that was quite high.
    While we were encouraged by that, that more people did not 
need to tap into it, it is 100-percent voluntary. We made it 
available, and made everyone aware that that provision is 
there. So we were encouraged that people were in better shape 
maybe than we might have thought going into it, and they did 
not need to tap into their retirement savings at even greater 
rates.
    Senator Cortez Masto. That is helpful. That is helpful to 
hear. Anyone else? Any other perspectives based on your 
experience, on what you are seeing?
    Mr. Luskin. From the public sector, the experience with 
NAGDCA, we found that we had about 50-50 plan sponsors taking 
that provision. We do not see a whole lot of use of it, but it 
did disproportionately affect our health-care workers and our 
first responders. And so it was being accessed by the people 
who needed it the most, who were impacted the most, but also 
there was a lot of focus on education, because that is the time 
value of money. Any withdrawal you take right now, 10, 20 
years, if it is $1,000 now, $5,000 now, in 20 years it will be 
$10,000.
    So a lot of education was focused on that. But having more 
access to retirement plans, having more people enrolling in 
retirement plans, has quite a lot of downstream benefits.
    Senator Cortez Masto. Thank you. Let me also add my support 
for the auto-portability. I think that is so necessary. I mean, 
I think anybody who has been in the workforce would appreciate 
that opportunity.
    Mr. Kreps--and I only have so much time left--can you speak 
to how that might impact someone who is facing a longer gap 
between jobs?
    Mr. Kreps. Yes. The real benefit is, when they have a 
longer gap between jobs, they are at a higher risk of losing 
their retirement account. And so the benefit here is that, as 
people move from employer to employer, their account can follow 
them on an automatic basis. And rather than what they do now in 
often cashing out their savings and paying the taxes and 
penalties, they will maintain their savings over the course of 
their career. They will build more and more personal wealth and 
hopefully be able to retire with some dignity.
    Senator Cortez Masto. Thank you. I appreciate that. I know 
my time is up. I will submit the rest of my questions for the 
record.
    Gentlemen, thank you so much for the conversation this 
morning.
    Senator Young. Thank you, Senator Cortez Masto.
    Well, Senator Portman will return and I believe will be 
accepting the gavel once again momentarily, but I have some 
questions for our witnesses.
    I really thank you for all of your good work. And I commend 
my colleagues, Senator Portman and Senator Cardin, for their 
effort to kick-start this discussion with respect to retirement 
security, with their Retirement Security and Savings Act, and 
for holding this hearing today, as we look to lay the 
groundwork for what we hope will be another bipartisan 
retirement bill success story in the next Congress.
    The ongoing pandemic is causing a multitude of problems for 
Hoosiers, from unemployment to remote learning challenges to, 
sadly, illness and even death among family and friends.
    I am hopeful we will reach a bipartisan deal in the coming 
days in a relief package that will help to address some of 
these immediate challenges. But I am also mindful of the long-
term ramifications of the pandemic in a host of areas, 
including retirement security.
    I want to ask a question of Mr. Stevenson. Sir, in your 
testimony, you noted the work that Nationwide has undertaken to 
support workers during this pandemic and the CARES Act. Could 
you update us on how you have implemented the CARES Act to 
support workers through coronavirus-related distributions and 
other provisions of the law, Mr. Stevenson?
    Mr. Stevenson. Thank you, Senator Young. The CARES Act was 
really, as you know, as we all know, a very important piece of 
legislation to support our workers. And Nationwide has--our 
goal is to make sure that it was easy and accessible.
    When the volatility in the markets first hit, we saw an 
incredible spike in phone calls. People called in to check on 
their balances, and those concerns. And we made sure that we 
had people and technology so that we could answer those 
questions quickly and efficiently, and deliver the right kinds 
of content to help people remain calm so they did not make the 
mistake that so many do of selling when it is low and buying 
when it is high.
    We also delivered more and more education and workshops, 
and engaging with the plan sponsoring the participant. A piece 
that is really important is our partnership with our clients, 
the small business owners, the government entities. Their voice 
is even more important than our voice. So we partnered with 
them to tell the story. There is so much credibility there with 
the participant to help them make the right decision.
    And the other part that we moved quickly on, as I 
referenced a little bit earlier, is, one of the greatest things 
that happens during all the volatility is participants do not 
know how to react. And so people have saved sometimes $100,000, 
$200,000, $1 million, and they can really blow that quickly.
    So, allowing us to be able to deliver annuities, or in-plan 
guarantees inside of a retirement plan--which is a very 
efficient delivery vehicle--we managed the volatility. So just 
like a target-date fund, participants start saving in that, and 
then the professionals take over. The same way now with this 
capability. We will manage that process all the way through 
retirement into income, and really help participants be much 
better prepared to live in retirement after they have worked 
for 20 or 30 years to save--have worked so hard to save so 
much.
    Senator Young. Thank you very much. It sounds like you have 
really played an important role to help your clients through 
this crisis.
    Mr. Barr, in your testimony you mention a new study that 
found the pandemic has altered the retirement planning of 
nearly 68 million Americans, with most of those planning to 
retire later. In addition, about 20 million Americans have 
paused their contributions to retirement savings during this 
uncertain time.
    What do you see as the long-term impact, sir, of those 
changes? And could you elaborate on the proposals you think 
would be most effective at incentivizing Americans to continue 
saving, or making up for that lost time?
    Mr. Barr. Thank you, Senator Young, for the question. It is 
a great question. It is very pressing, and an issue that I deal 
with every day. And to be frank, not just with COVID. COVID is 
a sudden change. COVID is a sudden change that has altered, 
from the study's point of view, exactly those statistics that 
were in my testimony. Twenty million folks have stopped making 
contributions, but folks go through sudden change all the time. 
They change jobs. I have clients who are in the middle of what 
is known as the sandwich generation. They are taking care of 
children, their grandchildren, and they are taking care of 
elderly parents.
    So there are lots of circumstances in one's life that cause 
a sudden change. The provisions that the Portman-Cardin 
legislation permit that I think will have a huge impact on all 
of those things are, first, any opportunity that my clients 
have to put money away if they are incentivized to do so. Most 
of my clients try to do just that, when they can. So that helps 
with retirement savings on the way in.
    Catching up at age 60, that provision in the Portman-Cardin 
legislation is also something that I am certain many of my 
clients are going to take advantage of, because there are times 
in their life when they do not have the opportunity to put as 
much away as they normally would, and they would later in life.
    And then finally, a provision that is very near and dear to 
me--the biggest fear that every client has is running out of 
money and becoming a burden. We think the provision that 
increases the required minimum distribution age to 75 attacks 
the problem from the back end, that distribution time.
    Senator Young. Thank you so much.
    My final question is directed at Mr. Luskin, whom I want to 
thank for your service, sir, to the thousands of Hoosiers who 
serve in the public sector in the great State of Indiana and 
rely on the funds you help to oversee for their retirement.
    As you noted in your testimony, the average employee starts 
savings for retirement at age 32. Many of them have accumulated 
significant student loan debt, and you indicated that debt has 
the impact on their ability to participate in an employer-
sponsored retirement plan.
    What can we do to address student loan debt while also 
encouraging younger workers to begin saving for retirement 
earlier in their careers?
    Mr. Luskin. Thank you for the question, Senator Young. And 
because I am representing NAGDCA and a few of the provisions 
that we have approved, I will not go into too much detail as 
far as the student loans go. So I do apologize. But I think one 
of the points that you made was a great point in your 
conversation with the other witnesses that has to do--as you 
look at the retirement cycle and looking at the Hoosiers we 
support, it starts out with making sure people are 
participating.
    And then as you get to the end of that retirement cycle, it 
has to do with, what is your balance, and how are you able to 
go ahead and break that down into replacement income?
    So we are looking at those two bookends. But during their 
whole career, as you mentioned, most government employees, this 
is their second career, and they need to be able to make 
choices to be able to either invest in their retirement or 
invest in paying off their student loan debt.
    So I go back to the obvious. I have been raised by 
educators, so providing education to the participants that 
allows them to make the best decisions becomes very important, 
regardless of what is the option.
    Senator Young. Well, thank you so much. It is my 
understanding that Senator Portman has returned. And if indeed 
that is the case, I will be handing the gavel back to you, sir. 
You have the baton, as we say in the Navy.
    Senator Portman. Excellent. I appreciate having it. And I 
thought you did a superb job in handling this delicate 
responsibility, and good questions.
    I think we have Senator Whitehouse next, if you are with 
us, Senator Whitehouse?
    Senator Whitehouse. I am here with you. I thank you and 
Senator Cardin and Senator Brown very much.
    The problem of where you set defaults when people are 
making choices is an important question. If I am not mistaken, 
a psychologist won the Nobel Prize in Economics a couple of 
years ago for his work on choice, and where defaults are set, 
and how people make choices.
    I have what we call the auto-IRA bill, which sets the 
default that employees are automatically enrolled in their IRA 
plan unless they opt out, as opposed to automatically not 
enrolled in their IRA plan unless they opt in.
    The employee retains full choice. It is just a question of 
where the default is set. It exempts smaller businesses, and 
businesses in States that already have a similar program 
operating at the State level. And I think it is one way to 
address the problem of having 25 percent of non-retiree adults 
having no retirement savings or pension at all. And only 55 
percent of workers participate in 
employer-sponsored retirement plans when they have them.
    So I would like to ask--let me ask Mr. Kreps. Do you 
believe that an auto-enrollment IRA program would help in that 
circumstance? And specifically, are there elements that we have 
learned from the successful State auto-enrollment IRA programs 
that, if we were to spread one across the Federal system, we 
should use as models?
    Mr. Kreps. Well, thanks for that question and for your 
leadership on this issue. Clearly, if we had a national 
requirement that employers either provide a plan or 
automatically enroll their employees in a savings program, more 
people would save. There is really no question about that.
    Where we set the default matters, as you said, and we can 
look to what they are doing in Oregon, Illinois, California, 
elsewhere, to fine-tune it at the Federal level, if we go that 
direction, to make it the most effective. But there is no 
question that that would get more people saving.
    Senator Whitehouse. And it leaves the employee with 
complete freedom of choice. If they want one or the other--
anybody who feels strongly about which way to go can make their 
own decision. It is not taking choice away from anybody. It is 
just following this choice theory problem, setting the default 
in a way that signals people to their own best interests.
    Mr. Kreps. I completely agree.
    Senator Whitehouse. That is the one point that I wanted to 
raise, and I look forward to having that default setting 
question be a part of the conversation as we move forward with 
Portman-Cardin. Thanks, very much.
    Senator Portman. Thank you, Senator Whitehouse.
    Let me say to the panelists and those who might be tuning 
in, we had a great turnout of Senators today. Some had to go 
vote, or go to other hearings, but we had to pass over Senator 
Bennet. If he is now with us, I ask him to speak up.
    [No response.]
    Senator Portman. Senator Daines?
    [No response.]
    Senator Portman. He is not with us? Well, to both of them, 
thank you for being on the hearing call and listening, and to 
all my colleagues, thanks for participating.
    As I said, I am here to the bitter end. So I am going to 
ask a few more questions, many of which are questions that have 
been touched on, but I think we need a little deeper dive.
    The first issue that I mentioned earlier was the fact that 
we do not have adequate savings among low-income and part-time 
workers. These are people who are working, and yet they are not 
saving. And I think it is important that the bill lowers the 
number of hours that someone has to work before they qualify to 
be saving in a retirement plan. That was improved by the SECURE 
Act, by the way. We take it to the next level.
    A lot of workers have part-time jobs. And by the way, a lot 
of parents, particularly women, work part-time raising their 
kids. And it is particularly important now, during the 
pandemic, to address that concern about, how does this address 
the COVID-19 reality? With child care being as expensive as it 
is, part-time jobs are sometimes all people can do because they 
have to take care of their kids when the schools are closed.
    So I think that it is really important that we help. It is 
a great opportunity. The matching thresholds being increased 
for those workers is also important, and that is something that 
ought to be emphasized, as we give employers the opportunity to 
increase the match so that those individuals can save money 
more quickly and build up their nest egg.
    Only about 25 percent of low-income workers are saving. We 
have heard that over time. Some say 22 percent; whatever the 
number is, it is too low. And the Saver's Credit being made 
refundable will help there.
    And by the way, again I have some colleagues on my side of 
the aisle who have some concerns about this. I do think the 
Saver's Credit has worked well, but it has run into sort of a 
roadblock in terms of its ability to help people that I think 
can be answered through refundability.
    And we are careful about it. The money goes into a 
retirement account, as an example, which I think is very 
important. It is not easy to administer that, but I think it is 
very important that it go into retirement.
    I would also say I am excited about this provision that 
would allow recent graduates to receive matching retirement 
contributions from their employers if they have student debt to 
be paid off. Again, this goes to a lot of these lower-income 
and part-time workers too. If they have some debt--and as was 
said earlier by Mr. Stevenson, some are in their 30s and 40s 
and they have this debt still hanging over them that makes it 
hard for them to save for retirement. And it is a national 
problem. And here we have a partial solution.
    The small business issue we have talked a lot about today, 
and I appreciate again the help we have gotten over time from 
the small business community as to what would make it easier 
for them to have a plan. And auto-enrollment to encourage 
employees to save for retirement is very important. And you 
know, that was one of our previous reforms, and we are very 
excited about the difference it makes. If you are in a plan 
that maybe has 70 percent participation, typically if you have 
auto-enrollment, it goes up to about 95 percent.
    Senator Whitehouse just talked about it in relation to his 
bill, but he is correct, in the sense that where there is an 
auto-
enrollment option, people do not have to make the decision. So 
I do think that we are helpful there because, for small 
businesses, that can be expensive.
    In fact, just starting a plan can be expensive. That is why 
it enhances the start-up credit for small businesses, so they 
can put auto-enrollment in place and put a plan in place, 
making it more cost-effective for them.
    And then those who are at or near retirement, again the 
data is that I think only 55 percent of baby boomers are close 
to being prepared for their retirement. And again, a lot of 
those good people are living longer, and they have not been 
able to save enough. Others have saved virtually nothing.
    But I think it is critical for that person who maybe could 
not save as much money when they were younger--they were paying 
off college debt for instance, or saving for their kids to go 
to college. And now they have the opportunity later in their 
career to be able to put some more money aside.
    So that is why we have the catch-up contribution for people 
who are 60 and up. And we also think it is important to help 
manage that retirement. So going to 75, we think is really 
important for the minimum required distribution.
    My dad was working into his 70s, and he would always 
complain to me about why he had to take his money out and pay 
taxes on it when he was still working, well into his 70s. And 
unfortunately, with this pandemic, more and more people are 
finding themselves in a situation where they have to work 
longer hours and more years in order to just sort of stay up. 
So I think it is particularly helpful now. And I appreciate 
what you all have said about those provisions.
    Anyway, those are some of the things that we had a chance 
to talk about today, and I think they are very important.
    On auto-enrollment--and that goes back to a bill we 
introduced back in 1999 with Senator Cardin and myself, and 
this next generation of auto-enrollment legislation, I think 
will help. It allows employers to increase the initial default 
contribution from 3 percent of pay to 6 percent, and then 
gradually increases the default rate to 10 percent of pay over 
time.
    Can anyone share views on that? I might start with you, Mr. 
Stevenson, because I know you have an interest in this, but do 
you think that will be helpful?
    Mr. Stevenson. Without question. Thank you, Mr. Chairman. 
And quite frankly, all of the provisions that you just ran 
through we wholeheartedly support--and auto-enrollment in 
particular. Auto-enrollment and auto-escalation--I think those 
are both really important.
    And one of the things we do not talk enough about is just 
the pattern that it creates. Once people get started, they get 
in that habit and they see that balance grow, and they are glad 
they did it. And one of the things I would point to is--we hear 
this all the time, especially from firefighters and police 
where there is a strong sisterhood/brotherhood--once somebody 
gets in the plan, they keep contributing, and they are so glad 
they did. And that is essentially what we are doing with auto-
enroll and auto-escalate: we are making that more systemic in 
getting people in those plans.
    So anything that we can do to support that, we will. And we 
have seen great success with that on the corporate side, where 
companies apply that without it being legislated. So anything 
else that we can do, we are with you.
    Senator Portman. Great. Well, thank you, thank you. And 
again, you are in the trenches dealing with this every day, and 
trying to encourage companies to do it, and I think that more 
incentive helps.
    On the catch-up contribution--and anybody can jump in 
here--the current bill would create a higher catch-up at 60, as 
I said: $10,000 versus $6,500 at age 50. How would that higher 
limit help people to get a more secure retirement? And maybe, 
Mr. Barr or Mr. Kreps, you guys could talk about that a little 
bit.
    Mr. Barr. Thank you, Senator Portman. I would be happy to 
answer that question. First, let me say I really do want to 
thank you and Senator Cardin for your incredible work on this 
bill. Edward Jones supports every provision of it. It is, we 
think, a very needed piece of legislation, and it really hits 
the mark against the target that people need to be incentivized 
to save more.
    The catch-up contribution, in my opinion, increasing the 
RMD date to 75, all of those provisions--if somebody has the 
opportunity to save more money, it has been my experience that 
they do. It is also my experience that with increasing the 
required minimum distribution age--you mentioned your father 
earlier in your comments. I had that situation happen 
frequently in my office as well.
    Having people allow their money to compound over time by 
contributing, and by educating them to do so and allowing 
people a little bit of extra time at the end to take care of 
themselves--their number one concern is that they become a 
burden to their families, to their friends, to their community. 
And these provisions, I think, help with that.
    So we applaud your efforts, and we thank you.
    Senator Portman. I am, again, happy that we have made some 
progress for small businesses. We talked about that earlier. 
Mr. Kreps, you may want to talk about this, but the SIMPLE plan 
that we proposed back in, I think it was enacted in 1996, I 
think has been helpful. The small business startup credit was 
established in 2001. I think we have done some things to help 
on SIMPLE plans and on start-up credits that helped small 
businesses, but still we have these numbers that are 
inescapably discouraging, that many small businesses are not 
offering plans.
    Mr. Kreps, why don't you start, but also obviously, Edward 
Jones, you would have--Mr. Barr, you would have a strong view 
on this. Talk to us about what we should do with regard to 
small businesses. And particularly, SIMPLE plans do not permit 
employees to make Roth contributions now, which I have always 
thought was a mistake. All other plans permit it. 401(k)s 
permit it. 403(b) plans, 427 plans, Mr. Luskin can talk about.
    So I would like to give small employers all those options, 
including the Roth option. Is there any reason not to do that? 
Can you comment on that?
    Mr. Kreps. I cannot think of a reason not to give them a 
Roth option. And in kind of the larger context, when we look at 
the uncovered workforce, the folks who do not have access to a 
plan, a lot of them are employees of small businesses. And I am 
sympathetic to a small business owner who does not have the 
time or energy to go through the complicated process sometimes 
of establishing and running a 401(k) plan, and sometimes they 
need a simpler option. So anything we can do to incentivize 
them to take those steps, to make the economics work better 
through credits, to give them more options, is great. That will 
help expand coverage.
    Senator Portman. Thank you. Any other thoughts on that? 
Then I want to go to Mr. Luskin for a question. Any others?
    [No response.]
    Senator Portman. Mr. Luskin, I want to ask you to take a 
look at one provision. It is the non-spousal assets being able 
to be rolled into a plan. Can you talk about that a little and 
how that might affect some of the beneficiaries you serve?
    Mr. Luskin. Absolutely, and thank you for the question, 
Senator. When it comes to rolling over the non-spousal 
beneficiaries to IRAs, it goes back to what we were talking 
about, about some of the benefits behind asset consolidation.
    The larger balances you have open you up to additional 
investment vehicles that can lower investment costs and 
administrative costs. And lowering those costs for those 
individuals allows them to partake in a better return. Because 
expenses and paying for good investment advice and so forth are 
important, lowering those allows them to have better returns 
and to build up their balances more.
    And so what we are trying to do is give people the 
opportunity to consolidate their accounts, which allows them to 
align their asset allocations to make sure that they have 
financial plans that will provide them with better 
opportunities to be retirement-ready. Because, once again, and 
I apologize for reiterating, but by the end of the game when 
you are getting ready to retire, you need to convert that 
balance--and the larger the balance the better--into 
replacement income.
    And the lower income you make, the higher your replacement 
income needs to be. So consolidating the assets gives you a lot 
of advantages when it comes to, not just your financial plans 
but lowering your investment and administrative costs to make 
sure that those balances can grow.
    So that is what we are looking to support: providing that 
ability.
    Senator Portman. Let me follow on that for a minute then. 
One of the ways to give plans the flexibility they need to 
ensure you can get the most gain out of your investment might 
be these collective investment trust provisions. Can you talk 
about that? I think in your opening statement you talked about 
how this will save plans a significant amount--I think you said 
a total of about a billion dollars. Can you talk a little about 
the collective trust, the investment trusts provision and how 
that might be helpful?
    Mr. Luskin. Absolutely. And thank you for the opportunity 
for that question. I had the privilege of being raised by 
educators and understand the population being impacted. So 
thank you for that.
    Essentially right now, the crux of the argument is that we 
want to provide 403(b) participants with the same advantages 
that participants in other plans have. Once again, having an 
open market is very important, and there are a lot of different 
options, depending on the plan's metrics, where you have access 
to annuity contracts, mutual funds, or CITs, and what we are 
looking to support is allowing especially some of these larger 
plans, these large 403(b) plans, to have access to the CITs, 
because not only does it give them lower fees, but it gives 
them the opportunity to have pricing flexibility, customized 
investment options, and to mitigate potential downside risks.
    And so providing that vehicle and that option that fits for 
that specific plan's sponsor should be something that should be 
provided.
    And on the other side of the coin--it is always important 
to look at that other side of the coin. I cannot think of a 
single reason why we would not want to provide that option for 
them, especially people who work so hard and are dedicated to 
the public and our communities.
    Senator Portman. Well, good.
    Here is another one that we have not talked about today, 
which is exempting Roth assets in a plan from the required 
minimum distribution rules. And I think that also helps your 
beneficiaries, and I don't know if you, and maybe Mr. Barr, 
want to comment on that for a minute. That is one that I think 
is an important provision in this bill that has not gotten much 
attention.
    Mr. Luskin. I agree. Mr. Barr, would you like to go first?
    Mr. Barr. That is a provision that I am not as familiar 
with, so I will defer to you, Mr. Luskin. Thank you.
    Mr. Luskin. Thank you.
    Right now, traditional IRAs are exempt from RMDs. And what 
we are looking to do is, once again--one of the biggest 
considerations about that is to the point of people who are 
coming near retirement age maintaining those large balances.
    And so right now, IRAs are not required to have an RMD on 
those Roth accounts, but plan sponsors in governmental 
retirement plans are. So what we are simply looking to do is 
provide our government participants who work so hard the same 
benefits that IRAs are providing.
    So we are just looking to even the field.
    Senator Portman. Yes. And, Mr. Barr, I know how strongly 
you feel about RMDs, so I was giving you a chance to just talk 
generally about RMDs too. But thank you, Mr. Luskin, for that.
    There are a lot of great provisions in this bill that are 
going to affect people's lives. I said at the outset, this is 
about peace of mind in retirement. And I think Mr. Kreps talked 
about the golden years. You know, people work hard, and they 
end up in retirement and find, ``Oh, my gosh, I am outliving my 
savings, and I do not want to be a burden on my family or 
others.''
    So everything in this bill, I think, is directed toward 
that in one way or another.
    I see that Mr. Daines has now joined us. Steve, if you 
would like to ask questions of the witnesses, that would be 
great.
    Senator Daines. Yes; thank you, Mr. Chairman. I am really 
glad you are holding this hearing. This is an important issue 
of retirement security. We think about how many Americans, how 
many Montanans, work hard to save for decades with the hopes of 
achieving a peaceful retirement. They want a retirement--and I 
have been listening to this back-and-forth conversation where 
folks do not have to worry about outliving their savings. And 
how do we promote more personal responsibility as it relates to 
saving more money so they can do that on their own and not have 
to rely on somebody else?
    It is so important, we have found, that people who are in 
the workplace today are aware of how much they need to save to 
achieve their desired retirement, and to make sure they do not 
make any significant errors or mistakes along the way.
    One easy thing that Congress could do--and, Chairman 
Portman, thanks for mentioning this bill that I am working on 
with Senator Warren--is helping future retirees with this 
Retirement Savings Lost and Found Act.
    As we dug into this issue, we found, first of all, 
Americans, by no surprise, are switching jobs at a higher rate 
than ever before. But they are unknowingly leaving behind 
401(k) balances. In fact, there was a study from a major 
investment management company that showed up to 30 percent of 
employees left behind some retirement savings when they 
switched jobs--nearly 1 in 3. So this bipartisan bill I have 
with Senator Warren would solve that problem. It would assure 
that people keep more of their hard-earned money by creating a 
national lost and found registry for retirement accounts--one 
place to go and find this information. And it would be using 
data that employers are already required to report. So it would 
not add another reporting burden to employers.
    And by using this registry, employees could find all the 
former employer-sponsored retirement accounts in one easy 
location online. It would be a big help for employers who often 
spend a lot of time, a lot of hours, trying to reunite 
employees with their lost accounts.
    So this would be a win for Montana workers, for families, 
businesses, and I would like to see it passed. I just wanted to 
highlight that as a piece of legislation I think would be a 
pretty common-sense fix and help here to build larger 
retirement accounts long-term.
    Well, I have a question for the whole panel. With that kind 
of introduction, would you agree that creating a retirement 
savings lost and found registry would be helpful to reunite 
workers and retirees with their missing retirement accounts? I 
will start with the panel, and whoever wants to jump in, go 
ahead.
    Mr. Stevenson. Senator Daines, thank you for joining us, 
and this is Eric Stevenson of Nationwide, and we certainly 
support that piece of legislation that you have discussed and 
outlined.
    The other part I think that is also important is, 
everything we can do to strengthen beneficiaries, making sure 
that these plans have really clear beneficiaries on them, also 
helps with us tracking that down. Because you are right: they 
have earned it. They worked hard, and that money should follow 
them wherever they go.
    Senator Daines. Great. Thank you, Mr. Stevenson.
    Somebody else?
    Mr. Kreps. Senator Daines, I would also like to echo what 
Mr. Stevenson just said. It is an important piece of 
legislation. And one part of that legislation that I 
particularly like is that it is forward-looking, and not only 
does it form this registry but then has the ability for the 
administrator of this program to basically work with the 
private sector to actively try and find people who have missing 
accounts. And that is important.
    Senator Daines. Yes.
    Mr. Barr. Senator Daines, as somebody who has spent time 
helping clients do just that, I agree that it does address a 
critically important issue for lots of Americans. And I extend 
the offer that our firm would be happy to help you in any way 
that we can.
    Senator Daines. Well, I appreciate it. We will have you 
review the bill and make sure we got it right, and any other 
feedback you might give before we have a hearing on it.
    But you know, we are parents to four children. All of our 
children now have graduated from college and have started their 
own careers and have their 401(k) accounts. And we had those 
dad and mom moments helping our kids setting those up and 
telling them to maximize it with the match, and so forth.
    But also, as we all know here, the importance of starting 
early, how big an effect that has long-term on the growth of 
these savings accounts. This would be one way to make sure you 
do not lose that early investment, which of course turns out to 
be a big number as you move through life.
    Well, I want to ask another question here regarding 
personal savings rates. One of the trends that surprised us as 
we were doing some investigation about what is happening with 
savings rates during the pandemic, is that we have seen a big 
jump in the personal savings rate. In fact, the personal 
savings rate in the data that we have collected went from about 
7.6 percent in January to north of 33 percent in April.
    Now as of October, we have seen this personal rate decrease 
to 13.6 percent. But it is definitely moving up, which we think 
is actually a healthy thing for long-term retirement.
    Here is my question for the whole panel. Once things get 
back to normal--and I was at the President's vaccine summit 
yesterday at the White House. I am encouraged by the direction 
we are headed here, and we may have some very good news here as 
a Christmas present for the Nation with these vaccines. But 
once things are back to normal on the other side of the 
pandemic, what would you say is the ideal personal savings 
rate? And how can we make sure that folks at all income levels 
are saving enough?
    Mr. Luskin. Thank you, Senator Daines, for the question. I 
think it is a very good question. And I think it is very 
dependent on a few factors, depending if your DC plan is a 
supplemental versus a primary. The savings rate, the 3 percent 
we are used to hearing, was based off some past research that 
came out when 401(k)s started to come out. The higher the 
percentage you need is dependent on if it is a primary or a 
supplemental. But a lot of the reading I have done points 
toward double-digit contributions. And I think from your 
initial question and your motivation, there is a lot of 
downstream benefit to helping participants get to those rates 
that help them satisfy their replacement income, because there 
is so much dependent on the individual needs.
    So, thank you.
    Senator Daines. Yes, thanks, Mr. Luskin. Someone else?
    Mr. Stevenson. I would just reiterate. I think the point 
that Mr. Luskin made is that we think that number depends on 
what else you have--what is your Social Security benefit; do 
you have access to a pension? But if the DC, defined 
contribution, is your only savings vehicle, that number does 
need to be double-digits and greater--10, 15 percent--to have a 
real chance at having a secure retirement.
    There is a lot of data out there, and we are happy to 
provide that to your office, some of the information, after 
this call.
    Senator Daines. I appreciate that. Thanks, Mr. Stevenson; 
you bet. Did I miss anybody else who wants to provide a thought 
on that question?
    [No response.]
    Senator Daines. If not, Mr. Chairman, I will toss it back 
to you.
    Senator Portman. I appreciate that back and forth with some 
of the witnesses about the fact that one of our challenges in 
our system right now is that people are moving jobs more 
frequently, and sometimes losing savings, which may be 
relatively small, but it adds up when you have several plans, 
which is not unusual for the generation of your kids and my 
kids, particularly as they move from job to job.
    I will say on the personal savings rate, just to throw this 
in, we talked earlier about the K-shaped recovery. My sense 
from talking to some of the experts on this is, the reason the 
personal savings rate got so high was that some people were 
saving more who could afford to and, particularly with the 
stock market doing as well as it was, and continues to, that 
higher-income individuals were able to save more--and a lot of 
middle-income workers as well. But unfortunately, it was not, 
as you indicated in your comment, Senator Daines, at all income 
levels. You know, you want to see that kind of savings. And our 
focus here today has been a lot about the part-time worker, the 
worker in a small business, the lower-income worker, which is 
where the huge opportunity is, because they are not saving.
    Senator Daines worked for the Proctor and Gamble Company in 
his distinguished career, and they had a great savings plan. 
And you know, in effect their profit-sharing plan and 401(k) 
plan together meant that people were really given great 
opportunities.
    My dad worked there when he was a young man for a couple of 
years, and he loved the idea at Proctor and Gamble. So when he 
started his own small business with five people, he started a 
profit-sharing plan like Proctor and Gamble's. Unfortunately, 
they lost money the first 3 years and people did not get much 
in their profit-sharing plan, but he started a 401(k) as soon 
as he could, and today there are guys I know who turned a 
wrench their whole career--these were lift-truck technicians; 
he sold forklift trucks--who are retiring, my age. Guys I have 
known virtually my whole life are retiring with a nice nest egg 
for themselves and their family. I ran into one recently who 
was using it to help his granddaughter go to college right now. 
It really works. And these were small business workers and not 
people who had a lot of means, but they had the ability to save 
and they took advantage of it, and now they have 3-, 4-, 5-, 
600,000 dollars coming to them, hopefully spread out over time 
wisely, as we try to encourage through our legislation through 
the QLACs and other periodic payment methods. But it really 
works, and that is what is exciting.
    And I know Senator Daines understands it really well, from 
his experience in big business and small business. So we look 
forward to working with you on your proposal. In a sense, I 
think you have had a hearing on it today, and I hope you 
realize that, and hopefully we can get it in legislation soon.
    With that, I want to thank the witnesses, Mr. Barr, Mr. 
Stevenson, Mr. Kreps, Mr. Luskin. You guys were very helpful 
today, and you are the experts. We want to continue to stay in 
touch with you, and we need your views as we put this together.
    Senator Carper. Mr. Chairman?
    Senator Portman. Yes?
    Senator Carper. Tom Carper here.
    Senator Portman. Oh, Senator Carper. I was just about to 
close out. Thank goodness you spoke up. Okay, Senator Carper, 
let me do this if I could, please.
    I have to go run vote, so I am going to turn the gavel over 
to either you or Senator Daines, whoever would like to have it, 
and----
    Senator Carper. I would like to have it.
    Senator Portman. You have the gavel in that case, because I 
have to run to go vote. I can come back, but I may miss the 
vote if I do not go now. So for any members who have written 
questions for the record, you should submit those by close of 
business on Wednesday, December 16th.
    And for our witnesses, again, if you have additional 
written comments, please provide them. Everything that was in 
writing is part of the record already, but feel free to add to 
that.
    And with that, I am going to turn the gavel over to Senator 
Carper, who will formally adjourn this hearing.
    Senator Carper?
    Senator Carper [presiding]. Thank you, my chairman. Thank 
you, Mr. Chairman.
    Welcome, one and all.
    As the chairman knows, I spent some formative years of my 
life in Ohio, in Columbus. My dad started off as a claims 
adjuster for Nationwide and ended up in the home office in 
Columbus, being sort of in charge of training for claims 
adjusters all over America for Nationwide. So we have more than 
a little bit of interest.
    And, Mr. Stevenson, I think you are with Nationwide. Is 
that correct?
    Mr. Stevenson. Yes, sir, that is correct.
    Senator Carper. That is good. There is a great movie out 
this last year, and I think it was nominated for an Academy 
Award or two, and the name of the movie is ``Just Mercy.'' And 
it focuses on the life of an African American attorney who grew 
up in the rural south, and actually grew up in southern 
Delaware, and he spent most of his life trying to make sure 
that justice was provided for people of color as they navigated 
through the criminal justice system.
    You are a dead ringer for him. You are literally a dead 
ringer for him. I turned on my laptop and saw you, and I said, 
``Oh, my God, what is Bryan Stevenson doing on''----
    Mr. Stevenson. And we share a last name, which is 
interesting.
    Senator Carper. A great guy. A great guy.
    Is there somebody from Zanesville? Who is from Zanesville 
on this?
    Mr. Barr. Scott Barr. I am, Senator; Scott Barr from 
Zanesville, with Edward Jones.
    Senator Carper. That is great. And I have a stepson whose 
life's work is helping people make investments for their 
retirement security. He is up near north of Detroit. So I am 
very proud of him and what he does.
    So I have all kinds of interest in this hearing. I used to 
be State Treasurer; I was elected at the age of 29. We had the 
worst credit rating in the country. We had a pension system, 
but we had no pension fund; not a dime in our pension fund. We 
had a deferred compensation program that was just a tragedy. It 
was just such a screwed-up mess. And we were able to work with 
the great Governor Pete du Pont and others to straighten out 
the pension fund and to actually make the deferred compensation 
program something we could be proud of.
    But I have a question for Mike Kreps, if I could. This 
actually focuses on helping low-income and nontraditional 
workers save for retirement. But, Mr. Kreps, I believe it was 
you--and I have been going back and forth voting on the floor 
and attending other hearings and have gotten a little bit 
confused here, but I think it was in your opening statement you 
raised a number of great proposals introduced by my colleagues 
aimed at helping low- and moderate-income people save for 
retirement.
    And I am reminded in the New Testament of looking out for 
the least of these, and I think, you know, when I was hungry, 
did you feed me; when I was naked, did you clothe me, and on 
and on and on. It does not say anything about, when I was a 
low-income person and did not have much money, did you help me 
save for retirement? But I think the inference is the same, and 
I think there is a moral imperative at play here.
    But a related challenge in this space is that most people 
do not think that much about retirement savings until later in 
life or at maybe a particular inflection point, maybe getting a 
new job. And tax time is one inflection point that might be 
particularly helpful to leverage, especially for people of 
lower incomes, and maybe for nontraditional workers.
    Here is an example out of Delaware. Delaware's Volunteer 
Income Tax Assistance operator piloted a partnership this year 
to refer tax preparation clients to a local institution where 
they can sign up for an IRA.
    And, Mr. Kreps, let me just ask, how should Congress, maybe 
the incoming Biden administration, be thinking about better 
leveraging inflection points in public-private partnerships to 
encourage retirement savings, particularly amongst lower-income 
and nontraditional workers?
    Mr. Kreps. It is a great question. And you are right, we 
have decades of academic and industry research showing very 
clearly that we can do the most to help people and encourage 
them to save if we hit them at inflection points when they are 
thinking long-term about retirement: birthdays, starting a new 
job, marriages, divorces, death in the family--things where 
they have to think long-term.
    And I think the Congress, the Biden administration, folks 
in industry, can think a little more creatively about how we 
can partner together to do things. Imagine if, every time you 
got a tax refund--you file your taxes and you get a tax 
refund--a window popped up and said, ``would you like to put 
part of that towards retirement savings?'' Or, there was a more 
national push to get people using the Saver's Credit? Or just 
more of a national push to get people to save?
    I think there is a lot of room to work there, particularly 
through public-private partnerships, to do the education, to do 
the kind of pushing on folks to nudge them in the right 
direction when--you know, they are busy. They are not going to 
think about retirement 24 hours a day like some of us in this 
hearing.
    Senator Carper. Thank you. Do any other panelists want to 
comment on it, please? Thank you for your responses. Anybody 
else?
    Mr. Stevenson. Senator, I would just add that I think, 
while using inflection points is helpful, just what I have seen 
over time, and what the data continues to suggest, is that the 
auto features are even more impactful.
    The auto features are key. The Saver's Credit, expanding 
that and making that more available, I think those are things 
that are more standard so that people do not have to have 
choice. Less choice, I think, will help them. But as they see 
the balance and they have gotten the habit, then they are 
hooked. I think that is also an important way to go.
    Senator Carper. To your point on the auto features, the 
Thrift Savings program for Federal employees--and a lot of 
people participate in that, as they should. We find that before 
we had an auto-signup feature, fewer than half of the people 
joined the Thrift Savings Plan when they joined the Federal 
workforce. Once we moved to the auto-provision, over three-
quarters.
    Mr. Stevenson. And one of the opportunities in that Federal 
Thrift Savings Plan even now is to help those Federal workers, 
now that they are in the plan, help them get out of just that 
safe account, that stable value, and get into more of the 
equities. That is the next opportunity in that, and I think 
that is something that we, in the right time, should also have 
a conversation about.
    Senator Carper. All right; thank you.
    All right; anybody else?
    [No response.]
    Senator Carper. No? All right, let me find out if at least 
two of you can spell the word O-H-I-O. Great to see you guys. 
Thank you so much. Thanks for what you do, and thanks for 
joining us today.
    Does anybody else--I think I am the acting chair. Does 
anybody else, members or witnesses, wish to comment?
    [No response.]
    Senator Carper. No? Going, going, gone. Thank you all. 
Happy holidays. God Bless you. Thanks so much.
    [Whereupon, at 12:03 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


                Prepared Statement of Scott Barr, AAMS, 
                    Financial Advisor, Edward Jones
                              introduction
    Chairman Portman, Ranking Member Brown, and members of the 
subcommittee, thank you for inviting me to testify on the critically 
important issues being considered this morning by the Finance 
Committee's Subcommittee on Social Security, Pensions, and Family. My 
name is Scott Barr, and I have been an Edward Jones financial advisor 
in Zanesville, OH for the past 21 years. As discussed further below, I 
would like to emphasize at the outset Edward Jones' strong support for 
the Retirement Security and Savings Act of 2019 (S. 1431) (``Portman-
Cardin'').

    Every day my work permits me the chance to build meaningful 
relationships with our clients--families and small businesses in and 
around Zanesville, OH. I have had the privilege of helping them plan 
for and achieve their financial goals--whether it is preparing for 
retirement, saving for a child's or grandchild's education, or simply 
working towards a more secure financial future. I have found this work 
to be tremendously rewarding because I have been able to help my 
clients, who are often my friends and neighbors, build financial 
resilience and achieve financially what is most important to them.

    As an Edward Jones financial advisor, I take great pride in helping 
my small business clients work towards a financially secure retirement 
for themselves and their employees. When given the right opportunity, 
my clients overwhelmingly strive to put money away for their own 
retirement. Moreover, I consistently find that my small business 
clients deeply care about giving their employees a chance to prepare 
for their own retirement by establishing workplace savings plans and 
facilitating the savings process for their employees. These small 
business owners are not only interested in offering their employees 
retirement savings options because it helps their businesses attract 
and retain great employees, they also know that it is the right thing 
to do and they want to help their employees make good financial 
decisions for themselves and their families.

    Edward Jones. Edward Jones offers a wide variety of products and 
services that are designed to help individual investors and small 
business owners achieve retirement security for themselves and their 
employees. Our 19,000 financial advisors serve more than 7 million 
clients and care for more than $1.3 trillion of their assets. Every 
aspect of our business, from the investments we offer to the location 
of our branch offices, is focused on serving the needs of individual 
investors and small business owners.

    Edward Jones recently partnered with Age Wave on a comprehensive 
study to better understand the way our clients are viewing retirement--
across four central ``pillars''--health, family, purpose, and finances. 
The study not only improves our ability to serve them and help them 
achieve what's most important to them and their families, but also 
highlights the profound impact the coronavirus has had on millions of 
American family's retirement security. The study found the pandemic has 
altered the retirement timing of nearly 68 million Americans, most 
planning to retire later, and caused more than 20 million Americans to 
stop making retirement savings contributions--reinforcing the 
importance of the meaningful legislation we are discussing today. 
(Source: www.edwardjones.com/NewRetirement)
           retirement savings successes and current barriers
    Successful Efforts to Promote Retirement Savings. Our Nation's 
private retirement savings system has been a tremendous success for 
countless Americans because it has enabled them to build a financial 
nest egg that will help them supplement the retirement income that they 
expect to receive through Social Security. Congressional efforts to 
promote retirement savings--in partnership with companies that 
facilitate those savings, such as Edward Jones--have benefited millions 
of Americans by encouraging individuals to save for their own 
retirement and establish retirement plans for their employees.

    Edward Jones is encouraged by the most recent iteration of these 
congressional efforts, which were signed into law as the Setting Every 
Community Up for Retirement Enhancement (``SECURE'') Act at the end of 
2019. We are particularly excited to see how the SECURE Act's improved 
retirement plan start-up costs tax credit for small business and new 
tax credit for the adoption of automatic enrollment will help to 
improve the retirement readiness of the individual investors and small 
businesses employees that Edward Jones serves.

    This most recent congressional effort builds upon decades of 
bipartisan support for our Nation's private retirement system, which 
has been spearheaded, in many cases, by the tireless work of 
subcommittee chairman Portman and Senator Cardin, who have worked 
together so well and so effectively for so many years. As someone who 
works every day with clients who strive to save for their own 
retirement and improve the retirement preparedness of their employees, 
I would like to take this opportunity to thank Chairman Portman and 
Senator Cardin for their decades-long effort to make it easier for all 
Americans to save for a financially secure retirement.

    This includes, among other important initiatives, their successful 
efforts to create SIMPLE retirement plans for small businesses, 
appropriately increase the contribution limits for retirement plans and 
IRAs and make permanent the saver's tax credit for low- and moderate-
income Americans who make contributions to their retirement accounts. 
Thanks to the leadership on retirement of Chairman Portman and Senator 
Cardin, my clients and Edward Jones's clients across the country are 
far more likely to enjoy a financially secure retirement than they were 
2 decades ago when I started in this business.

    Similarly, I would like to thank committee chairman Grassley, 
Ranking Member Wyden, and subcommittee ranking member Brown, and all 
members of the Finance Committee for their many years of leadership on 
retirement issues. We would not have made the progress we have without 
all that you have done.

    More Work to Be Done. Although congressional efforts to encourage 
personal retirement savings have benefited millions of Americans, much 
more can, and should, be done to increase personal retirement savings 
and encourage the creation of workplace retirement plans, especially 
for the employees of small businesses.

    According to recent data compiled by the Bureau of Labor 
Statistics, 88 percent of private sector employees who are employed by 
a business with 500 or more employees have access to a workplace 
retirement plan. By comparison, only 49 percent of private-sector 
employees who are employed by a business with less than 50 employees 
have access to a workplace retirement plan.\1\ This coverage gap for 
small business employees is particularly concerning given that only 28 
percent of Americans without access to a workplace retirement plan have 
any retirement savings.\2\
---------------------------------------------------------------------------
    \1\ Bureau of Labor Statistics news release, Employee Benefits in 
the United States--March 2020, available at: https://www.bls.gov/
news.release/pdf/ebs2.pdf.
    \2\ Survey Highlights Worker Perspective on Barriers to Retirement 
Savings (September 2017), available at: https://www.pewtrusts.org/-/
media/assets/2017/09/barriers_to_worker_savings_
report_draft.pdf.

    In my experience, this small business coverage gap is not the 
result of a lack of interest from small business owners. According to a 
2016 survey conducted by the Pew Charitable Trust, 96 percent of all 
small and medium-sized businesses expressed a desire to help their 
employees save for retirement.\3\ According to the same survey, the 
most significant barriers preventing small and medium-sized businesses 
from establishing a workplace retirement plan for their employees were 
the costs of plan creation and the lack of organizational resources. In 
fact, 37 percent of the business surveyed cited cost as the main reason 
for not starting a plan.\4\
---------------------------------------------------------------------------
    \3\ Employer Barriers to and Motivations for Offering Retirement 
Benefits: Insights From Pew's National Survey of Small Businesses (June 
2017), available at: https://www.pewtrusts.org/-/media/assets/2017/09/
employer_barriers_to_and_motivations.pdf.
    \4\ Id.

    We also know, however, that increased access to workplace 
retirement plans is not a ``silver bullet'' for all of our Nation's 
retirement preparedness challenges. This is because, even for many 
Americans who have access to a retirement plan at work, other financial 
priorities can prevent them from adequately saving for retirement. 
Particularly in this pandemic, and when faced with immediate expenses 
for housing, food, transportation, medical care, and family care, 
saving for a retirement that may be years away can be daunting for many 
Americans. These competing financial priorities make it difficult for 
younger workers to save at the beginning of their careers because they 
have relatively lower incomes and often carry student loan obligations 
that account for a significant portion of their income.\5\ Most of 
these younger workers eventually pay off their student debt and 
increase their earnings, but not until a point in their career when 
they have few remaining years to save--limiting the benefits of the 
time value of money. We believe the Retirement Security and Savings Act 
will meaningfully address these challenges and enable more Americans to 
save for a secure and dignified retirement.
---------------------------------------------------------------------------
    \5\ We are working on finding statistics or data to support this.
---------------------------------------------------------------------------
 improving outcomes for individual savers and small business employees
    The financial and legal barriers that make it difficult for more 
Americans to achieve financial security in retirement are formidable, 
but they are not insurmountable. Accordingly, to further encourage 
personal retirement savings and eliminate the barriers discussed 
earlier, Edward Jones urges this subcommittee and the full Senate 
Finance Committee to advance legislation that will: (1) make it easier 
and less costly for businesses of all sizes, but especially small 
businesses, to offer workplace retirement plans to their employees; and 
(2) increase opportunities and eliminate barriers that currently 
prevent more Americans from adequately saving and preparing for their 
financial future in retirement.

    Support for Portman-Cardin. In pursuit of these goals, Edward Jones 
strongly supports the provisions included in Portman-Cardin. Consistent 
with Chairman Portman and Senator Cardin's longstanding and bipartisan 
efforts to improve the private retirement savings of all Americans, 
Edward Jones believes that the changes included in Portman-Cardin, if 
enacted, would significantly improve the retirement preparedness of 
American workers by making it easier and less costly for small 
businesses to offer retirement savings plans to their employees and 
increase opportunities for more Americans to save and invest for a 
financially secure retirement.

    Although Edward Jones supports the full suite of changes included 
in Portman-Cardin, I would highlight our support for the provisions 
that we believe would be most effective in reducing the coverage gap 
for small business employees and increasing the personal retirement 
savings of all Americans.

        Incentives to Promote the Creation of Small Employer 
Retirement Plans. Edward Jones supports the Portman-Cardin provision 
that would increase the start-up tax credit made available to small 
employers when they establish retirement plans for their employees. 
Employer cost is the most significant barrier preventing small 
employers from offering their employees workplace savings arrangements. 
Accordingly, tax incentives that help offset those costs can go a long 
way in expanding retirement plan access to small business employees.

        Incentives for Employers That Embrace Automatic Enrollment. 
Edward Jones supports the Portman-Cardin provisions that would create 
new incentives for employers to offer automatic enrollment programs 
that are more generous than what is contemplated under current law. 
This includes support for Portman-Cardin's ``Secure Deferral 
Arrangement'' safe harbor for satisfying the Internal Revenue Code's 
nondiscrimination rules and a new tax credit to offset small employer 
retirement plan contributions made in satisfaction of that safe harbor. 
By directly offsetting some of the employer costs associated with plan 
contributions, a tax credit based on employer contributions would be a 
``game changer'' for employees who participate in workplace retirement 
plans made available by their small employers.

        SIMPLE Roth IRAs. Edward Jones supports the Portman-Cardin 
provision that would expand SIMPLE IRA offerings by allowing SIMPLE 
IRAs to be offered on a Roth basis. There is no reason to deny SIMPLE 
IRAs, which are so important to small businesses, access to Roth 
options available with respect to all other types of plans.

        Support for Retirement Savers With Competing Financial 
Priorities. Edward Jones supports the Portman-Cardin provision that was 
originally introduced by Ranking Member Wyden that would permit 
employers to make retirement plan matching contributions to their 
employees' retirement accounts based on their employees' student loan 
repayments. If enacted, this provision would help workers burdened with 
student loan debt to pay down those obligations while also starting to 
save for a secure retirement early in their careers.

        Age 60 Catch-Up Contributions. Edward Jones supports the 
Portman-Cardin provision that would permit workers who are age 60 and 
older to make additional contributions to employer-sponsored retirement 
arrangements. This provision would help workers to make up for 
contributions that they could not afford earlier in their careers due 
to competing financial priorities.

        Increasing the Required Beginning Date. Edward Jones supports 
the Portman-Cardin provision that would increase the required minimum 
distribution (``RMD'') age from age 72 to age 75. Americans are living 
longer than they ever have before and should not be unnecessarily 
forced to distribute retirement savings before they have a financial 
need.

    Support for Other Solutions That Would Improve Outcomes for 
Individual Investors and Small Business Employees. In addition to our 
support for Portman-Cardin, Edward Jones supports other legislative 
proposals that would make it easier for individual investors and small 
business employees to prepare for a financially secure retirement. 
Specifically, Edward Jones supports the bipartisan Securing a Strong 
Retirement Act of 2020, which was recently introduced on a bipartisan 
basis by House Ways and Means Committee Chairman Richard Neal (D-MA) 
and Ranking Member Kevin Brady (R-TX). In addition to containing many 
provisions that are also in Portman-Cardin, this bill includes other 
important proposals, including:

        Incentives to Support the Creation of Small Employer 
Retirement Plans. Edward Jones supports the provision that would 
provide small employers with a new tax credit based on the retirement 
contributions that they make on behalf of their employees.

        Incentives to Support Retirement Benefits for Military 
Spouses. Edward Jones supports the provision that would create new tax 
credits for small employers that provide accelerated eligibility and 
vesting rights for military spouses. This provision recognizes the 
unique challenges that military spouses face in saving for retirement 
as they move around the globe when their spouses are deployed. We also 
applaud Senators Collins and Hassan and Representatives Crow and 
Wenstrup for addressing this important issue in stand-alone 
legislation.
                               conclusion
    In closing, I would like to again thank Chairman Portman, Ranking 
Member Brown, and the rest of the subcommittee, on behalf of myself and 
Edward Jones, for holding this important hearing to discuss the actions 
that can be taken to make it easier for more Americans to enjoy a 
financially secure retirement. In pursuit of these goals, Edward Jones 
fully supports Portman-Cardin and other legislative proposals that 
strengthen the retirement savings system and help more Americans enjoy 
the dignified and secure retirement they have worked so hard to 
achieve.

                                 ______
                                 
               Prepared Statement of Hon. Sherrod Brown, 
                        a U.S. Senator From Ohio
    Thank you, Senator Portman, for scheduling this hearing, and to our 
witnesses for participating today.

    The focus of today's hearing is on retirement security, and we 
can't talk about that without acknowledging the looming crisis on the 
minds of millions of retired Americans and workers in Ohio and across 
the country. These workers and retirees in the multiemployer pension 
system are in danger of losing the retirement security they earned over 
a lifetime of work.

    This crisis affects thousands of Ohioans. It affects the massive 
Central States Pension Plan, the Iron Workers Local 17 Pension Plan, 
the Ohio Southwest Carpenters Pension Plan, the Bakers and 
Confectioners Pension Plan, and so many others. And it touches every 
State in the country.

    If the entire multiemployer system collapses, it won't just be 
retirees who will feel the pain. Current workers will be stuck paying 
into pensions they'll never receive. Small businesses will be left 
drowning in pension liability they can't afford to pay. Businesses that 
have been in the family for generations could face bankruptcy, and 
workers will lose their jobs.

    These plans were already in danger before the pandemic, and now the 
economic emergency we're in has only put them in a worse position. They 
were hit by the financial crisis and the recession that followed, and 
now they're being hit again by an economic crisis that's 
disproportionately hurting small businesses and workers, while Wall 
Street recovers.

    The House has done its part. They have passed a bipartisan 
solution. The Senate needs to do ours. A pensions solution should be 
part of the work we're doing on COVID relief. There's no reason we 
shouldn't be able to do this as part of a year-end deal.

    I ask my colleagues to think about the workers whose lives and 
livelihoods will be devastated if we don't do our job. Those workers 
and retirees in Ohio and around the country have rallied in the name of 
Butch Lewis, a great Ohioan who helped lead this fight and passed away 
far too soon, fighting for his fellow workers.

    His wife Rita has continued his fight and become a leader and 
inspiration to so many. Rita once told me that retirees and workers 
struggling with this crisis feel like they are invisible.

    These Americans aren't invisible to me. And they aren't invisible 
to my colleagues who have worked with us for years now, trying to find 
a bipartisan solution. We aren't giving up on that.

    Though the multiemployer system is the most urgent retirement 
matter, we also have a lot of work to do to protect and expand 
retirement security for all workers.

    Over the past few decades, we've watch what happens when Wall 
Street runs the economy: corporate profits go up, CEO pay soars, and 
stock buybacks explode--but wages are flat, and the middle class 
shrinks. And as Americans' economic security has eroded, so have their 
retirement options. Too many workers have no retirement account through 
their employer.

    Fundamentally, our tax system is set up to reward the already-
wealthy with more wealth, instead of to help everyone save and invest 
for their futures. Forty percent of adults don't have $400 to weather a 
financial emergency, let alone save for retirement. Instead of focusing 
on those who already have plenty saved, we have to do more to help 
everyone else get started in the first place.

    And we've had 4 years of an administration that made things worse, 
not better. In his first months in charge, President Trump, with help 
from the Republican-
controlled Congress, made it harder for States to get auto-enrollment 
programs off the ground. President Trump and congressional Republicans' 
massive tax cut for the wealthy and corporations threatened deep cuts 
to Social Security and Medicare. Just yesterday, the Senate voted to 
confirm a Trump appointee to the Federal judiciary who has advocated 
for abolishing Social Security.

    But this November, 80 million Americans decisively rejected that 
approach. People are tired of a system where Wall Street runs the 
show--they voted for a new President who has pledged to make government 
work for everyone else.

    Next year we have a real opportunity to do something concrete for 
middle-class families and low-paid workers who need help saving. We 
know what some of these solutions are. We have to do more on auto-
enrollment and on auto-escalation. The States that have introduced 
auto-enrollment plans, like Senator Wyden's State of Oregon, have seen 
real success in the early years. Auto-enrollment is a best practice in 
helping people save.

    And we have to do more on portability so our retirement policies 
reflect the workforce we have today. Job flexibility shouldn't be a 
corporate PR term for having no economic security.

    We have an opportunity to do big things for the American people. 
Fix the multiemployer pension crisis, instead of allowing it to grow. 
Protect and expand the Social Security benefits that people earn, 
instead of threatening so-called ``entitlement cuts'' in the name of 
new-found religion on the deficit. Build a defined contribution system 
that is inclusive, that is equitable, and that meets the needs of 
today's workforce--instead of relying on the status quo that works well 
for some but leaves too many behind.

    I know many of my colleagues have ideas in this area, and I look 
forward to working with all of you next Congress on an effort that 
builds on the success of the SECURE Act to deliver results for the 
people we serve.

    Thanks again to Senator Portman for scheduling this hearing. I turn 
it back to you.

                                 ______
                                 
                Prepared Statement of Michael P. Kreps, 
                       Principal, Groom Law Group
    Good morning. I want to thank Chairman Portman and Ranking Member 
Brown for inviting me to testify today and for their dedication to 
improving retirement security for all Americans. The topic of this 
hearing is critically important. I think we can all agree that, after a 
lifetime of hard work, everyone deserves the opportunity to live out 
their golden years with dignity and financial independence.

    In 1935--at another time of great national hardship--President 
Roosevelt and Congress enacted the Social Security Act (Pub. L. 74-271) 
to ``give some measure of protection to the average citizen and to his 
family against . . . poverty-ridden old age.''\1\ It has been 85 years, 
and Social Security is still the bedrock of our retirement system. It 
is the most effective anti-poverty program in the United States, having 
kept 21.7 million Americans above the poverty line in 2019.\2\ In fact, 
without Social Security, 37.8 percent of elderly Americans would have 
incomes below the poverty line, all else being equal.\3\
---------------------------------------------------------------------------
    \1\ President Franklin D. Roosevelt, Statement on Signing the 
Social Security Act (August 14, 1935), available at http://
docs.fdrlibrary.marist.edu/odssast.html. See also, The Social Security 
Act, Preamble (Pub. L. 74-271) (stating that the purpose of the act was 
to ``provide for the general welfare by establishing a system of 
Federal old-age benefits, and by enabling the several States to make 
more adequate provision for aged persons, blind persons, dependent and 
crippled children, maternal and child welfare, public health, and the 
administration of their unemployment compensation laws; to establish a 
Social Security Board; to raise revenue; and for other purposes.'').
    \2\ See, e.g., Kathleen Romig, Social Security Lifts More Americans 
Above Poverty Than Any Other Program, Center for Budget and Policy 
Priorities (February 20, 2020), available at https://www.cbpp.org/
research/social-security/social-security-lifts-more-americans-above-
poverty-than-any-other-program.
    \3\ Id.

    But Social Security benefits, on their own, are not enough to allow 
most older Americans to maintain their standard of living when they 
retire--whether retirement is a choice or, as is the case for many 
Americans, a person cannot work any longer. That is why we need a 
---------------------------------------------------------------------------
robust, equitable, and inclusive private retirement system.

    Over the years, our private retirement system has evolved, and 
there have been many important improvements. More people are 
participating in 401(k) plans thanks to the Pension Protection Act of 
2006 (Pub. L. 109-280) and the proliferation of auto-enrollment; plans 
are more transparent than ever before because of improved fee 
disclosure; and the SECURE Act of 2019 (Pub. L. 116-94) gave employers 
more tools to help participants protect themselves from the risk of 
outliving their savings. Although the system is working well for many 
people, there is still more work to be done for those falling through 
the cracks.

    Many working people still do not have access to, or participate in, 
an employer provided plan.\4\ That is particularly true for private-
sector employees who are younger, part time, in lower wage occupations, 
and/or not a member of a union.\5\ There is nothing stopping us from 
taking affirmative steps to reach this uncovered workforce and give 
them the opportunity to prepare for retirement.
---------------------------------------------------------------------------
    \4\ The Congressional Research Service (``CRS'') determined 
approximately 55 percent of all U.S. workers participate in employer-
sponsored retirement plans. CRS, Workers Participation in 
Employer-sponsored Pensions: Data in Brief, R43439 (updated December 1, 
2019), available at https://crsreports.congress.gov/product/pdf/R/
R43439. See also The Pew Charitable Trusts, Employer-Sponsored 
Retirement Plan Access, Uptake, and Savings (September 2016), available 
at http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2016/
09/employer-sponsored-retirement-plan-access-uptake-and-savings.
    \5\ CRS, supra 4.

    Several States--including California, Illinois, and Oregon--are 
already trying to address the problem through State-based programs to 
provide for universal or near-universal access to payroll deduction 
savings programs.\6\ Similarly, Washington State--working with the 
Service Employees International Union Local 775--established a savings 
plan specifically to help homecare workers--most of whom earn very 
little despite providing critical care to our sick, disabled, and 
elderly family members. And there are efforts at both the State and 
Federal levels to encourage the expansion of automatic enrollment, 
including for public employees.\7\
---------------------------------------------------------------------------
    \6\ Up-to-date information about State-based efforts to improve 
retirement security is available from the Georgetown Center on 
Retirement Initiatives at http://cri.georgetown.edu. For policy 
considerations and recommendations, see the Center's 2018 Policy 
Innovation Forum Report: Driving Change to Improve Retirement Outcomes, 
available at https://cri.georgetown.edu/wp-content/uploads/2019/02/CRI-
Policy-Forum-Report-2-28-19.pdf.
    \7\ See, e.g., Securing a Strong Retirement Act of 2020 Sec. 101 
(H.R. 8696, 116th Cong.); Internal Revenue Service Priv. Ltr. R. 
201743002 (July, 19, 2017).

    We cannot forget that millions of working people struggle to pay 
their bills, let alone save for retirement. Congress took an important 
step to address the issue in 2001 by creating the Retirement Savings 
Contribution Credit--known as the Saver's Credit--to provide a 
nonrefundable tax credit to low-income taxpayers for certain retirement 
plan contributions.\8\ But the Saver's Credit does not reach nearly 
enough people because many lower income workers do not have taxable 
income.\9\ We can fix that by making the credit refundable and having 
it deposited directly into a savings plan. That approach has bipartisan 
support, and I commend the chairman, ranking member, committee chairman 
Wyden, and Senator Cardin for their leadership on this issue.\10\
---------------------------------------------------------------------------
    \8\ Internal Revenue Code Sec. 25B.
    \9\ In 2016, only 5.6 percent of taxpayers claimed the Saver's 
Credit, and the average credit amount claimed was $182. Congressional 
Research Service, The Retirement Savings Contribution Credit (April 2, 
2019), available at https://fas.org/sgp/crs/misc/IF11159.pdf.
    \10\ Retirement Security and Savings Act Sec. 104 (S. 1431, 116th 
Cong.); Encouraging Americans to Save Act (S. 3636, 115th Cong.). See 
also Securing a Strong Retirement Act of 2020 Sec. 103 (raising the 
amount of the credit and creating a single credit rate).

    We should also plug some of the holes that drain people's savings. 
At least 33 percent and as many as 47 percent of plan participants 
withdraw part or all of their retirement plan assets following a job 
change.\11\ The lost savings due to these cash-outs amounts to between 
$60 billion and $105 billion annually.\12\ Fortunately, the development 
of auto portability will help preserve savings for many job-changers--
particularly lower-income earners--by allowing a person's account to 
automatically follow them from one employer's plan to the next. Thanks 
to guidance from the Department of Labor and strong, bipartisan support 
from members of Congress, including many members of this subcommittee, 
auto-portability will be a reality for millions of plan participants 
early next year.\13\
---------------------------------------------------------------------------
    \11\ Savings Preservation Working Group, Cashing Out: Impact of 
Withdrawing Savings Before Retirement (October 2019), available at 
http://preservingsavings.org.
    \12\ Id.
    \13\ Pensions and Investments, Alight to Offer Auto-portability 
Program to DC Plan Sponsors (July 15, 2020), available at http://
pionline.com/defined-contribution/alight-offer-auto-portability-
program-dc-plan-sponsors. See also DOL Advisory Opinion 2018-01 
(November 5, 2018); DOL Prohibited Transaction Exemption 2019-02, 84 
Fed. Reg. 37337 (July 19, 2019).

    There is no shortage of proposals with significant bipartisan 
support that could improve the retirement system. For example, Chairman 
Portman and Senator Cardin introduced the Retirement Security and 
Savings Act, and in in the U.S. House of Representatives, Ways and 
Means Committee Chairman Neal and Ranking Member Brady recently 
introduced the Securing a Strong Retirement Act of 2020.\14\ Chairman 
Portman and Ranking Member Brown have also been long-time supporters of 
employee stock ownership plans because of the meaningful impact 
employee ownership can have on retirement savers across the 
country.\15\ And of course, the most important thing we can do to help 
people save for retirement is to put more money in their pockets 
through Federal policies that lead to sustained wage growth, greater 
economic equality, and shared prosperity.
---------------------------------------------------------------------------
    \14\ S. 1431 (116th Cong.); H.R. 8696 (116th Cong.).
    \15\ See, e.g., Promotion and Expansion of Private Employee 
Ownership Act (S. 177 and H.R. 2258, 116th Cong.). See also Jared 
Bernstein, Employee Ownership, ESOPs, Wealth, and Wages (January 2016, 
available at http://esca.us/wp-content/uploads/2016/01/ESOP-Study-
Final.
pdf.

    Finally--and most importantly--we cannot ignore the fact that we 
are on the brink of over a million Americans losing their hard-earned 
pension benefits. Most multiemployer pension plans are secure, but some 
plans--including some very large plans--will become insolvent in the 
next few years.\16\ The Federal pension insurance program administered 
by the Pension Benefit Guaranty Corporation (``PBGC'') only guarantees 
a fraction of many multiemployer pension plan participants' 
benefits.\17\ Worse yet, PBGC projects that its multiemployer insurance 
program will be insolvent in 2026.\18\ When that happens, PBGC will 
only be able to pay pennies on the dollar, meaning participants and 
retirees in insolvent plans will see their benefits slashed to the 
bone.
---------------------------------------------------------------------------
    \16\ Of the approximately 1,400 multiemployer pension plans, 124 
are in critical and declining status and projected to become insolvent. 
PBGC, FY19 Projections Report (2020), available at https://
www.pbgc.gov/sites/default/files/fy-2019-projections-report.pdf.
    \17\ PBGC guaranteed benefits are set by statute. The guarantees 
for multiemployer pension plans are not adjusted for inflation, and the 
amount has not increased since it was last adjusted in 2000. See ERISA 
Sec. Sec. 4022A, 4022B. The current maximum guaranteed benefit for a 
multiemployer plan participant with 30 years of service is $12,870 per 
year. Id.
    \18\ PBGC, supra 16.

    It is not these participants' fault that their plans are failing. 
They worked hard, played by the rules, and made significant wage 
concessions all so that they could have some measure of economic 
security in retirement. They did everything they could to achieve the 
American dream, but they are living a nightmare. Unless Congress acts 
soon, retirees, their families, and their communities will be 
---------------------------------------------------------------------------
devastated.

    Consider Pat and her husband in New York State. They refinanced 
their mortgage to pay for their children to go to college, and now, 
they are terrified that they will lose their house when their pension 
gets cut. Or Christopher from Buffalo, who cannot work because of 
debilitating back and shoulder problems caused by decades of manual 
labor but does not qualify for Social Security Disability Insurance. Or 
Larry from Michigan, who drove a truck for 40 years when he was 
diagnosed with cancer and is now relying on his pension to make ends 
meet.\19\ These are not isolated examples. There are over a million 
real people just like Pat, Christopher, and Larry.
---------------------------------------------------------------------------
    \19\ These personal accounts were collected by the Pension Rights 
Center. Pension Rights Center, Story Bank (accessed on December 9, 
2019), available at http://www.pensionrights.org/create-content/action/
story-bank.

    The crisis is upon us, and only Congress has the power to do 
something about it. We are the richest country in the history of the 
world, and we owe it to our fellow Americans to find a solution. That 
is going to require putting aside politics and ideology and doing what 
is right for retirees. There is simply no time left to lose as, every 
day that ticks by, the problem becomes more intractable and more costly 
to fix. I urge the members of this Subcommittee and every member of 
---------------------------------------------------------------------------
Congress to act as soon possible to address the crisis.

    Thank you for your time today, your attention to these important 
issues, and for your commitment to making retirement more secure for 
all Americans. I would be happy to answer any questions you may have.

                                 ______
                                 
Prepared Statement of Joshua Luskin, President, National Association of 
             Government Defined Contribution Administrators
    The National Association of Government Defined Contribution 
Administrators (``NAGDCA'') thanks Chairman Portman and Ranking Member 
Brown and the members of the Subcommittee on Social Security, Pensions, 
and Family Policy for holding this hearing. We also thank Chairman 
Grassley and Ranking Member Wyden and the members of the full Finance 
committee for their ongoing commitment to improving America's 
retirement system.

    NAGDCA is grateful for the opportunity to testify today in support 
of bipartisan proposals to improve the public-sector retirement system 
and retirement outcomes for the approximately 16 million teachers, 
first responders, public health workers, and other public servants 
employed by America's State and local governments.
                              about nagdca
    Founded in 1980, NAGDCA is the premier professional organization of 
public 
employer-sponsored deferred compensation and defined contribution plan 
administrators. NAGDCA's mission is to support plan sponsors and 
service providers of 
government-sponsored deferred compensation and defined contribution 
retirement plans in creating successful retirement security outcomes 
for their plan participants.

    NAGDCA governmental members oversee plans for participants from 49 
State and territorial government entities and 132 local government 
entities, including counties, cities, public safety agencies, school 
districts, and utilities. NAGDCA's members administer governmental 
deferred compensation and defined contribution plans, including section 
457(b), 401(k), 401(a), and 403(b) plans which provide for employee and 
employer contributions.

    The association provides a forum for working together to improve DC 
plan operations and outcomes by sharing information on investments, 
marketing, administration, and the Federal laws and regulations 
governing DC plans.

    NAGDCA is also the sole sponsor of National Retirement Security 
Month, an annual national campaign to improve retirement security. On 
October 1st, the U.S. Senate recognized the goals and ideals of 
National Retirement Security Month, unanimously approving S. Res. 743, 
led by Senator Enzi and Senator Cardin, and cosponsored by fellow 
Finance committee members, Senators Young and Hassan.
        proposals to improve dc plan outcomes and administration
    Congress has taken major strides to improve the retirement system, 
including passage of the Setting Every Community Up for Retirement 
Enhancement (SECURE) Act (Pub. L. 116-94) at the end of last year. Not 
coincidentally, the SECURE Act built on, and incorporated, significant 
provisions from the Finance committee's bipartisan work on the 
Retirement Enhancement and Savings Act (RESA) in the 115th and 116th 
Congresses. While this landmark legislation is beginning to bear fruit, 
we believe that there is more that Congress can and should do to build 
on these great accomplishments. Far too many Americans do not have 
access to a retirement plan and among those who do, too many have not 
saved enough to enjoy a financially secure retirement.

    To that end, NAGDCA strongly endorses the following six targeted 
proposals and urges that the Finance committee include them in a new 
bipartisan package of retirement legislation that Congress can advance 
as soon as possible. All six provisions have already been incorporated 
in the Retirement Security and Savings Act, introduced by Chairman 
Portman and Senator Cardin (``Portman-Cardin''). We thank both Senators 
for their decades of leadership in the retirement space and for their 
support for these sensible improvements to the system.

      1.  Expand 403(b) plan funding vehicle options to include 
collective investment trusts.

      2.  Permit non-spousal beneficiaries to roll inherited IRA assets 
into DC Plans.

      3.  Eliminate the 457(b) ``first day of the month'' requirement.

      4.  Allow participants with Roth accounts in DC plans to roll 
Roth IRA assets into these plans.

      5.  Exempt Roth contributions in DC plans from required minimum 
distribution rules.

      6.  Permit DC plan participants to make qualified charitable 
distributions.

    As a membership organization for public sector plan administrators, 
NAGDCA's policy development process is member-driven. Past and present 
legislative committee members, executive board members, and 
representatives of our industry partners have volunteered countless 
hours because they are passionate about improving the ability of people 
to reach their own retirement goals. Each of these member-generated 
proposals has been evaluated and endorsed as enabling plan participants 
to increase their savings and plan sponsors to administer their plans 
more efficiently.
              expand 403(b) plan funding vehicle options 
                to include collective investment trusts
    First, NAGDCA supports expanding the funding vehicle options for 
403(b) plans to include collective investment trusts (``CITs''). CITs 
are common investment choices in 401(a), 401(k) and 457(b) governmental 
DC plans. However, with only limited exceptions, IRC section 403(b) 
limits funding arrangements to annuity contracts issued by an insurance 
company and custodial accounts invested solely in mutual funds. 
Therefore, participants in 403(b) plans are not able to take advantage 
of these options, potentially costing them thousands of dollars in 
retirement as a result of higher investment expenses or reduced returns 
from not having available the same breadth of investment structures as 
have long been available to other types of governmental DC plans. In a 
May 2020 viewpoint entitled Improving Investment Outcomes for 403(b) 
Plan Participants, Blackrock analysts estimated that the lower fees 
could result in more than $100,000,000 in aggregate savings per year 
for 403(b) plan participants, which could translate into ``. . . 
thousands of dollars in increased savings for an individual 403(b) plan 
participant invested in a CIT over the course of his or her career.''

    Plan sponsors would benefit from the use of CITs by having 
increased flexibility to build more robust investment lineups, at lower 
costs, often with improved speed to market and other efficiencies. In 
addition, CITs would support increased customization of asset 
allocations and glidepaths for 403(b) plans. Amending IRC section 
403(b) to include these additional investment vehicles has the 
potential to reduce costs, increase retirement security, and improve 
the overall experience of plan members and sponsors. Finally, improved 
403(b) plans can help plan sponsors better recruit and retain top 
talent.

    Section 117 of Portman-Cardin would amend IRC section 403(b) to 
permit CITs as investment vehicles for all types of 403(b) plans. 
Corresponding changes would also be made to the Investment Company Act 
of 1940, the Securities Act of 1933, and the Securities Exchange Act of 
1934.

 permit non-spousal beneficiaries to roll inherited ira assets into dc 
                                 plans
    Second, NAGDCA proposes permitting non-spousal beneficiaries to 
roll inherited IRA assets to their 457(b), 401(k), 401(a) or 403(b) 
plans. Lower expenses and coordination of retirement plans are two 
important ways to improve retirement outcomes. In the Economic Growth 
and Tax Relief Reconciliation Act of 2001 and the Pension Protection 
Act of 2006, Congress acknowledged that coordination of retirement 
plans is valuable to those with multiple retirement savings accounts. 
Allowing non-spousal beneficiaries to roll inherited IRA assets to 
their employer-sponsored plan would be beneficial to those plan 
participants as employer-sponsored governmental DC plans generally have 
lower fees and administrative costs than other retirement savings 
plans. In addition, allowing IRA rollovers to employer sponsored 
governmental DC plans would help participants achieve consolidation, 
enhanced portability, and administrative simplicity.

    Section 304 of Portman-Cardin would amend IRC section 408(d)(3)(C) 
to permit non-spousal beneficiaries to roll IRA assets to their 457(b), 
401(k), 401(a) and 403(b) governmental DC plans.
      eliminate the 457(b) ``first day of the month'' requirement
    Third, NAGDCA proposes eliminating the ``first day of the month'' 
requirement in 457(b) plans. IRC section 457(b) provides that a plan 
participant's deferral changes must be made prior to the first day of 
the month in which the change is to commence. This provision was 
enacted as an administrative convenience prior to the advent of modern 
record-keeping technology. Now it is an administrative inconvenience to 
delay requested changes and is an unnecessary impediment to 
participants' ability to manage their retirement assets. This 
restriction is not imposed on other retirement savings plans and should 
no longer apply to 457(b) plans.

    Section 305 of Portman-Cardin would amend IRC section 457(b) to 
repeal the requirement that deferral changes be made prior to the first 
day of the month in which the change is to commence. The proposed 
language would permit governmental 457(b) plans to allow deferrals 
changes up to a date prior to which the compensation is otherwise 
available.
         allow participants with roth accounts in dc plans to 
                 roll roth ira assets into these plans
    Fourth, NAGDCA supports allowing participants with Roth accounts in 
457(b), 401(k) and 403(b) plans to roll Roth IRA assets into these 
plans. As noted above, lower plan expenses and better coordination of 
retirement savings are two important ways to improve retirement 
outcomes, as has been acknowledged by Congress. Rolling Roth IRA assets 
to an employer-sponsored plan would be beneficial to those plan 
participants who are making Roth contributions to these plans as 
employer sponsored plans generally have lower fees and administrative 
costs than other retirement savings plans. In addition, allowing Roth 
IRA rollovers to Roth accounts in employer-sponsored governmental DC 
plans would help participants achieve consolidation, enhanced 
portability, and administrative simplicity.

    If permitted by the respective plan, plan participants may make 
Roth contributions to a governmental DC plan, but such plans are not 
permitted to accept rollovers of Roth IRA assets. Section 504 of 
Portman-Cardin would amend the IRC to allow 457(b), 401(k) and 403(b) 
plans with Roth contributions to accept participant rollovers from Roth 
IRAs into these plans.
              exempt roth contributions in dc plans from 
                  required minimum distribution rules
    Fifth, NAGDCA supports exempting designated Roth contributions in 
DC Plans from required minimum distribution (``RMD'') rules, as Roth 
IRA assets are presently exempt. The disparate treatment between Roth 
IRA assets and Roth assets in 457(b), 401(k) and 403(b) plans create an 
incentive for plan participants to roll their Roth assets to a Roth IRA 
in order to avoid the RMD rules. It would be beneficial for 
participants to maintain Roth assets in their employer-sponsored 
governmental DC plans because these plans generally offer lower 
administrative costs and fees than retail market IRAs. The change 
should be revenue-neutral.

    Roth contributions in 457(b), 401(k) and 403(b) governmental DC 
plans are subject to required minimum distribution (RMD) rules and must 
be included when calculating the amount of a participant's RMD. Section 
501 of Portman-Cardin would amend the IRC to exclude any designated 
Roth account in 457(b), 401(k) and 403(b) plans from RMD requirements.
 permit dc plan participants to make qualified charitable distributions
    Finally, NAGDCA supports enhanced distribution choice, specifically 
the proposal to permit 457(b), 401(a), 401(k) and 403(b) plan 
participants to make qualified charitable distributions (``QCDs''). IRC 
section 408(d)(8) permits QCDs from traditional IRA or Roth IRA 
accounts of up to $100,000 to be excluded from gross income each year. 
The taxpayer's RMD, made on or after the taxpayer has attained age 72, 
or any portion thereof, may be considered a QCD and, therefore, is 
distributed tax-free directly to the qualifying organization. This same 
tax break is not available for RMDs from qualified plans, 403(b) or 
governmental 457(b) plans.

    Under current law, in order to take full advantage of a QCD as an 
RMD, a governmental DC plan participant would have to roll plan assets 
to an IRA prior to the participant attaining age 72 (RMDs, which begin 
at age 72, are not eligible rollover distributions). If participants 
were eligible to make QCDs from their 457(b), 401(a), 401(k) and 403(b) 
governmental DC plans, this rollover step would not be required, and 
participants' funds could remain in their governmental DC plans until 
such participants choose to make QCDs.

    Provisions of the Tax Cuts and Jobs Act of 2017, effective in 2018, 
make this issue more relevant. Making QCDs from an IRA allows the 
taxpayer to donate RMDs tax free even if claiming the standard 
deduction ($26,500 standard deduction for married couples), rather than 
itemizing deductions. Many more taxpayers are expected to use this 
increased standard deduction.

    Thus, allowing governmental DC plans to have this added benefit 
could further incent participation and retention in governmental DC 
plans.

    Section 502 of Portman-Cardin would amend the IRC to permit QCDs 
from 457(b), 401(a), 401(k) and 403(b) plans of up to $100,000 to be 
excluded from gross income each year, just as QCDs are permitted from 
traditional IRAs.
                               conclusion
    Once again, I thank the subcommittee for inviting me to testify on 
behalf of NAGDCA. It is an honor to work with you to advance targeted 
improvements to the retirement system which we believe will benefit 
many people by helping them to be ready for a financially secure 
retirement. Beyond the individual, the benefits of more people enjoying 
improved retirement security extend to the community as a whole, 
leading to increased community well-being and reduced stress on social 
safety net systems. We look forward to continuing to work with the 
committee, with your counterparts in the House, with our industry 
partners and with other stakeholders to move a bipartisan retirement 
legislative package in the 117th Congress.

                                 ______
                                 
           Question Submitted for the Record to Joshua Luskin
               Question Submitted by Hon. Chuck Grassley
    Question. The SECURE Act improved the rules governing multiple 
employer plans, known as MEPs. I have heard that allowing 403(b) plans 
to participate in MEPs could be beneficial. Do you agree? If not, why 
not?

    Answer. Yes, it would be beneficial to allow 403(b) plans to 
participate in MEPs. Given the important differences between 401(k) 
plans and 403(b) plans, increasing coverage and participation using 
both types of plans is an important, common goal. Further, expanding 
MEP availability in 403(b) plans can help facilitate efficiencies that 
allow governmental 403(b) sponsors to provide valuable benefits to 
their employees while minimizing their administrative burdens. Some of 
these benefits of expanding MEP availability will be aligned with the 
current focus on fee compression on investments and the potential 
reduction of administrative costs/liability we have seen quite 
extensively discussed in the retirement environment, this change is 
aligned with the direction retirement industry and plan sponsors have 
been going for the last decade or so. The broader potential long term 
benefits of 403(b)s gaining access to MEPS will be participants 
retiring with larger balances that eventually help with replacement 
income for retirees. Due to the nature of spending of retirees, 
additional replacement income spent in communities will provide 
additional benefits for local economies, the local tax base, 
potentially reduce the dependency on government assistance to name a 
few. All different environments will benefit from this but government 
jobs tend to be better paying jobs in rural communities and this 
potentially will help support those communities that have been hit hard 
recently.

                                 ______
                                 
                Prepared Statement of Hon. Rob Portman, 
                        a U.S. Senator From Ohio
    The hearing will come to order. I want to first thank all of the 
witnesses for being here to give us their expertise and counsel on such 
an important topic--especially as we work remotely during these 
challenging times for our country. I also want to give a special thanks 
to Senator Brown and his staff for working together with us to plan 
this hearing.

    As some of you know, I have been looking forward to this hearing 
for a long time. I appreciate the Finance Committee allowing us to move 
forward with it now. We've got some great witnesses, and I'm sorry we 
have to be remote, because I'd love to be in person talking to you, but 
I think this is best, given where we are with the COVID-19 challenge. 
And we've had plenty of opportunities to speak and will continue to, 
but this, I think, is really exciting because retirement security, to 
me, is not only just critically important for all Americans--and 
frankly savings has taken a hit, as you know, during the coronavirus--
but also, this is an opportunity for bipartisan work, and I think we'll 
hear about this later from Senator Brown, Senator Cardin, and others.

    But regardless who gets the majority in the Senate come January, 
this is an area where I think we have the potential to make some real 
progress, because I think it has been, and will be, bipartisan. And 
when you look at the support it has among the American people, it is 
really impressive. I mean, everybody talks about who supports what in 
terms of tax policy, but I can tell you, the idea of being able to save 
more for your own retirement is just broadly popular, so this is an 
opportunity for us.

    I have worked a lot with Senator Cardin, over the years, on these 
issues. I notice he is in the hearing--well, he is in his office, so I 
wouldn't say he is in the hearing--but he is joining us remotely. And 
you know, we've done some good things, helped people save more for 
retirement, and it has improved retirement savings considerably.

    Last year, we introduced the latest iteration of Portman-Cardin, 
and that's called the Retirement Security and Savings Act, which has 
had some broad support, bicameral and bipartisan. In fact, 27 of the 
Portman-Cardin provisions were included in this new SECURE 2.0 
legislation introduced by the Ways and Means chairman, a Democrat, 
Richie Neal, and the Ranking Member Kevin Brady on the House side. If 
that's not bipartisan, I don't know what is. So, the two of them coming 
together, I think is terrific, and there are some provisions in ours 
they do not include, and there are some in theirs we do not include, 
but I think that, in my view, is an opportunity when you have so much 
common ground between the two proposals. So I think it's a really good 
starting point, and again it gives us a real opportunity to get 
something done.

    A lot of our other colleagues have worked on this issue. Sherrod 
Brown has worked on it on a bipartisan basis. Senator Daines and 
Senator Warren have a retirement lost and found bill that I think is 
interesting. Senator Collins and Senator Hassan have their assistance 
to military spouses, which I like. So I think there are a lot of 
opportunities for members of the committee, and even outside of the 
committee, to come together on something here.

    The one that Ben Cardin and I have introduced recently focuses on 
what I think are the four big problems that can be identified and 
addressed through legislation. One is to help lower-income and part-
time workers. And this is an obvious issue when you know you only have 
20-some percent of people who are part-time and low-income saving now. 
So when people are living paycheck to paycheck, it's tough to set money 
aside, and so we help in that regard in a number of ways.

    Second, it focuses on small businesses. Why? Because that is where 
the opportunity is. Less than half of workers employed by small 
businesses have access to an employer-sponsored plan. Think about that. 
That's compared to 88 percent of workers employed by large businesses. 
So it's small businesses--that's where we really need to target and 
focus to expand coverage for so many working Americans. And Eric talked 
about his restaurant business. A lot of them are small businesses like 
that, that just can't afford to put together a plan, so we help them in 
that regard. And they're also concerned about the complexity of it.

    Third, we've got an issue with the baby boomers. A few of us on 
this call would fit into that category. And we just aren't saving 
enough as a generation, and haven't been. And therefore, we do some 
things to help encourage people who are getting ready for retirement, 
near retirement, to save more. And then finally, as folks are living 
longer, retirees, even those who have accumulated some savings, are 
finding that they are outliving those savings. Living longer is good 
news. Longer, healthier lives are great, but they are tough on our bank 
accounts, especially when current laws force Americans to start 
depleting and taxing their retirement savings accounts at age 72. 
That's an issue too, and you know that long-term savings piece, how do 
you ensure that nest egg is adequate for people living longer and 
healthier lives, is a key issue.

    So, we've made progress on some of these issues, but the lack of 
sufficient retirement savings remains an urgent problem for our 
country, and it's an opportunity, again, for us. In 2020, we've moved 
this legislation to this point; now, in 2021, we've got to get it 
across the finish line. Unfortunately, the pandemic, as we talked 
about, has just exacerbated the need to improve savings. We may not be 
seeing a V-shaped economic recovery in this pandemic. I think we're 
going to see more, as we have so far, a K-shaped recovery. And it's K 
in terms of savings, meaning it's not just going down like it normally 
would in a recession and then back up the same way. You have some 
people who are doing well and others who are not. And many of these who 
are not are some of these middle- and low-income part-time workers we 
talked about. That's why we allow those workers to have more 
opportunities, through both expanding savings plans for them, but also 
allowing part-time folks to be able to access plans more easily, 
lowering the number of hours someone works where they qualify, in 
particular, in a retirement plan.

    We also make the Saver's Credit refundable, which is not without 
controversy, I understand that. And some of my Republican colleagues 
have concerns there, and we can talk later about why I think that's 
important as part of an overall balanced plan. We also have a provision 
that allows recent graduates to receive matching retirement 
contributions from their employers as they pay off student loans. This 
is a good connection between an obvious problem out there with student 
loan debt and retirement, so it's a way to approach both.

    Our second set of solutions on small business I talked about makes 
it easier to establish plans. We increase the tax credit. We have a lot 
of companies that want to adopt auto-enrollment and encourage their 
employees to save more for retirement. But that can be expensive, so it 
does enhance the start-up credit for small businesses. It makes 
offering auto-enrollment features much more cost effective for 
employers. We like auto-enrollment. We make it more cost-effective.

    For those near retirement, whom we talked about, we want to be sure 
that those who are saving money have the opportunity to be able to 
spread that out over time. So that's part of what we do here through 
QLACs and also changing the minimum required distribution laws to take 
you up to 75. By the way, before the pandemic, 9.7 percent of Americans 
75 and older were working. It's, I'm sure, more than that now, but 
that's up from just 7.5 percent 10 years ago. So again, we have more 
and more Americans, again, working into their 70s. That's just the 
reality.

    Like all good legislation, we have taken ideas from Senators from 
both parties, and we know there's more to do and more to improve it. I 
think we can learn about that today in this hearing, because we have 
some great witnesses and great colleagues who are on the dais. So with 
that, let me recognize my colleague, and my friend and fellow Ohioan, 
Ranking Member Sherrod Brown, for his opening statement.

                                 ______
                                 
           Prepared Statement of Eric Stevenson, President, 
                      Retirement Plans, Nationwide
    Good morning. I would like to thank Chairman Portman, Ranking 
Member Brown, and all members of the Senate Finance Committee's 
Subcommittee on Social Security, Pensions, and Family Policy for 
holding this hearing on American retirement income, and for the 
invitation to testify.

    My name is Eric Stevenson. As president of Nationwide's retirement 
plans business, I am currently managing the team responsible for 
Nationwide's retirement plans operation that protects roughly $156 
billion in participant assets for over 2.5 million participants. I am 
passionate about fostering a culture that embraces collaboration to 
bring value to Nationwide's customers that meets and exceeds the unique 
retirement readiness needs of plan sponsors and participants. I have 
nearly 16 years of experience in the industry, starting at Nationwide 
in 2007 as vice president of marketing, then leading sales and 
distribution for Nationwide's retirement plans business and now serving 
as the business president since July 2019. I earned my bachelor's of 
business administration in finance from the University of Oklahoma and 
my master's of business administration degree from Northwestern 
University Kellogg Graduate School of Management. I am also dedicated 
to public service, serving in a 7-year term confirmed by the Oklahoma 
Senate for the OU board of regents.

    Nationwide, a Fortune 100 company based in Columbus, OH, is one of 
the largest and strongest diversified insurance and financial services 
organizations in the United States. Nationwide is rated A+ by both A.M. 
Best and Standard and Poor's. An industry leader in driving customer-
focused innovation, Nationwide provides a full range of insurance and 
financial services products including auto, business, homeowners, farm 
and life insurance; public and private sector retirement plans, 
annuities and mutual funds; excess and surplus, specialty and surety; 
pet, motorcycle, and boat insurance.

    In 1973, Nationwide Retirement Solutions, Inc. was founded to focus 
on the needs of governmental employees, and we have been a major 
innovator in this market ever since. As one of the first companies to 
focus on public-sector 457 plan workers, Nationwide has over 47 years 
of experience. Today, Nationwide is the largest retirement plan 
provider serving the public sector with over 7,700 government-sector 
retirement plans, ranging from smaller county and city plans to mega-
size State plans. In addition to the public sector, Nationwide also 
administers retirement plans in the private sector defined contribution 
and not-for-profit marketplace.

    Protecting roughly $156 billion in participant assets, Nationwide 
is the 9th largest provider of retirement plans in the U.S. by number 
of plans administered (about 26,000) and 12th by number of 
participants, with about 2.58 million. We are the top provider of 
governmental retirement plans (457 plans) by number of plans and focus 
on meeting the needs of smaller plans--managing 24,600 plans with less 
than $10 million in assets (21 percent of the assets, 34 percent of 
the plan participants). We also manage some very large plans, including 
124 plans with more than $100 million in assets (60 percent of the 
assets, 50 percent of the plan participants).

    Nationwide greatly appreciates the efforts of the Subcommittee on 
Social Security, Pensions, and Family Policy and the full Finance 
Committee to continually improve our Nation's retirement system in a 
bipartisan manner. We commend Chairman Grassley, Ranking Member Wyden, 
Chairman Portman, Ranking Member Brown, Senator Cardin, and all members 
of the committee for their leadership in this regard. Nationwide is 
glad to be here today in strong support of S. 1431, the Retirement 
Security and Savings Act, introduced by Chairman Portman and Senator 
Cardin, which we are confident would help usher in a new era of 
enhanced retirement security.

    The impact of COVID-19 on Americans' health and finances has 
highlighted several critical needs and challenges affecting workers. 
Specifically at Nationwide, we've seen the impact of COVID-19 related 
to the CARES Act provisions passed in March. Since that time, 
Coronavirus-Related Distributions (CRDs) are close to 20 percent of 
total withdrawals across our retirement plans, distributing $885M in 
total withdrawals. Even though the Retirement Security and Savings Act 
was introduced long before any of us encountered the term ``COVID-19,'' 
the bill's provisions will help us meet the challenge of both restoring 
pre-COVID-19 retirement security and enhancing it.
                     journey to financial wellness
    At Nationwide, we aim to support Americans throughout their entire 
financial wellness journey. We find it helpful to think about this 
journey in three key phases:

        Beginning Planning;
        Saving for Retirement; and
        Living in Retirement

    The Finance Committee's ongoing work to improve our retirement 
system has benefited all three phases of American workers' journeys to 
financial wellness. Building on the recent success of the SECURE Act, 
Nationwide strongly supports the additional improvements Portman-Cardin 
will make to Americans' financial wellness. In particular, Nationwide 
believes the six key proposals highlighted below are critical to 
supporting workers in their financial wellness journey to a secure 
retirement.
                      phase 1: beginning planning
    The Beginning Planning stage of the financial wellness journey 
requires that workers have both an opportunity to save for retirement 
and the financial means to fund that savings opportunity. According to 
the Bureau of Labor Statistics, 71 percent of all workers and 67 
percent of private industry workers are provided with an opportunity to 
save through an employer-sponsored retirement plan. Plan Sponsor 
Council of America estimates an average participation rate of 85 
percent. Still, too many workers remain uncovered by a retirement plan. 
Congress took significant steps to address this concern last year by 
passing the SECURE Act, which included provisions to expand worker 
access to retirement plans. One of those provisions created a new type 
of multiple-employer plan (``MEP'') called a ``pooled employer plan,'' 
which is intended to make plan sponsorship more attractive and 
attainable to small and mid-sized employers and will first be available 
to employers in 2021.

    But simply having an opportunity to save for retirement is not 
enough. Workers must also be able to afford to take advantage of that 
opportunity without jeopardizing other critical aspects of financial 
security. Here, Nationwide believes that the retirement system could be 
leveraged to help workers meet their short-term financial needs, like 
paying down student debt, while also increasing workers' ability to 
make greater and more consistent progress toward their retirement 
savings goals.
Student Loan Debt
    As the number of individuals with burdensome student loan debt 
grows, fewer workers can afford to make contributions to an employer-
sponsored retirement plan, particularly in the early years of their 
careers. In 2018, Nationwide conducted a study looking at the impact of 
beginning retirement saving earlier in one's career. On average, 
employees start saving for retirement at age 31.5. If those employees 
consistently save until they reach Social Security's normal retirement 
age, they'd have about 35 years of asset accumulation and potential 
investment earnings at retirement. However, if they started saving for 
retirement 8 years sooner, they could have significantly more available 
for retirement income. If you take a specific example where an employee 
is paid twice a month and contributes $50 per pay period to an account 
that earns 6 percent annualized return on investment and the employee 
starts at age 23, they'd have $88,572 more than if they started at age 
31. At $100 per pay period, the difference would be $177,143.60.

    At Nationwide, we understand the significant strain that student 
debt is placing on many workers. The student loan debt statistics are 
jarring. In the last 3 decades, the cost of a bachelor's degree has 
increased by 1,120 percent. In less than 30 years, the amount of 
student debt has tripled. Sixty-two percent owe more in debt than they 
have in personal savings (source: Commonbond). But this is not just a 
challenge faced by 20-somethings. Student loan debt is increasingly 
affecting workers well into their 30s, 40s, and beyond, as some 
individuals struggle for decades to repay six-figure loans and others 
return to school mid-career. According to the Employee Benefits 
Research Institute 2020 Retirement Confidence survey, 7 out of 10 
workers report having some kind of non-mortgage debt and say it has 
impacted their ability to save for retirement or emergencies. Roughly 
half say their ability to participate in workplace retirement savings 
plans has been impacted. Also, 1 in 5 workers has student loan debt for 
themselves, a child, or grandchild, and 9 in 10 of all workers think it 
would be a good idea if employers offered matching contributions to 
retirement plans in exchange for workers making student loan payments.

    Although the retirement industry can't solve the broader societal 
challenges created by student loan debt, we do believe that the 
existing retirement system can be utilized to alleviate some of the 
immediate pressure and long-term financial impact on workers. As such, 
we support the provision in Ranking Member Wyden's bill and in Portman-
Cardin that would permit employers to make matching contributions to a 
401(k) or similar plan on behalf of a participant based on payments the 
participant makes toward a student loan if certain requirements are 
met. This provision would help workers who otherwise could not afford 
to make elective contributions to the plan still take advantage of the 
employer match and thus begin (or continue) accumulating money for 
their retirement.

    In recent years, we have increasingly seen employers take a greater 
interest in providing for the overall financial health of their 
employees. At Nationwide, we believe that the student loan employer 
match provision will become a popular 
employer-provided benefit, as it would help employers both respond to 
workers' concerns over student debt burdens and help ensure a better 
retirement savings outcome for workers struggling with student debt 
payments.
                     phase 2: saving for retirement
    The Saving for Retirement phase of the financial wellness journey 
emphasizes taking advantage of tax-deferred savings opportunities to 
the extent possible for an individual and ensuring that any amounts 
saved are invested efficiently, such as through the avoidance of 
excessive fees. Every dollar saved must be maximized to give workers 
the best chance at reaching their retirement savings goals. Here, it is 
not only important that individuals save as much as possible, but also 
that plan sponsors and financial professionals provide appropriate 
products and solutions that put those savings to work for the benefit 
of the saver.
Increasing Catch-up Contributions
    Americans are living longer than ever before, which means workers 
need to accumulate even more savings in order to have a financially 
secure retirement. At the same time, many workers in the beginning and 
middle of their careers face competing financial needs--such as student 
loan and car payments, home purchases, and the cost of raising a 
family--that leave workers unable to contribute to a plan the maximum 
amount allowed each year under the Internal Revenue Code. To put into 
perspective, roughly 75 percent of full-time workers are living 
paycheck to paycheck (2017, CNBC.com). A 2016 Mercer survey of U.S. 
workers found that immediate financial concerns are a significant 
source of worry for all workers, regardless of age, and that retirement 
income only becomes the highest priority concern for individuals aged 
50 or older.

    To account for these combined challenges, Americans are working 
longer than ever before, often using those additional years of 
employment to make increased contributions to their retirement plans. 
One way to accommodate both the increase in longevity and those workers 
who are unable to save at consistently high levels throughout their 
careers would be to allow savers to make greater ``catch-up'' 
contributions to a plan than what is allowed today. The amount 
available and promotion of this savings vehicle could play a 
significant role in closing the gap for savers, especially segments 
nearing retirement.

    In this regard, Nationwide supports the provision in Portman-Cardin 
that would introduce an enhanced catch-up contribution limit for 
workers age 60 or older. Today, individuals age 50 or older are allowed 
to make an additional catch-up contribution of $6,500 (indexed) each 
year to a 401(k), 403(b), or governmental 457(b) plan. Similarly, 
individuals age 50 or older may make an additional catch-up 
contribution of $3,000 (indexed) to a SIMPLE IRA or SIMPLE 401(k) plan. 
The Retirement Security and Savings Act would increase those limits to 
$10,000 and $5,000, respectively, for individuals age 60 or older, and 
would also index those amounts. At Nationwide, we believe this 
additional catch-up limit will make a meaningful difference in helping 
older workers maximize their retirement preparedness in the very years 
when many of them are best able to do so.
Exchange-Traded Funds
    The SECURE Act increased access to a workplace retirement plan with 
provisions like pooled employer plans (PEPs) and allowing long-term 
part-time workers to participate. Further improvements from Portman-
Cardin such as expanding the Saver's Credit and reducing the service 
requirement for long-time part-time workers will further expand access 
to savings opportunities and provide a strong incentive to participate.

    Still, some workers will need to save for retirement outside the 
employer context. For those individuals, solutions like IRAs and 
annuities provide an opportunity to prepare for retirement on an 
individual basis. To that end, we support a provision from Portman-
Cardin to allow ETFs as an investment option in variable annuity 
products. This change responds to clear consumer preference for ETFs 
and is intended to lower the cost of variable annuity products and 
better integrate these products for fee-based registered investment 
advisers (RIAs).

    Exchange-traded funds (``ETFs'') are pooled investment vehicles 
that are similar to mutual funds, but ETF shares may be traded 
throughout the day on the stock market instead of having to be held 
until after the market closes. ETF products have been one of the 
fastest growing retail investment products for years, and this rapid 
rise is often credited to their simple structure, low cost, and 
intraday trading capability. Those features have made ETFs the 
preferred choice of many in the RIA community when selecting or making 
recommendations of investments for their customers. According to 
Cerulli's 2020 RIA Marketplace Report, ``over the past decade, 
registered investment advisors' (RIAs') average allocation to exchange-
traded funds (ETFs) increased 12.3 percentage points, whereas average 
mutual fund allocations decreased 17.8 percentage points. During the 
same timeframe, RIAs' use of ETFs rose 38 percent.''

    Despite the benefits and popularity of ETFs, under current law, 
ETFs may not be used as investment options in variable annuity 
contracts. This is largely due to the fact that the current IRS 
diversification rules were created before ETFs were a viable product 
category and thus don't anticipate their unique structure.

    To provide variable annuity contract owners and advisors with the 
investment products they prefer, Nationwide supports efforts to allow 
ETFs to be used as investment options under variable annuity contracts, 
and we thank the chairman and Senator Cardin for including a provision 
that would accomplish this in Portman-Cardin.
Collective Investment Trusts in 403(b) Plans
    Collective investment trusts (``CITs'') are an investment option 
that typically has lower costs than mutual funds. Although CITs may be 
used in 401(k) and certain other retirement plans, the Internal Revenue 
Code currently prevents 403(b)(7) custodial accounts, which are often 
used by nonprofit, healthcare and higher education employers, from 
investing in CITs.

    The nonprofit and higher education worlds employ over 12.5 million 
people saving for their retirement, and those savers should have the 
same access to proven and low-cost vehicles within their institutional 
plans that their private-sector taxable counterparts enjoy. Nationwide 
therefore supports the provision in Portman-Cardin that would permit 
403(b)(7) custodial accounts to invest in CITs (in addition to the 
stock of regulated investment companies, which is permitted under 
current law). We are pleased to partner with our friends at National 
Association of Government Defined Contribution Administrators (NAGDCA) 
in supporting this important provision and other provisions to improve 
403(b) and 457 retirement plans, including:

        Section 304 to permit non-spousal beneficiaries to roll 
inherited IRA assets into 457(b), 401(k), 401(a) and 403(b) plans;

        Section 305 to eliminate the ``first day of the month'' 
requirement in 457(b) plans;

        Section 501 to exempt designated Roth contributions in 457(b), 
401(k) and 403(b) plans from RMD rules, as Roth IRA assets are 
presently exempt;

        Section 502 to permit 457(b), 401(a), 401(k) and 403(b) plan 
participants to make Qualifying Charitable Distributions; and

        Section 504 to allow participants with Roth accounts in 
457(b), 401(k), 401(a), and 403(b) plans to roll Roth IRA assets into 
these plans.
                     phase 3: living in retirement
    The goal of the third and final phase of the financial wellness 
journey, Living in Retirement, is for savers to experience a 
financially secure retirement for the remainder of their lives. 
Although the planning, preparation, and saving that occurred during the 
first two phases are critical to achieving a financially secure 
retirement, it is equally important that savers be equipped to make 
wise decisions and have the appropriate products and tools available in 
their retirement years to make their savings last. Here again, 
Nationwide believes that making some modifications to the existing 
retirement system will enhance individuals' ability to live well in 
retirement.
Increasing the RMD Age to 75
    Today, Americans are living an average of 79 years, 50 percent of 
Americans age 65 can expect to reach age 85, and 1 in 4 Americans age 
65 can expect to live past age 90. For most individuals, the potential 
need to fund many years of retirement living makes it very important to 
maintain as much money in savings as possible for as long as possible. 
One way the current retirement system could better serve those who are 
living longer and/or working longer would be to increase the age at 
which required minimum distributions (``RMDs'') generally must begin.

    We very much appreciate that Congress took action in last year's 
SECURE Act by increasing the age that triggers the deadline by which 
RMDs must begin from age 70\1/2\ to 72. However, Nationwide encourages 
Congress to further increase that to age 75, and we support the 
provision in Portman-Cardin to do just that. This change would allow 
workers to continue to save more effectively and not require that 
distributions from retirement savings be taken ahead of the schedule 
that works best for each saver. Workers face enough challenges in 
saving enough money to last for a potentially lengthy retirement, and 
the retirement system's forced systematic depletion of savings should 
not unduly add to that challenge.
Improving Longevity Annuities
    Saving enough money to last for an average-length retirement is 
already challenging for many workers, but the prospect of having to 
save enough to protect against the possibility of living to age 90, 
100, or beyond can be daunting. A more efficient way for retirees to 
protect themselves from the risk of outliving their savings in defined 
contribution plans and IRAs is to share the cost of that risk with 
others by purchasing a longevity annuity with a portion of their 
assets. Longevity annuities are deferred annuities that generally begin 
payments at or near the end of an individual's life expectancy. Since 
payments begin so late, they can be a very inexpensive way of ensuring 
guaranteed income after an individual reaches a certain age.

    Prior to 2014, the RMD rules were an impediment to longevity 
annuities because the rules generally required that distributions begin 
before such an annuity would be scheduled to commence payments. In 
2014, the Treasury Department and the Internal Revenue Service 
(``IRS'') published final regulations on ``qualifying longevity annuity 
contracts'' (``QLACs''), which generally exempt QLACs from the RMD 
rules until payments under the contract commence, provided that certain 
requirements are met. Critically, the regulations limit the premiums an 
individual may pay for a QLAC in 2021 to the lesser of (1) $135,000 or 
(2) 25 percent of the individual's account balance under the plan or 
IRA. Although the $135,000 limit applies across all types of 
arrangements, the 25-percent limit applies separately to each defined 
contribution plan and collectively to all IRAs that an individual owns.

    The 25-percent limitation is especially problematic when an 
individual would like to purchase a QLAC using savings in a defined 
contribution plan where a QLAC is not available for purchase directly 
through the plan (as is most often the case). In that case, the 
individual would need to roll money out of the fund and into an IRA 
before purchasing a QLAC from an insurance company. But the 25-percent 
QLAC limit on the account balance of all IRAs requires the individual 
to roll four times the amount out of the defined contribution plan than 
he or she may have otherwise wished to roll over, simply to purchase a 
QLAC in the desired amount (e.g., in order to purchase a $100,000 QLAC, 
the individual would to roll $400,000 out of the plan).

    While Nationwide appreciates the efforts of the Treasury Department 
and IRS to facilitate the use of longevity contracts, the QLAC 
regulations in their present form could be improved to help longevity 
annuities better realize their potential in helping retirees manage the 
risk of outliving their savings. We therefore support the provision in 
the Retirement Security and Savings Act that would direct the Treasury 
Department and IRS to make key reforms to the QLAC regulations, 
including eliminating the 25-percent limit and raising the $135,000 cap 
(2021) to $200,000 (indexed). Those changes, together with other 
improvements that the provision would make, would go a long way in 
making QLACs more attractive to both retirees and insurers.
                               conclusion
    Once more, thank you, Chairman Portman, Ranking Member Brown, and 
all members of this subcommittee, for holding this important hearing 
and for extending an invitation to Nationwide to testify. Although the 
journey to financial wellness is one that lasts nearly a lifetime, many 
opportunities exist to improve our current retirement system and make 
that journey less arduous for savers. Today, we highlighted six of 
those opportunities, all of which are addressed in Portman-Cardin. We 
commend each of you for your ongoing, bipartisan work to improve every 
phase of Americans' financial wellness journey, and we look forward to 
continuing to work with you and supporting your efforts to make 
achieving a financially secure retirement an attainable goal for all 
Americans.

                                 ______
                                 

                             Communications

                              ----------                              


                    American Securities Association

                1455 Pennsylvania Avenue, NW, Suite 400

                          Washington, DC 20004

                         AmericanSecurites.org

                            @amersecurities

                              202-621-1784

Dear Chairman Portman, Ranking Member Brown, and Members of the 
Subcommittee:

The American Securities Association (ASA), the only trade association 
exclusively for regional financial services firms, is committed to 
helping Americans prepare for retirement and other significant life 
milestones, such as sending a child to college. ASA member companies 
engage with regulators and policy makers to encourage common-sense, 
private sector solutions to strengthen the current retirement system 
and expand savings opportunities for all Americans.

In 2019, lawmakers came together on a bipartisan basis to pass the Set 
ting Every Community Up for Retirement Enhancement (``SECURE'') Act. 
This major legislation featured dozens of positive reforms to empower 
more Americans to better prepare for retirement. The Senate Finance 
Committee played a critical role in crafting the SECURE Act, which 
ultimately received support from a broad range of industry and consumer 
stakeholders.

The ASA applauds the Committee's interest in expanding on the positive 
reforms enacted by the SECURE Act. However, as policymakers continue to 
consider additional retirement proposals in the coming months, we 
encourage the Committee to recognize that some provisions included in 
SECURE Act are only now beginning to take effect. For example, the 
broadly supported pooled employer plan (``PEP'') provisions will be 
effective on January 1, 2021. These provisions are intended to help 
more small employers offer retirement solutions for their employees. 
While some policymakers are debating the merits of placing more 
enrollment mandates on small businesses, the ASA encourages the 
Committee to take a more cautious approach until the new PEP framework 
can fully implemented and evaluated.

Rather than place costly and burdensome mandates on America's small 
businesses, the SECURE Act correctly recognizes that incentives and 
increased efficiency are better tools to address the savings gap. While 
the ASA agrees that additional measures to improve access to retirement 
savings should be considered, policymakers should also recognize that 
small businesses are already subject to a mandatory retirement plan in 
the form of Social Security. As the Committee knows, the Social 
Security program relies on the private sector to ensure payroll taxes 
are appropriately collected and transferred to the federal government. 
Any additional man dates, particularly with differing rules and 
requirements, would represent a significant challenge for small 
employers.

Improve Small Business Retirement Plan Options: The ASA supports 
updating rules that would encourage small businesses to offer 
retirement plans to their employees. As such, we strongly encourage 
Congress to consider enhancing and expanding low-cost SIMPLE IRAs. 
SIMPLE IRAs have been proven successful in encouraging micro-businesses 
to begin offering retirement savings arrangements to their employees.

Specifically, the ASA recommends that rules governing SIMPLE IRAs be 
updated to allow for a Roth option while also permitting SIMPLE IRA 
sponsors to make non-elective contributions on behalf of their 
employees. These reforms would facilitate the creation of new plans for 
very small employers while also easing the transition process for those 
businesses who later choose to adopt a 401(k) savings arrangement. 
These two proposals, which are included in the Retirement Security and 
Savings Act introduced by Senators Rob Portman and Ben Cardin, would 
likely encourage more small employees to consider offering SIMPLE IRAs 
when a traditional 401(k) might still be too costly or complex relative 
to the size of their business.

Encourage Utilization of Financial Planning: To encourage access to 
financial advice, the ASA supports a bipartisan proposal from Senators 
Portman and Cardin to allow employees to pay for financial planning 
with pre-tax dollars through 
employer-sponsored ``cafeteria'' plans.\1\ On average, individuals who 
use financial planning services save more and are financially better 
prepared, with one study suggesting that good financial planning can 
yield nearly 29 percent additional retirement income.\2\ Providing 
employees a tax advantaged benefit to pay for financial planning would 
expand the use of this critical tool. Additionally, Congress can 
further encourage work-site education by enhancing existing safe harbor 
protections.
---------------------------------------------------------------------------
    \1\ Retirement Security and Savings Act of 2019 (S. 1431, 116th 
Congress).
    \2\ Blanchett, David, and Paul Kaplan. 2012. ``Alpha, Beta, and Now 
. . . Gamma.'' Morningstar White Paper (December).

Build on the Success of 529 Plans: 529 plans are an invaluable tool for 
families and individuals looking to save for school. Nearly every state 
sponsors some type of 529 plan, with most states encouraging 
contributions by offering tax deductions and/or credits. However, in 
many states, such tax incentivizes are only available for contributions 
made to the same state's 529 plan. Additionally, some states only allow 
the account owner, and not third-party contributors, to claim the 
deduction. To encourage all Americans to start saving as soon as 
possible, the ASA recommends policymakers enact a modest, above-the-
line federal income tax deduction for contributions made to any state's 
---------------------------------------------------------------------------
qualified 529 plan.

This policy would promote contributions from grandparents and other 
family members, providing additional resources for 529 savers. 
Additionally, under the current system, some would-be savers who 
anticipate one or several moves out of state--for employment, health 
reasons or military service--may be reluctant to start making 
contributions to their current state's 529 plan. Knowing that a federal 
deduction is available would likely encourage these individuals to 
enroll in a 529 plan and consistently contribute.

The ASA also appreciates Congress's interest in helping more Americans 
struggling with student loan debt because of the negative impact debt 
has on long-term savings goals, including a secure retirement. However, 
the ASA believes that policymakers should also seek ways to encourage 
more Americans to start saving ahead of these expenses, rather than 
financing their education primarily through debt. Increased access to 
529 plans could play a vital role in helping more Americans avoid 
burdensome student loan costs.

Digital Communications: In recent years, Americans have overwhelmingly 
embraced digital communication over outmoded paper delivery systems. 
During the pandemic, the ability of our members to work remotely and 
support their clients virtually depended on the successful adoption of 
numerous technologies. The ASA believes that lawmakers should support 
additional legislative and regulatory updates that would shift the 
default method of delivering plan-related communications to clients. E-
delivery has proven to be an effective and popular tool for clients, 
and we encourage policymakers to continue moving forward in this area. 
Additionally, a 2018 study by the Investment Company Institute and the 
American Retirement Association estimates that total printing and 
mailing costs for paper delivery could exceed $385 million annually. 
Finally, digital communication also provides greater access for the 
visually impaired as well as retirement savers who are not proficient 
in English.

Increase the Required Minimum Distribution Age to 75: The ASA supported 
language in the SECURE Act to raise the required minimum distribution 
(RMD) age for plan disbursements from 70\1/2\ to 72. This welcomed 
change better reflects our current reality, in which many Americans are 
living and working longer than ever before. The ASA believes Congress 
can do even more to help seniors saving for retirement and is 
encouraged that both chambers have introduced legislation to would 
raise the RMD age to 75.\3\ This provision would allow seniors more 
time to amass savings, providing greater retirement security and making 
them less likely to depend on resource-strained safety net programs 
later in life.
---------------------------------------------------------------------------
    \3\ Securing a Strong Retirement Act of 2020 (H.R. 8696, 116th 
Congress); S. 1431.

---------------------------------------------------------------------------
Thank you for your consideration of our views.

Sincerely,

Kelli McMorrow
Head of Government Affairs
American Securities Association

                                 ______
                                 
                      Financial Services Institute

                1201 Pennsylvania Avenue, NW, Suite 700

                          Washington, DC 20004

                              888-373-1840

                     https://financialservices.org/

The Financial Services Institute (FSI) represents independent broker-
dealers (IBD) and the independent financial advisors affiliated with 
them. We are pleased that the Subcommittee is holding this hearing to 
explore the issues facing Main Street Americans saving for retirement, 
particularly given that the COVID-19 pandemic has only worsened the 
country's existing retirement savings crisis. Sadly, too many Americans 
do not have access to competent and ethical financial advice to help 
them navigate these difficult times and to ensure their ability to save 
for a dignified retirement. We wish to register our support for S. 1431 
the Retirement Security and Savings Act of 2019 and H.R. 8696 The 
Securing a Strong Retirement Act of 2020, both of which build on the 
important improvements made in the Setting Every Community Up for 
Retirement Enhancement (SECURE) Act of 2019.

FSI Members believe that all investors should have access to competent 
and affordable financial advice, products, and services. Research shows 
that investors who work with a financial advisor are better prepared 
for their retirement, better understand the costs that may arise in 
retirement and how to save for them and feel more confident in their 
ability to be successful in retirement.\1\ FSI supports S. 1431 and 
H.R. 8696 because they provide private sector retirement solutions to 
ensure that Americans have access to personalized investment advice.
---------------------------------------------------------------------------
    \1\ The Insured Retirement Institute, The State of Retirement 
Security in America Today--2019 Boomer Expectations for Retirement 
Study, available at: https://www.myirionline.org/docs/default-source/
default-document-library/
iri_babyboomers_whitepaper_2019_final.pdf?sfvrsn=0; Claude 
Montmarquette, Nathalie Viennot-Briot, Centre for Interuniversity 
Research and Analysis on Organizations (CIRANO), The Gamma Factor and 
the Value of Advice of a Financial Advisor, available at https://
www.cirano.qc.ca/files/publications/2016s-35.pdf.

In particular, the legislation would address the current retirement 
savings crisis by encouraging Americans to begin saving earlier and 
---------------------------------------------------------------------------
saving more for their retirement in the following ways:

      Encouraging employees to begin saving for retirement earlier 
through automatic enrollment;
      Creating a new financial incentive for small businesses to offer 
retirement plans by increasing the small-business startup credit;
      Simplifying and increasing the Saver's Tax Credit;
      Offering individuals 60 and older more flexibility to set aside 
savings as they approach retirement;
      Increasing the required minimum distribution (RMD) age to 75, 
allowing individuals to save for retirement longer; and
      Exempting individuals with less than $100K in their retirement 
accounts from RMDs requirements, allowing smaller account balances to 
continue to earn interest and individuals to save more for retirement.

Further, we encourage Congress to restore the pre-2017 tax deduction 
for investment advisory fees without the 2 percent Adjusted Gross 
Income (AGI) threshold to enable all taxpayers to access the deduction 
regardless of income. Restoring and expanding this deduction under 26 
U.S.C. Sec. 212 will encourage savers to seek advice from financial 
professionals, which is even more important in these turbulent economic 
times. Many investors, including those nearing retirement, are watching 
their hard-earned savings fluctuate with the turbulent stock market. 
Financial advisors can help investors avoid common errors in response--
such as buying high and selling low or losing sight of their long-term 
financial plan--to ensure that their retirement savings are secure.

We urge Congress to include retirement savings legislation such as S. 
1431 and H.R. 8696 in its end of year legislative package in order to 
provide critical tools to address the retirement savings crisis, which 
has only been exacerbated by the COVID-19 pandemic. We thank the 
Subcommittee for holding this hearing and for the work it is doing to 
address these issues. We are ready to serve as a resource in your 
efforts to help Main Street Americans save for their retirement. Should 
you have any questions or would like more information on FSI and our 
position on this important issue, please contact our Director of 
Legislative Affairs, Hanna Laver, at (202) 499-7224.

                       Background on FSI Members

The independent financial services community has been an important and 
active part of the lives of American investors for more than 40 years. 
In the US, there are more than 160,000 independent financial advisors, 
which account for approximately 52.7 percent of all producing 
registered representatives.\2\ These financial advisors are self-
employed independent contractors, rather than employees of the 
Independent Broker-Dealers (IBD).\3\
---------------------------------------------------------------------------
    \2\ Cerulli Associates, Advisor Headcount 2016, on file with 
author.
    \3\ The use of the term ``financial advisor'' or ``advisor'' in 
this letter is a reference to an individual who is a dually registered 
representative of a broker-dealer and an investment adviser 
representative of a registered investment adviser firm. The use of the 
term ``investment adviser'' or ``adviser'' in this letter is a 
reference to a firm or individual registered with the SEC or state 
securities division as an investment adviser.

FSI's IBD member firms provide business support to independent 
financial advisors in addition to supervising their business practices 
and arranging for the execution and clearing of customer transactions. 
Independent financial advisors are small business owners and job 
creators with strong ties to their communities. These financial 
advisors provide comprehensive and affordable financial services that 
help millions of individuals, families, small businesses, associations, 
organizations, and retirement plans. Their services include financial 
education, planning, implementation, and investment monitoring. Due to 
their unique business model, FSI member firms and their affiliated 
financial advisors are especially well positioned to provide Main 
Street Americans with the affordable financial advice, products, and 
---------------------------------------------------------------------------
services necessary to achieve their investment goals.

FSI members make substantial contributions to our nation's economy. 
According to Oxford Economics, FSI members nationwide generate $48.3 
billion of economic activity. This activity, in turn, supports 482,100 
jobs including direct employees, those employed in the FSI supply 
chain, and those supported in the broader economy. In addition, FSI 
members contribute nearly $6.8 billion annually to federal, state, and 
local government taxes. FSI members account for approximately 8.4 
percent of the total financial services industry contribution to U.S. 
economic activity.\4\
---------------------------------------------------------------------------
    \4\ Oxford Economics for the Financial Services Institute, The 
Economic Impact of FSI's Members (2016).

                                 ______
                                 
                     T. Rowe Price Associates, Inc.
T. Rowe Price Associates, Inc. and its affiliates (collectively ``T. 
Rowe Price'') thank Chairman Portman, Ranking Member Brown, and the 
other Members of the Senate Finance Subcommittee on Social Security, 
Pensions, and Family Policy for holding this hearing to examine the 
challenges that American workers face in achieving their best 
retirement outcomes. We appreciate that this hearing also examined the 
challenges retirement plan sponsors, recordkeepers, and other service 
providers face in helping American workers meet their retirement goals 
while also balancing their competing priorities, such as paying off 
student loan debt.

We particularly appreciate that legislation introduced by Chairman 
Portman and Senator Cardin in 2019 (S. 1431) was a central focus of the 
hearing.\1\ That legislation has served as the foundation for countless 
bipartisan discussions on retirement savings during this Congress, and 
some of its provisions are reflected in the SECURE Act, which was 
enacted last year, and H.R. 8696, which was more recently introduced in 
the House of Representatives by Ways and Means Committee Chairman Neal 
and Ranking Member Brady.\2\
---------------------------------------------------------------------------
    \1\ The Retirement Security and Savings Act of 2019 (S. 1431) was 
introduced on March 29, 2019.
    \2\ The Setting Every Community Up for Retirement Enhancement Act 
(the ``SECURE Act'') was signed into law on December 20, 2019, as part 
of a comprehensive government spending bill, along with a handful of 
other retirement measures, The Securing a Strong Retirement Act of 2020 
(H.R. 8696) was introduced on October 27, 2020.

Both S. 1431 and H.R. 8696 include many common-sense changes to current 
law that would build on the foundation of the SECURE Act to improve 
individuals' abilities to save for retirement, including those that 
promote increased utilization of automatic contribution and automatic 
escalation features, simplify disclosures, and allow individuals saving 
through 403(b) plans to enjoy the same lower cost investment vehicles 
that participants in larger 401(k) plans enjoy through the use of 
collective trusts. Although these are just a few of the many provisions 
in S. 1431 and H.R. 8696 that would build on the success of the SECURE 
Act, in our view each is critically important in addressing the needs 
---------------------------------------------------------------------------
of American retirement savers.

      Encouraging the use of automatic contribution and automatic 
escalation features. As Senator Brown pointed out in his opening 
statement, ``auto-enrollment is a best practice in helping people 
save,'' and doing more on auto-enrollment and auto-escalation 
``provides a real opportunity to do something concrete for middle-class 
families and low-paid workers who need help saving.''

       Both S. 1431 and H.R. 8696 include provisions that encourage 
greater utilization of automatic features in plans, but in different 
ways. For example, H.R. 8696 includes provisions that generally require 
automatic enrollment for all new plans at a minimum of 3% and auto-
escalation at one percentage point a year up to 10% (with a grandfather 
provision for existing plans). S. 1431 introduces a new automatic 
contribution safe harbor plan design with higher starting and ending 
rates (6% and 15%), which are more consistent with the levels of 
savings that we believe are necessary to help workers achieve their 
best retirement outcomes. Both bills also include tax credits for small 
employers to encourage adoption of safe harbor automatic contribution 
programs. T. Rowe Price research has shown that these automatic 
features help savers achieve successful retirement outcomes, 
particularly at the higher rates reflected in S. 1431.

      Simplifying disclosures. S. 1431 contemplates a number of 
improvements in retirement plan disclosures, such as consolidation of 
disclosures, simplification of the Internal Revenue Code section 402(f) 
special tax notice, and allowing the presentation of benchmarks of 
target date funds that more closely reflects their design and 
objectives.

      Allowing 403(b) plans to use collective investment trusts 
(CITs). Both bills remove outdated regulatory constraints and allow 
403(b) plans that enjoy fiduciary oversight to use CITs as funding 
vehicles for investment options. CITs are often used by other types of 
retirement plans, including 401(k) plans and 457 plans, because of 
their institutional pricing and increased flexibility. In his testimony 
at the hearing, Joshua Luskin highlighted these benefits, noting that 
CITs could provide 403(b) plan sponsors with increased flexibility, 
lower costs, faster speed to market, and increased customization of 
asset allocations and glidepaths, all of which would result in 
increased retirement security and a better overall experience for 
403(b) plan participants and sponsors. We agree, and we commend the 
sponsors of both S. 1431 and H.R. 8696 for including this 
common-sense provision in their bills.

We appreciate the opportunity to submit this statement for the record 
in connection with the December 9th hearing. We share the optimism 
expressed by Chairman Portman, Ranking Member Brown, Senator Cardin, 
and so many others that there is a real opportunity for bipartisan 
consesus to emerge in the coming Congress on a legislative package that 
could significantly improve the landscape for retirement savings in 
America. We encourage all membrs of Congress, in both chambers, to work 
toward that goal.

                                   [all]