[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                EXAMINING PATHWAYS TO BUILD A STRONGER,
                    MORE INCLUSIVE RETIREMENT SYSTEM

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HEALTH, EMPLOYMENT,
                          LABOR, AND PENSIONS

                                 OF THE

                    COMMITTEE ON EDUCATION AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, JUNE 23, 2021

                               __________

                           Serial No. 117-21

                               __________

      Printed for the use of the Committee on Education and Labor

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                  
                                     

          Available via: edlabor.house.gov or www.govinfo.gov

                               __________
                               
                              
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-858 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   

                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

RAUL M. GRIJALVA, Arizona            VIRGINIA FOXX, North Carolina,
JOE COURTNEY, Connecticut              Ranking Member
GREGORIO KILILI CAMACHO SABLAN,      JOE WILSON, South Carolina
  Northern Mariana Islands           GLENN THOMPSON, Pennsylvania
FREDERICA S. WILSON, Florida         TIM WALBERG, Michigan
SUZANNE BONAMICI, Oregon             GLENN GROTHMAN, Wisconsin
MARK TAKANO, California              ELISE M. STEFANIK, New York
ALMA S. ADAMS, North Carolina        RICK W. ALLEN, Georgia
MARK DeSAULNIER, California          JIM BANKS, Indiana
DONALD NORCROSS, New Jersey          JAMES COMER, Kentucky
PRAMILA JAYAPAL, Washington          RUSS FULCHER, Idaho
JOSEPH D. MORELLE, New York          FRED KELLER, Pennsylvania
SUSAN WILD, Pennsylvania             GREGORY F. MURPHY, North Carolina
LUCY McBATH, Georgia                 MARIANNETTE MILLER-MEEKS, Iowa
JAHANA HAYES, Connecticut            BURGESS OWENS, Utah
ANDY LEVIN, Michigan                 BOB GOOD, Virginia
ILHAN OMAR, Minnesota                LISA C. McCLAIN, Michigan
HALEY M. STEVENS, Michigan           DIANA HARSHBARGER, Tennessee
TERESA LEGER FERNANDEZ, New Mexico   MARY E. MILLER, Illinois
MONDAIRE JONES, New York             VICTORIA SPARTZ, Indiana
KATHY E. MANNING, North Carolina     SCOTT FITZGERALD, Wisconsin
FRANK J. MRVAN, Indiana              MADISON CAWTHORN, North Carolina
JAMAAL BOWMAN, New York, Vice-Chair  MICHELLE STEEL, California
MARK POCAN, Wisconsin                JULIA LETLOW, Louisiana
JOAQUIN CASTRO, Texas                Vacancy
MIKIE SHERRILL, New Jersey
JOHN A. YARMUTH, Kentucky
ADRIANO ESPAILLAT, New York
KWEISI MFUME, Maryland

                   Veronique Pluviose, Staff Director
                  Cyrus Artz, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                 MARK De SAULNIER, California, Chairman

JOE COURTNEY, Connecticut            RICK W. ALLEN, Georgia
DONALD NORCROSS, New Jersey            Ranking Member
JOSEPH D. MORELLE, New York          JOE WILSON, South Carolina
SUSAN WILD, Pennsylvania             TIM WALBERG, Michigan
LUCY McBATH, Georgia                 JIM BANKS, Indiana
ANDY LEVIN, Michigan                 DIANA HARSHBARGER, Tennessee
HALEY M. STEVENS, Michigan           MARY E. MILLER, Illinois
FRANK J. MRVAN, Indiana              SCOTT FITZGERALD, Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  VIRGINIA FOXX, North Carolina
  (ex officio)                         (ex officio)
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on June 23, 2021....................................     1

Statement of Members:
    DeSaulnier, Hon. Mark, Chairman, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     1
        Prepared statement of....................................     4
    Allen, Hon. Rick, Ranking Member, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     6
        Prepared statement of....................................     7

Statement of Witnesses:
    Biggs, Andrew, Resident Scholar, American Enterprise 
      Institute..................................................    35
        Prepared statement of....................................    38
    Certner, David, Legislative Counsel and Director of 
      Legislative Policy for Government Affairs, AARP............    57
        Prepared statement of....................................    60
    Ghilarducci, Teresa, Irene and Bernard L. Schwartz Professor 
      of Economics and Policy Analysis, The New School for Social 
      Research...................................................     9
        Prepared statement of....................................    12
    Rhee, Nari, Director, Retirement Security Program, University 
      of 
      California at Berkeley.....................................    19
        Prepared statement of....................................    22

Additional Submissions:
    Chairman DeSaulnier:
        Insured Retirment Institute statement for the record.....    98
        American Benefits Council statement for the record.......   110
    Mr. Allen:
        American Benefits Council statement for the record.......   110
        ERISA Industry Committee statement for the record........   123
        Spark Institute letter dated June 23, 2021...............   125
    Scott, Hon. Robert C. ``Bobby'', a Representative in Congress 
      from the State of Virginia:
        American Council of Life Insurers statement for the 
          record.................................................   129
    Stevens, Hon. Haley M., a Representative in Congress from the 
      State of Michigan:
        Central States Pension Fund Economic Impact on 
          Subcommittee Member Districts..........................   138

 
                      EXAMINING PATHWAYS TO BUILD
                       A STRONGER, MORE INCLUSIVE
                           RETIREMENT SYSTEM

                              ----------                              


                        Wednesday, June 23, 2021

                  House of Representatives,
                Subcommittee on Health, Employment,
                               Labor, and Pensions,
                          Committee on Education and Labor,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:05 a.m., 
via Zoom, Hon. Mark DeSaulnier (Chairman of the Subcommittee) 
presiding.
    Present: Representatives DeSaulnier, Courtney, Norcross, 
Morelle, Wild, Stevens, Levin, Mrvan, Allen, Walberg, Banks, 
Harshbarger, Miller, Fitzgerald, and Foxx (ex officio).
    Staff present: Ilana Brunner, General Counsel; Rasheedah 
Hasan, Chief Clerk; Sheila Havenner, Director of Information 
Technology; Eli Hovland, Policy Associate; Andre Lindsay, 
Policy Associate; Kevin McDermott, Senior Labor Policy Advisor; 
Richard Miller, Director of Labor Policy; Max Moore, Staff 
Assistant; Mariah Mowbray, Clerk/Special Assistant to the Staff 
Director; Kayla Pennebecker, Staff Assistant; Veronique 
Pluviose, Staff Director; Banyon Vassar, Deputy Director of 
Information Technology; Cyrus Artz, Minority Staff Director; 
Rob Green, Minority Director of Workforce Policy; Taylor 
Hittle, Minority Professional Staff Member; Georgie Littlefair, 
Minority Legislative Assistant; John Martin, Minority Workforce 
Policy Counsel; Hannah Matesic, Minority Director of 
Operations; Alex Ricci, Minority Speechwriter; and Ben Ridder, 
Minority Professional Staff Member.
    Chairman DeSaulnier. The Subcommittee on Health, 
Employment, Labor, and Pensions will come to order.
    Welcome again, everyone. I note that a quorum is present.
    The Subcommittee is meeting today to hear testimony on 
examining pathways to build a stronger and more inclusive 
retirement system for Americans.
    This is an entirely remote hearing, and as such, the 
Committee's hearing room is officially closed.
    All microphones will be kept muted as a general rule to 
avoid unnecessary background noise. Members and witnesses will 
be responsible for unmuting themselves when they are recognized 
to speak or when they wish to seek recognition.
    If a Member or witness experiences technical difficulties 
during the hearing, please stay connected on the platform, make 
sure you are muted, and use your phone to immediately call the 
Committee's IT director, whose number was provided in advance.
    Should the Chair experience technical difficulty or need to 
step away, my distinguished colleague, Mr. Levin from Michigan, 
or another majority Member is hereby authorized to assume the 
gavel in my absence.
    In order to ensure that the Committee's five-minute rule is 
adhered to, staff will be keeping track of time using the 
Committee's field timer, which appears in its own thumbnail 
picture and will show a blinking light when time is up.
    Pursuant to Committee Rule 8(c), opening statements are 
limited to the Chair and Ranking Member.
    I recognize myself now for the purpose of making an opening 
statement.
    Today we are meeting to explore the strengths, challenges, 
and inequities of America's retirement system, as well as to 
review H.R. 2954, the Securing a Strong Retirement Act of 2021, 
which is known as the SECURE Act 2.0. This bill includes 
important provisions in the Education and Labor Committee's 
jurisdiction.
    Earlier this year, congressional Democrats and the 
administration addressed the urgent multi-employer pension 
crisis and fully protected the pensions of more than 1 million 
Americans. Our solution was broadly supported by key 
stakeholders, including hundreds of employers and the United 
States Chamber of Commerce.
    Had we not acted, the unacceptable status quo would have 
continued, plans would have failed, and the Pension Benefit 
Guaranty Corporation would have become insolvent.
    If that had happened, workers and retirees would lose 
nearly everything they had worked and contributed so hard to 
save. Many participating employers would be forced to close or 
cut jobs.
    American taxpayers would have suffered as well. One expert 
estimated that if Congress failed to address the multi-employer 
pension crisis, the total cost to U.S. taxpayers in terms of 
lost tax revenue and increased social safety net spending due 
to pensioners' difficulty making ends meet would be between 
$170 billion and $240 billion over a 10-year budget window. 
This far exceeds the estimated $86 billion cost of the solution 
included in the American Rescue Plan Act.
    As we proceed, we should remain mindful that taxpayers 
would have been on the hook one way or another with the multi-
employer pension crisis.
    By acting now, congressional Democrats and the Biden 
administration averted a catastrophe, spared over a million 
Americans harm, saved businesses, and protected jobs, which in 
my view was the right thing to do and far better and less 
expensive for taxpayers than doing nothing.
    Certainly we can all agree that a look back on lessons 
learned is valuable. But today's hearing is not about past 
action. It is about the present State of private sector 
retirement and what we need to do in the future to make it 
stronger and more inclusive.
    I am certain we all believe that Americans, after a hard-
working life, deserve to retire with some level of security. 
That is what this hearing is about.
    For decades, the retirement system has been premised on 
Americans relying on three income streams--the so-called three-
legged stool--to support themselves as they age: Social 
Security, employer-sponsored pensions, and personal savings.
    Social Security remains the foundation of retirement 
security for most Americans. When President Franklin Roosevelt 
signed the Social Security Act into law, he talked about giving 
it, quote, ``some measure of protection to the average citizen 
and to their family . . . against poverty-ridden old age,'' end 
quote.
    He was right. To this day, Social Security provides the 
majority of income to most elderly Americans and singlehandedly 
keeps 15 million Americans out of poverty.
    There has been a changing social model over the past 
decades. In 1975, 47 percent of women with children were in the 
labor force. Most of those were part-time jobs. Now it is 72 
percent, most of them full-time jobs.
    Many Americans age 65 and older left the labor force in 
2020 due to the pandemic, but millions remain. And according to 
the Bureau of Labor Statistics, people held, on average, 12 
jobs from age 18 to 52, with nearly half of these jobs held 
before age 25--12 jobs from age 18 to 52 and half of those 
before they are 25.
    Meanwhile, the employer-provided retirement and wage-
earning landscapes also significantly changed. These changes 
have been to the detriment of the workers' ability and our 
society to achieve a secure and dignified retirement for 
Americans.
    Employers have shifted away from offering traditional 
defined benefit pension plans, which provided workers 
guaranteed lifetime income after they retired. Nowadays, when a 
private sector employer offers a retirement plan, it is likely 
to be a defined contribution plan, such as a 401(k), but that 
is if employers offer one at all.
    Too many Americans lack access to a retirement savings plan 
through their employer. An estimated 7.5 million Californians 
and roughly 55 million people nationwide, do not have access to 
retirement benefits through their employer.
    There are also significant disparities along racial and 
ethnic lines when it comes to retirement savings. According to 
the Urban Institute, in 2016 White families had about $130,000 
more--or six times more--in average liquid retirement savings 
than African-American and Hispanic families. That disparity has 
increased fivefold over the past 25 years.
    Additionally, few Americans are earning enough to save for 
a stable, secure retirement. Workers are doing more today than 
ever before. Over the last 40 years, worker productivity has 
risen 72.2 percent. At the same time, worker wages have 
essentially stagnated, increasing only 17 percent. Worker 
productivity in the last 40 years has increased over 70 
percent. Wages, adjusted for inflation, increasing less than 20 
percent.
    It is incredibly hard for workers to do much on their own 
for retirement. According to the Federal Reserve, many would 
struggle to come up with the money to finance an unexpected 
$400 expense, such as a car repair or a medical bill, in their 
daily life.
    That is why I believe retirement security is fundamentally 
aligned with workers' wages during their lifetime. The more 
people earn, the easier it is for them to plan and save for 
retirement. At a minimum, we must support policies that 
increase workers' wages and strengthen their ability to 
organize and collectively bargain.
    The data is clear that unionized workers have greater 
access to retirement plans and higher participation rates than 
their non-unionized counterparts.
    But we shouldn't stop there. We must strengthen and protect 
Social Security. We must address inequities and discriminatory 
barriers in the labor market.
    I also am interested in learning more from the witnesses 
today about the SECURE Act 2.0 and how it helps Americans plan 
and save for retirement.
    Before I conclude, I just want to recall a recent issue of 
The New York Times Magazine discussing how human life span 
doubled over the past century. And now, with medicines 
combating diseases and prolonging life, the number of people 
who might live to be 100 years old could increase--should 
increase.
    According to the United Nations estimate cited by The New 
York Times, there were 95,000 centenarians in the world in 
1990, but there could be 25 million by 2100.
    A recent Kaiser Foundation report showed that the life 
expectancy for people over 65 is increasing exponentially. 
According to this study, the U.S. ranks 13th in the world in 
life expectancy increases for people over 65.
    I am proud to say, when you separate that by region, the 
western United States--and the State of California, where I 
live--is No. 1 in the world in life expectancy for people over 
65.
    We must make sure our retirement system is equipped to 
support people living longer and that it provides the measure 
of protection Franklin Roosevelt mentioned in 1935.
    I look forward to hearing from my colleagues and from our 
expert witnesses about these issues.
    [The statement of Chairman DeSaulnier follows:]

             Statement of Hon. Mark DeSaulnier, Chairman, 
        Subcommittee on Health, Employment, Labor, and Pensions

    Today we are meeting to explore the strengths, challenges, and 
inequities of America's retirement system as well as review H.R. 2954, 
the Securing a Strong Retirement Act of 2021, which is known as the 
SECURE Act 2.0. This bill includes important provisions in the 
Education and Labor Committee's jurisdiction.
    Earlier this year, congressional Democrats and the Biden 
administration addressed the urgent multiemployer pension crisis and 
fully protected the pensions of more than one million Americans. Our 
solution was broadly supported by key stakeholders, including hundreds 
of employers and the U.S. Chamber of Commerce. Had we not acted, the 
unacceptable status-quo would have continued; plans would have failed; 
and the Pension Benefit Guaranty Corporation would have become 
insolvent. If that happened, workers and retirees would lose nearly 
everything they worked and contributed so hard to save. Many 
participating employers would be forced to close or cut jobs.
    American taxpayers would have suffered, too. One expert estimated 
that, if Congress failed to address the multiemployer pension crisis, 
the total cost to the U.S. taxpayers--in terms of lost tax revenue and 
increased social safety net spending due to pensioners' difficulty 
making ends meet--would be between $170 billion and $240 billion over 
the 10-year budget window. This far exceeds the estimated $86 billion 
cost of the solution included in the American Rescue Plan Act.
    As we proceed, we should remain mindful that taxpayers would have 
been on the hook one way or another with the multiemployer pension 
crisis. By acting now, congressional Democrats and the Biden 
administration averted a catastrophe, spared over a million Americans 
harm, saved businesses, and protected jobs. Which in my view is the 
right thing to do--and far better, and less expensive for the taxpayers 
than doing nothing. Certainly we can all agree to look back on lessons 
learned is valuable.
    But today's hearing is not about past action; it's about the 
present State of the private sector retirement and what we need to do 
in the future to make it stronger and more inclusive. Im certain we all 
beleive that Americans after a hard working life deserve to retire in 
some level of security. That's what this hearing is all about.
    For decades, the retirement system has been premised on Americans 
relying on three income streams--the so-called three-legged stool--to 
support themselves as they age: Social Security, employer-sponsored 
pensions, and personal savings.
    Social Security remains the foundation of retirement security for 
most Americans. When President Franklin Roosevelt signed the Social 
Security Act into law, he talked about it giving--quote--``some measure 
of protection to the average citizen and to his family . . . against 
poverty-ridden old age.'' He was right. To this day, Social Security 
provides the majority of income to most elderly Americans and single-
handily keeps up to 15 million seniors out of poverty.
    There has been a changing social model over the past decades. In 
1975, 47 percent of women with children were in the labor force--most 
of those were part-time jobs. Now, it is 72 percent and most of them 
full-time jobs. Many Americans age 65 and older left the labor force in 
2020 due to the pandemic, but millions remain. And, according to the 
Bureau of Labor Statistics, people held an average of 12 jobs from ages 
18 to 52, with nearly half of these jobs held before age 25. 12 jobs 
from ages 18 to 52, with nearly half of these jobs held before age 25. 
Meanwhile, the employer-provided retirement and wage-earning landscapes 
also significantly changed. These changes have been to the detriment of 
workers' ability to achieve a secure and dignified retirement.
    Employers have shifted away from offering traditional defined 
benefit pension plans, which provided workers guaranteed lifetime 
income after they retired. Nowadays when a private sector employer 
offers a retirement plan, it is likely to be a defined contribution 
plan, such as a 401(k). But that's if employers offer one at all. Too 
many Americans lack access to a retirement savings plan through their 
employer. An estimated 7.5 million Californians and roughly 55 million 
people nationwide do not have access to retirement benefits through 
their employer.
    There are also significant disparities along racial and ethnic 
lines when it comes to retirement savings. According to the Urban 
Institute, in 2016, white families had about $130,000 more--or six 
times more--in average liquid retirement savings than African American 
and Hispanic families. That disparity has increased fivefold over the 
past 25 years.
    Additionally, few Americans are earning enough to save for a 
stable, secure retirement. Workers are doing more today than ever 
before. Over the last 40 years, worker productivity has risen 72.2 
percent. At the same time, worker wages has essentially stagnated--
increasing only 17.2 percent. Worker productivity in the last 40 years 
has increased over 70 percent. Wages, adjusted for inflation, 
increasing less than 20 percent. It is incredibly hard for workers to 
do much on their own for retirement when, according to the Federal 
Reserve, many would struggle to come up with the money to finance an 
unexpected $400 expense, such as a car repair or a medical bill in 
their daily life.
    That is why I believe retirement security is fundamentally aligned 
with workers' wages. The more people earn, the easier it is for them to 
plan and save for retirement. At a minimum, we must support policies 
that increase workers' wages and strengthen their ability to organize 
and collectively bargain. The data is clear that unionized workers have 
greater access to retirement plans and higher participation rates than 
their non-unionized counterparts.
    But we shouldn't stop there. We must strengthen and protect Social 
Security. We must address inequities and discriminatory barriers in the 
labor market. I also am interested in learning more from the witnesses 
today about the SECURE Act 2.0 and how it helps Americans plan and save 
for retirement.
    Before I conclude, I recall a recent issue of the New York Times 
Magazine discussing how the human life span doubled over the past 
century. And now--with medicines combating diseases and prolonging 
life--the number of people who might live to be 100 years old could 
increase--should increase. According to a United Nations estimate cited 
by the Magazine, there were 95,000 centenarians in the world in 1990; 
but there could be 25 million by 2100.
    A recent Kaiser Foundation report showed that the life expectancy 
for people over 65 is increasing exponentially. According to this 
study, the U.S. ranks 13th in the world in life expectacy increases for 
people over 65. I'm proud to say that when you separate that by region 
the western United States, and State of California where I live, is No. 
1 in the world in life expectancy for people over 65.
    We must make sure our retirement system is equipped to support 
people living longer and that it provides that ``measure of 
protection'' Franklin Roosevelt mentioned in 1935.
    I look forward to hearing from our expert witnesses about these 
issues, and I now recognize my friend and the distinguished Ranking 
Member, Mr. Allen, for his opening statement.
                                 ______
                                 
    Chairman DeSaulnier. And I now am pleased to recognize my 
friend and the distinguished Ranking Member from Georgia, Mr. 
Allen, for his opening statement.
    Mr. Allen. Thank you, Chairman.
    We all desire financial security in our latter years. 
Individuals work for decades and diligently save money to have 
peace of mind when they move from success, their career, to 
significance. And for decades this Committee and Congress have 
come together in a bipartisan fashion to address the financial 
needs of our Nation's workers and retirees.
    The Pension Protection Act of 2006 strengthened protections 
for workers owed pension benefits, and the Multi-Employer 
Pension Reform Act of 2014 established a responsible and 
balanced process to save multi-employer pension plans projected 
to run out of money.
    The bipartisan approach continued last Congress. 
Republicans and Democrats worked together to pass the SECURE 
Act of 2019 which empowered small businesses to offer 
retirement plans through open, multiple, and pooled employer 
plans. The bipartisan CARES Act allowed workers to tap into 
their retirement savings without penalty to offset pandemic-
induced hardships.
    However, earlier this year, Democrats went in a different 
direction and used pandemic relief as an excuse to bail out 
failing multi-employer pensions without any structural reforms 
to hold unions and businesses accountable for the mismanagement 
of their pension plans. Taxpayers are now on the hook for this 
$86 billion bailout.
    Asking hard-working taxpayers to foot the bill for a 
contract between private parties is unsustainable and an abuse 
of the public's trust. Democrats are doing workers and retirees 
a great disservice by defending outdated defined benefit multi-
employer pension plans.
    Our nation's economy and workplaces have evolved. These 
pension plans have not evolved along with them.
    The simple fact of the matter is that most of these plans 
can no longer fulfill their promises. Ninety-six percent of 
multi-employer plan participants are enrolled in pensions that 
are less than 60 percent funded.
    Instead of modernizing outdated policies, Democrats 
continue to double down on failed pension arrangements. They 
depend on taxpayers not to notice that they are now on the hook 
for decades of mistakes made by entities with a track record of 
mismanagement.
    We must empower individuals to make the best financial 
choices for their own unique situation. Republicans trust the 
American worker. We believe every worker and retiree knows how 
best to save and spend their own money. Defined contribution 
plans present employees a flexible pathway to realize their 
retirement goals.
    There are numerous reasons why defined contribution plans, 
like 401(k)s, are more advantageous for employees. Defined 
contribution plans are immediately the property of employees, 
can be tailored to the precise retirement needs of the worker, 
and will never require taxpayer bailout.
    Furthermore, defined contribution plans are portable. 
Individual accounts travel with the worker as the person finds 
another job. These flexibilities are crucial in the modern 
economy.
    I see room for bipartisanship and commonsense policy 
updates, and this Committee must lead the way in working 
together to expand on the SECURE Act and ensure that Americans 
are secure in their retirement.
    One way we can help Americans secure a comfortable 
retirement is by making it easier for them to save part of 
their paycheck earlier in their working life.
    As this Committee considers updates to ERISA, we must focus 
on expanding access to defined contribution plans, increasing 
retirement options for employees of small businesses, making 
plans more transparent, and eliminating the need for future 
taxpayer-funded bailouts of special interests.
    This Committee has a long history of working together in a 
bipartisan way to address the retirement security needs of 
American workers and retirees. We need to return to that model 
by adopting evidence-based, balanced, and fiscally responsible 
solutions moving forward. This approach, accompanied by 
policies to ensure a growing and vibrant economy, will do far 
more to help American workers and retirees in the long run.
    And with that, Mr. Chairman, I yield back.
    [The statement of Ranking Member Allen follows:]

           Statement of Hon. Rick W. Allen, Ranking Member, 
        Subcommittee on Health, Employment, Labor, and Pensions

    Thank you, Chairman DeSaulnier.
    We all want a long and happy retirement. Individuals work for 
decades and diligently save money to have peace of mind for when they 
retire.
    And for decades, this Committee and Congress has come together in a 
bipartisan fashion to address the financial needs of our Nation's 
workers and retirees. The Pension Protection Act of 2006 strengthened 
protections for workers owed pension benefits, and the Multiemployer 
Pension Reform Act of 2014 established a responsible and balanced 
process to save multiemployer pension plans projected to run out of 
money.
    The bipartisan approach continued last Congress. Republicans and 
Democrats worked together to pass the SECURE Act in 2019, which 
empowered small businesses to offer retirement plans through open 
multiple and pooled employer plans. The bipartisan CARES Act allowed 
workers to tap into their retirement savings without penalty to offset 
pandemic-induced hardships.
    However, earlier this year, Democrats went in a different direction 
and used pandemic relief as an excuse to bail out failing multiemployer 
pensions without any structural reforms to hold unions and businesses 
accountable for the mismanagement of their pension plans. Taxpayers are 
now on the hook for this $86 billion bailout. Asking hardworking 
taxpayers to foot the bill for a contract between private parties is 
unsustainable and an abuse of the public's trust.
    Democrats are doing workers and retirees a great disservice by 
defending outdated defined benefit, multiemployer pension plans. Our 
nation's economy and workplaces have evolved, but these pension plans 
have not evolved along with them. The simple fact of the matter is that 
most of these plans can no longer fulfill their promises. Ninety-six 
percent of multiemployer plan participants are enrolled in pensions 
that are less than 60 percent funded.
    Instead of modernizing outdated policies, Democrats continue to 
double down on failed pension arrangements. They depend on taxpayers 
not to notice that they are now on the hook for decades of mistakes 
made by entities with a track record of mismanagement. We must empower 
individuals to make the best financial choices for their own unique 
situation. Republicans trust the American worker; we believe every 
worker and retiree knows how best to save and spend their own money.
    Defined contribution plans present employees a flexible pathway to 
realize their retirement goals. There are numerous reasons why defined 
contribution plans like a 401(k) are more advantageous for employees.
    Defined contribution plans are immediately the property of 
employees, can be tailored to the precise retirement needs of the 
worker, and will never require a taxpayer bailout. Furthermore, defined 
contribution plans are portable. Individual accounts travel with the 
worker as the person finds new jobs. These flexibilities are crucial in 
the modern economy.
    I see room for bipartisanship and commonsense policy updates, and 
this committee must lead the way in working together to expand on the 
SECURE Act and ensure that Americans are secure in their retirement. 
One way we can help Americans secure a comfortable retirement is by 
making it easier for them to save part of their paycheck earlier in 
their working life. As this Committee considers updates to ERISA, we 
must focus on expanding access to defined contribution plans, 
increasing retirement options for employees of small businesses, making 
plans more transparent, and eliminating the need for future taxpayer-
funded bailouts of special interests.
    This Committee has a long history of working together in a 
bipartisan way to address the retirement security needs of America's 
workers and retirees. We need to return to that model by adopting 
evidence-based, balanced and fiscally responsible solutions moving 
forward. This approach, accompanied by policies to ensure a growing and 
vibrant economy, will do far more to help America's workers and 
retirees in the long run.
                                 ______
                                 
    Chairman DeSaulnier. Thank you, Mr. Allen. I am encouraged 
by your comments and look forward to working with you. I think 
we can all agree that responsible oversight by this Committee--
this Subcommittee--would be a great addition. And I really look 
forward in a bipartisan way to look at that and conduct 
evidence-based oversight, both for the financial institutions 
that do much of this investment and the management of those. So 
encouraging.
    Without objection, all other Members who wish to insert 
written statements into the record may do so by submitting them 
to the Committee Clerk electronically in Microsoft Word format 
by 5 p.m. on July 7.
    Now I would like to introduce our witnesses, a really great 
panel. I want to thank our staff for getting them here, both 
Republican and Democratic staff.
    First, Dr. Teresa Ghilarducci is a professor of economics 
at the New School for Social Research and the director of the 
Schwartz Center for Economic Policy Analysis in the New 
School's Retirement Equity Lab.
    Dr. Nari Rhee is the director of the Retirement Security 
Program at the finest public university in the country, a 
neighbor of mine in my district, the University of California, 
Berkeley Center for Labor Research and Education--although I am 
not biased.
    Dr. Andrew Biggs is a resident scholar at the American 
Enterprise Institute.
    And Dr. David Certner is legislative counsel and director 
of legislative policy for government affairs at AARP.
    I apologize for any mispronunciations.
    Our instructions to the witnesses are as follows. We 
appreciate the witnesses for participating today and look 
forward to your testimony. Your written statement will appear 
in full in the hearing record, and you are asked to limit your 
oral presentation to five minutes. After your presentation, we 
will move to Member questions.
    The witnesses are aware of their responsibility to provide 
accurate information to the Subcommittee, and, therefore, we 
will immediately proceed to hear testimony. And I will first 
recognize Dr. Ghilarducci.
    Doctor.

        STATEMENT OF DR. TERESA GHILARDUCCI, IRENE AND 
         BERNARD L. SCHWARTZ PROFESSOR OF ECONOMICS AND
          POLICY ANALYSIS, THE NEW SCHOOL FOR SOCIAL 
        RESEARCH, DEPARTMENT OF ECONOMICS, NEW YORK, NY

    Ms. Ghilarducci. Thanks very much.
    Even though I have taught at two universities, at present 
the New School for Social Research in New York and for 25 years 
at the University of Notre Dame in Indiana, I did attend all my 
schooling at the best and greatest university, the University 
of California at Berkeley.
    Chairman DeSaulnier. Go Bears.
    Ms. Ghilarducci. Both undergraduate, master's, Ph.D. So I 
agree.
    I am here to talk about the landscape of what this country 
has done for older workers. It is called ``100 Years of 
Progress in Equalizing Retirement and How We Could Lose It.''
    Before Social Security and defined benefit plans were 
established, workers were more likely to die than they were 
more likely to retire. They died in their boots.
    And women's work was mainly unpaid. She did significant 
paid work when she did do that all throughout her life, and 
that was mostly in taking in boarders. It was the modern-day 
Airbnb. And she never retired either.
    In the 15 years or so before Social Security was passed--
and that was in 1935, of course--only a few soldiers, some 
government and railroad workers had a pension. A scattering of 
union workers had pensions. And most of those were in single 
and multi-employer plans.
    And still, 5 years after Social Security was passed, it was 
only the privileged that were truly able to retire. They would 
tell historians and researchers at the time, ``Oh, I retired 
because I wanted to.''
    There was reference in the opening statements about a 
dignified retirement, being able to look forward to retirement, 
but that was a very rare event. Only 3 percent of retirees had 
a voluntary retirement. And I will tell that story up until the 
present. And of course that 3 percent were the most privileged. 
They had the highest income, highest wealth, and they were 
healthier.
    Age in this period of time was a person's largest risk 
factor of being poor. Age in itself was a risk factor of being 
poor. And your grandparents and your great-grandparents and 
those before that were very high risk of living with their 
relatives when they got older.
    And if they weren't that lucky to have kin or relatives to 
live with, in this country the poor elderly were sent to county 
poorhouses. Or, when those were closed because of their 
brutality, in the early 20th century the aged went to 
institutions they called then insane asylums. The older poor 
were living with people who were severely mentally ill.
    So one of the first signs of progress that came with elders 
having more income was that they got to live independently and 
they weren't poor.
    But, given the work that we are doing now, we have done for 
the past 10 years since the last recession, we are predicting 
that the erosion of pensions, the scattered coverage of the 
defined contribution plans that we talked about in opening 
statements and the decline of defined benefit plans, and the 
fact that they are top heavy, that they really are something 
that the top people in the upper income distribution have, is 
going to create a situation where we are going back to the 
future.
    Right now, all of us here at the hearing are at greater 
risk of our parents moving in with us, in our spare bedroom, in 
our basements, in our renovated garage, than our parents faced 
with our grandparents.
    And another reverse of progress that I fear is the widening 
gap between the classes and the widening gap in what we have 
taken for granted, and that is the ability to retire in some 
kind of decency.
    So, right now, a working man in the bottom third of the 
educational distribution that is the best proxy for 
socioeconomic class that we have, he can expect to have 12 
years of retirement, not 20 or 30. It is about 12 years when we 
use actual data to see when people actually retire and when 
they die. And at the upper third, 14 years, so 12 and 14.
    Now, there is a class divide there, but it is not that 
great, and it is something we should celebrate. The rich and 
the poor and the middle class have been able to retire.
    But this is something that can be reversed very soon 
because retirement equity came from defined benefit plans, both 
single and multi-employer, retiree health plans, and an 
expanding Social Security system.
    Now, I come before you today as a professor and an 
historian, a professor of economics. But for 25 years I served 
as a trustee of not only the public pension plans for Indiana 
when I was at Notre Dame, also, a corporate director 
representing shareholders for the Yellow Freight Company, the 
biggest contributor--one of the biggest contributors to the 
Teamsters' Central States Fund. So I represented the 
shareholders there.
    And now I represent the $60 billion--I am a trustee of a 
$60 billion healthcare fund for United Auto Workers and the big 
three auto companies and for $1 billion for steelworkers and 
the Goodyear Tire company.
    And what I have learned from these roles is that the 
incomes that our Members have and take to their communities--
and they are all over the country, they are not just 
concentrated in Michigan or in Indiana or in Pennsylvania, they 
are everywhere--when they take those incomes to their 
communities, it has a huge multiplier effect. The Social 
Security, the pensions, and the healthcare really adds to the 
health of those communities.
    So it is not just the workers, it is their employers, and 
it is their communities.
    So not----
    Chairman DeSaulnier. Thank you, Doctor
    Ms. Ghilarducci. Yes, not everyone had a DB plan before. 
Only 70 percent of full-time workers had a DB plan then. And 
now that is switched, and so the worker is lucky enough to have 
any kind of plan, mostly 401(k)----
    Chairman DeSaulnier. Doctor, I am going to have to ask you 
to wrap up.
    Ms. Ghilarducci. Got it. OK. Sorry about that.
    One concern I have is that if we don't do something, we 
will have more elders in poverty.
    We have a solution. It is something that I provided back in 
2018 and something now, live, that is very bipartisan.
    I am working with an unlikely partner, Kevin Hassett, who 
was on Trump's Council of Economic Advisers. We have proposed 
with the Economic Innovation Group that everyone have access to 
a plan like you all have, the Thrift Savings Plan. So we are 
offering up a platform for everyone to have it. If we don't do 
that, we could reverse the decades of promise we have had in 
retirement equity.
    [The prepared statement of Ms. Ghilarducci follows:]

              Prepared Statement of Dr. Teresa Ghilarducci
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman DeSaulnier. Thank you, Doctor.
    Ms. Ghilarducci. Thank you.
    Chairman DeSaulnier. We look forward to hearing more about 
your partnership.
    Dr. Rhee, you are up for five minutes.

             STATEMENT OF DR. NARI RHEE, DIRECTOR, 
          RETIREMENT SECURITY PROGRAM, UNIVERSITY OF 
              CALIFORNIA AT BERKELEY, BERKELEY, CA

    Ms. Rhee. Thank you. Good morning, and thank you for this 
opportunity to be here today.
    I want to make three points today related to the 
inequalities in the current private sector retirement system, 
whether it is race, gender, and income. And I am so happy that 
you covered a lot of the basic data.
    So I am going to kind of reframe and talk about the 
interactions between the employer-sponsored retirement system 
and the fact that it is now primarily a defined contribution 
system and dynamics inside and outside the labor market that 
result in an incredible degree of inequality in retirement 
savings outcomes.
    So, as you mentioned, the retirement benefit access in the 
private sector is incomplete. It is far short of 100 percent. 
And it also varies wildly by occupation, industry, and wage 
level, not to mention firm size. So that the likelihood of 
being offered a retirement plan as a private sector worker is 
directly correlated with your wage level.
    At the end of the day, only about 20 percent of workers in 
the bottom quartile, bottom 25 percent, actually participate in 
a private sector retirement plan.
    So this intersects with sort of labor market segmentation 
and also kind of women's work realities. One is that, if you 
look at it by industry or occupation, the sectors with the 
heaviest concentrations of Black and Latino workers also have 
the lowest rates of retirement benefit sponsorship.
    I am just going to pull out two sectors, hotel and 
restaurants. Latinos and Black workers are 60 percent 
overrepresented in that sector relative to their overall labor 
market presence. Only 33 percent of workers in that sector are 
offered a plan.
    Similarly, in administrative wing services, which is also 
heavily overrepresented in terms of workers of color, only 38 
percent have access.
    And then if you look at the top levels where workers are 
underrepresented in terms of workers of color, it is the 
reverse, that you will see 80 percent or higher rates of access 
in things like finance and business services.
    So the upshot of this is that only 46 percent of Black 
working households and 37 percent of Latino working households 
has anybody on a pension or 401(k) in that family compared to 
60 percent of White working households.
    So I would say that both White working households and 
households of color are not looking so good. But, obviously, 
there is additional----[inaudible].
    So I am going to ask the facilitator to advance to Figure 
3. I just have a few charts that I want to highlight just to 
illustrate the magnitude of inequality.
    So if you would skip forward to Figure 3, please. Thank 
you.
    So we are looking at retirement account balances among near 
retirement households by income quintile in 2019. And so just 
kind of eyeball this chart and you can see that there is a 
tremendous degree of inequality in account balances.
    And this is just typical account balances. If you look at 
mean or average account balances it looks a lot worse.
    And then you will notice the zeros in the bottom 40 percent 
of the chart, and that is because less than half of--well under 
half of households in the bottom 40 percent of this age group, 
basically they don't own a retirement account.
    So I am going to advance to Figure 5, which shows the same 
kind of data by race, and this is for working age households 
age 25 to 64.
    And so, again, you will see that the median balance for all 
Black and Latino households is zero because, in fact, 60 
percent of Black households and 68 percent of Latino households 
do not own a retirement account.
    And among the lucky few that do, the typical balance is 
less than half that of the typical balance of White households. 
And, again, it looks much worse if you look at means as opposed 
to medians.
    Finally, on Figure 7, just to break this down quickly by 
sex and marital status, so marriage definitely gives you a 
boost in retirement security, although the balances aren't that 
impressive, and single women-led households tend to be the 
worst off.
    So women face particular challenges in an employer-based 
retirement system. The data indicates that women have 
approximate 30 with managers of retirement benefit access, but 
they also face a lot of challenges, and that is longer lives, 
the gender pay gap, and just in general lower wages than men, 
but also their lifetime earnings are really truncated by unpaid 
caregiving work. And that includes cumulative costs of hundreds 
of thousands of dollars for women who have to take time out of 
the labor force.
    I see that we are over time, so I just want to highlight a 
couple of things.
    I have been deeply involved in the formation of the 
CalSavers auto-IRA program. And the States are just desperate 
for a solution to this problem because it is going to hit them 
in their pocketbooks, and they know it.
    So some States have jumped, just jumped in and gotten tired 
of the Federal Government to act on universal retirement 
coverage. And at the same time, they are severely limited in 
terms of what they can do by ERISA preemption, so they can't 
take employer contributions, they can't cover the part-time 
workers who are excluded from ERISA-regulated plans. And so I 
think there is a need for Federal leadership on this issue.
    And the last point I want to make is that wage policy is 
incredibly important. California enacted the $15 minimum wage 
the same day that it enacted CalSavers. And combined, it has 
the potential to increase low wage workers' retirement incomes 
by up to 50 percent above the status quo. So wage policy is 
incredibly important.
    Thank you.
    [The prepared statement of Ms. Rhee follows:]

                  Prepared Statement of Dr. Nari Rhee
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman DeSaulnier. Thank you, Doctor.
    We will now go to Dr. Biggs for five minutes.
    Doctor, the floor is yours.

   STATEMENT OF DR. ANDREW BIGGS, RESIDENT SCHOLAR, AMERICAN 
              ENTERPRISE INSTITUTE, WASHINGTON, DC

    Mr. Biggs. Thank you very much, Mr. Chairman and Ranking 
Member Allen, for the opportunity to testify today.
    A study published by a prominent think tank predicted that, 
quote, ``More than 40 percent of households between the ages of 
47 to 64 will not be able to replace even half of their 
preretirement incomes once they stop working. Nearly 20 percent 
will have retirement incomes below the poverty line.''
    Those claims could have jumped from the testimony at 
today's hearing. We have heard the retirement system is eroding 
and retiree poverty will skyrocket.
    And, yet, that frightening study was published nearly two 
decades ago by the progressive Economic Policy Institute, and 
none of its dire predictions came to pass.
    Poverty in old age didn't increase. In fact, it fell 
substantially.
    Retirement incomes did not decline, but instead rose to 
record levels.
    And instead of a retirement crisis, 80 percent of retirees 
today tell Gallup surveys they have enough money not merely to 
survive but to, quote, ``live comfortably.'' Only 5 percent of 
seniors tell a Federal Reserve survey they are, quote, 
``finding it hard to get by.''
    The data show clearly that never before have so many 
Americans saved so much for retirement. Never before have 
retiree incomes been so high or poverty in old age so low. And 
so I predict the same will hold for the dire warnings you will 
hear today.
    But even more importantly, the Federal Government itself 
does not predict anything approaching a retirement crisis. The 
Social Security Administration's most sophisticated retirement 
income model projects that future retirees will have a median 
retirement income replacement rate about 110 percent of their 
career average returns. That is very similar to today's 
retirees.
    The share with low replacement rates also will remain the 
same while poverty and old age will continue to fall.
    Why is the future so much brighter than some would have you 
believe? Because we have done the things necessary to boost 
retirement savings.
    The switch from traditional pensions to 401(k)s means that 
more Americans have access to retirement plans. Back in the 
mid-1970s, when traditional pension participation was at its 
peak, only around 4 in 10 private sector workers had a 
retirement plan. IRS data show that nearly 60 percent of 
workers are participating in a plan today.
    Among married couples, over 80 percent have at least one 
spouse participating in a retirement plan, and it is likely 
that over 90 percent of couples have at least one spouse who is 
offered a plan.
    We have come a long way.
    401(k)s also boost savings because unlike traditional 
pensions, both employer and employee pay in. Since the 1970s, 
total retirement plan contributions rose from 5.8 percent of 
employee wages and salaries to 8.4 percent. That is a 45 
percent relative increase in retirement savings.
    Total retirement plan assets today are seven times higher 
than back in the 1970s. Federal Reserve data show that 
retirement savings have increased in every age, income, 
educational, and racial or ethnic group.
    401(k)s are also much more portable than traditional 
pensions, which helps workers who switch jobs or take time out 
of the workforce.
    All in all, while just 45 percent of retirees received 
benefits from a private retirement plan in 1990, 61 percent of 
retirees do today.
    When we think about a retirement system, especially how 
different groups are treated, we need to think about the whole 
system.
    U.S. households today hold $41 trillion in private 
retirement savings. Those savings are skewed toward high 
earners. But Americans have also earned nearly $41 trillion in 
Social Security benefits, and Social Security benefits are 
tilted toward low-income households.
    For instance, the CBO finds that the poorest fifth of 
retirees received Social Security benefits equal to about 80 
percent of their preretirement earnings, while the richest 
fifth received a replacement rate of just 34 percent of their 
earnings.
    Given this, it is not at all surprising that low-income 
Americans save little on top of Social Security while high-
income Americans save a great deal more.
    Remember, retirement saving isn't about ending life with 
the most money. It is about saving enough to maintain your 
standard of living once you stop working. And a variety of data 
show the vast majority of Americans, rich and poor and from 
different walks of life, are able to do that.
    I support policies to give all Americans access to 
retirement plans. The U.S. retirement system has made great 
progress in the last several decades and it is foolish to deny 
that progress. But past progress isn't enough. We need to keep 
working to fill the gaps that remain in our system so that 
every American who wants and needs to save for retirement has 
an easy and affordable way to do so.
    Thank you very much.
    [The prepared statement of Mr. Biggs follows:]

                   Prepared Statement of Andrew Biggs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman DeSaulnier. Thank you, Doctor.
    We will now go to our last witness, panelist, Dr. Certner.
    I apologize for the previous mispronunciation.
    Dr. Certner, you are recognized for five minutes.

    STATEMENT OF MR. DAVID CERTNER, LEGISLATIVE COUNSEL AND 
 DIRECTOR OF LEGISLATIVE POLICY FOR GOVERNMENT AFFAIRS, AARP, 
                         WASHINGTON, DC

    Mr. Certner. Thank you, Mr. Chairman and Members of the 
Committee. Thank you for the opportunity to testify today on 
improving our retirement system.
    A secure retirement traditionally centered on the three-
legged stool of employer-provided pensions, personal savings, 
and Social Security. Unfortunately, diminishing pensions and 
inadequate savings, plus longer life expectancies and high 
health costs, has put a secure requirement out of reach for too 
many, requiring Social Security to play an even greater role in 
retirement.
    Social Security is already the principal source of income 
for over half of older households. Roughly one quarter, about 
10 million people, depend on Social Security for nearly all--
meaning 90 percent or more--of their income. Social Security 
keeps approximately 15 million older Americans out of poverty 
and allows millions more to live without fear of outliving 
their income.
    And while Social Security is the base of income in 
retirement, more is needed. The dramatic switch from defined 
benefit plans to defined contribution plans over the past 40 
years has important implications for retirement security. 
Employees are now responsible for whether and how much to save 
and must manage their retirement funds even though most have 
little investment experience. And, unfortunately, most workers 
are not saving enough.
    Of course, access to a plan is better than none at all. 
Remarkably, less than half of all workers have access to a 
retirement plan at work.
    Now, Congress has taken numerous steps to make retirement 
saving easier, including features such as automatic enrollment 
and default investment that have helped workers and increased 
savings. However, automatic features only help workers who have 
a retirement plan. Expanding coverage for the tens of millions 
of workers without coverage remains a high priority.
    At the State level, AARP is focused on passing what are 
called Work and Save programs, like CalSavers, which provide 
employer-facilitated access to payroll deduction savings 
options for workers who don't have a way to save for retirement 
at work.
    Such access helps address the coverage gap because workers 
are 15 times more likely to save for retirement simply through 
payroll deduction at work.
    State programs have already shown much promise in 
increasing coverage and savings.
    In addition to State programs, Federal policy should also 
encourage automatic payroll deduction savings. AARP has been a 
long-time supporter of Federal auto-IRA legislation, most 
recently proposed by House Ways and Means Chairman Neal.
    AARP also supports bipartisan legislation recently approved 
by the Ways and Means Committee, the Securing a Strong 
Retirement Act, known as SECURE 2, which includes many 
important changes.
    The bill would improve coverage for the 27 million part-
time workers who generally are not covered by retirement 
savings plans. This is especially important for older workers 
and caregivers, who often shift to part-time work.
    The bill would also automatically enroll workers in new 
employer retirement savings plans.
    SECURE 2 includes an important requirement for an annual 
paper retirement benefit statement, which AARP strongly 
supports. Plan participants who generally prefer paper copies 
of important financial documents should be provided statements 
in paper form unless they choose electronic delivery.
    Congress needs to ensure that workers receive and can 
review their annual benefit statement, similar to the Social 
Security and Federal employee statement of benefits, to help 
employees better understand and manage their plans.
    SECURE 2 would also establish a national retirement lost 
and found office to help workers locate retirement accounts 
with previous employers. This has become increasingly important 
as more workers change jobs several times over their career.
    And SECURE 2 also makes improvements to the required 
minimum distribution rules, including exempting a threshold 
amount that will both simplify the rules and help preserve 
savings.
    Separately, AARP also supports efforts to improve the 
saver's tax credit, which acts as a matching contribution for 
low-and moderate-income taxpayers who contribute to a 
retirement plan. Improvements to the credit, again, can 
encourage and increase savings for those who are least able to 
save.
    We also must do more to protect hard-earned retirement nest 
eggs. All tax-deferred retirement savings should be prudently 
invested with reasonable fees and without conflicts of 
interest. A uniform strong fiduciary standard should ensure 
that all financial professionals act in the sole interest of 
their customers when providing investment advice.
    AARP also urges Congress to discourage preretirement cash-
outs of retirement funds and instead encourage account 
portability and stable lifetime income streams.
    We look forward to working with the Committee to encourage 
asset preservation and to provide low-cost distribution and 
spend-down options that meet workers' needs in retirement.
    Finally, AARP commends the Congress for enacting earlier 
this year important legislation to protect the earned benefits 
of millions of workers and retirees counting on multi-employer 
pensions for retirement security.
    Many retirees experienced and were facing devastating 
benefit cuts. While this was a difficult problem, the 
legislative support was critical to protecting the benefits of 
workers and retirees who had worked hard, earned their 
benefits, and were put at risk through no fault of their own.
    Again, in conclusion, AARP would again like to thank the 
Committee for considering the challenges and needs for a secure 
retirement and the opportunity to share our policy views. We 
stand ready to work with the Committee to improve Americans' 
retirement security.
    Thank you.
    [The prepared statement of Mr. Certner follows:]

                  Prepared Statement of David Certner
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman DeSaulnier. Thank you, Doctor.
    Thank you to all the panelists. Terrific testimony. I 
appreciate the content and the tone very much.
    Under Committee Rule, we will now question the witnesses 
under the five-minute rule, please, and I will be recognizing 
Subcommittee Members in seniority order.
    As the list I currently have from staff, I am going to 
speak first, and then we will go to Representative Walberg and 
then Representative Norcross.
    As Chair, I now recognize myself for five minutes.
    And, again, I want to thank the panelists. I look forward 
to further discussion and--in the terminology of the Ranking 
Member--evidence-based research.
    We certainly can have differences of opinion to our 
approach, and we do, to solving this problem, but I respect 
divergent opinions. And if we go by the evidence-based 
research, I think we can really make strong progress.
    And I want to work with the other committees of 
jurisdiction, particularly Ways and Means, but this 
Subcommittee, and I know the full Committee, thinks this is a 
priority. And I appreciate all the input from Subcommittee 
Members prior to this hearing, and I am open to further input.
    And, Dr. Biggs, I appreciate your testimony. We certainly 
want to be driven by evidence-based research. But I also don't 
think it necessarily contradicts the testimony from Dr. Rhee, 
and it is reflective of our overall inequality in this country, 
which isn't surprising, both for workers and for retirees.
    So the question is, how best do we have a discussion about 
that. There is nothing wrong with capital investments in 
general if they are done with responsibility toward all, as 
Piketty's work and Emmanuel Saez's work would indicate to me. 
But that balance between wages and capital investment, both for 
workers and retirees, are important for everybody's happiness.
    So I look forward to talking to you personally, Dr. Biggs, 
and other panelists on how we can honestly address these issues 
in a thoughtful way in this Subcommittee and, again, as the 
Ranking Member says, be driven by evidence-based research.
    My questions.
    Dr. Ghilarducci, in my opening statement I mentioned the 
recent New York Times Magazine on the doubling of life 
expectancy between 1920 and 2020. So the social model has 
changed, mostly for better, I would say, and particularly 
having two incomes in the workforce. Certainly household 
productivity I think, has undeniably increased in the United 
States because of this addition.
    But it has caused strains on our system as well, and the 
social model is very different. Young people are forced to have 
greater mobility when they look for jobs, not just in their own 
neighborhood and community and region but nationally.
    So in your written statement you mentioned several reasons 
why older Americans are better off these past hundred years. 
Would you please talk briefly about how having the ability to 
retire with a pension is so important and connected to human 
longevity and the quality of life as we get older?
    Doctor?
    Ms. Ghilarducci. Yes, just quickly, and I am sorry I went 
over time last time.
    We tend to think that improving longevity just happens and 
that that requires people to work longer, because people 
improved their longevity and they also exited the labor market, 
as if those two things were unrelated.
    And what the research, the medical research, using the 
health and retirement survey and other sources of data have 
shown is that living longer is actually related to being able 
to retire voluntarily with income.
    For many, many people, and it is unequally distributed this 
way, working at old age causes a lot of stress. Cortisol levels 
go up, you are subordinate in the workforce, you can't control 
the pace and content of your time like many of us can do now. 
And so, especially for women in service organizations or paid 
care work, working every day in your sixties and seventies 
actually reduces longevity.
    So, Andrew, notwithstanding your warning that our 
predictions can be wrong, the evidence is pointing to, if we 
are forcing people to work longer because we don't do anything 
about our pension system, we could actually reverse that great 
longevity gain and make those longevity gains really unequal.
    Most of those longevity gains, as you know, have gone to 
the people at the top of the income distribution.
    Chairman DeSaulnier. Dr. Rhee, let's talk about comparisons 
globally. We talk a lot about global competitiveness. Dr. Rhee 
or Dr. Ghilarducci, how do we compare vis-a-vis our global 
competitors?
    Dr. Rhee?
    Ms. Rhee. I think in terms of retirement plan coverage, I 
want to sort of stress that it is a totality between Social 
Security, pensions, employer-sponsored pensions, and private 
savings. And we just want to make sure that there is universal 
coverage and that benefits are adequate.
    And I think that on the whole U.S. Social Security benefits 
are less generous than other advanced countries, and we need to 
be doing more on the pension front, and that is actually not 
what is going on.
    Chairman DeSaulnier. Thank you, Doctor.
    My time is up. I am told that the Ranking Member would like 
to wait until later in the testimony for questioning. So that 
will put my friend and colleague from Michigan, Mr. Walberg, as 
the next speaker.
    You are recognized for five minutes.
    Mr. Walberg. Thank you, Mr. Chairman.
    And thank you to the panel for being here today.
    An important issue. Retirement security is an important 
topic and one that has a history of bipartisan support. 
Americans dream of retirement financial security, but, 
unfortunately, many struggle on how to get there.
    With that in mind, in 2018, when I Chaired this Committee, 
we held a bipartisan hearing that examined solutions to 
modernize our retirement system and make it easier for 
employees to save for retirement.
    The proposals that we discussed in 2018 were later signed 
into law, gratefully, as part of the SECURE Act, which was the 
first major update to our retirement policies in over a decade.
    Ensuring that American retirees can count on sufficient 
income to last throughout their retirement is not only 
important to families, but also for our economy.
    So I thank the Committee for holding this hearing, and I 
hope that Members on this Committee will continue our history 
of bipartisanship and buildupon the success of the SECURE Act 
so every American can retire with dignity and peace of mind.
    Dr. Biggs, thank you for being here as an additional point 
of view that we truly need to hear.
    Employer-sponsored retirement plans are an indispensable 
pillar to the U.S. retirement system. That is not really 
debatable.
    Could you please elaborate on your research regarding 
participation in employer-sponsored plans and the amount of 
savings employees are achieving through this model?
    Mr. Biggs. Well, thank you very much, Congressman Walberg.
    I think we all agree that having a retirement plan at work 
increases savings significantly versus having to set one up on 
your own, such as through an IRA. So it is important that 
employers offer these plans.
    What we have seen over time is that employers are 
increasingly offering retirement plans. Some gaps remain. But 
if we go back to the heyday of traditional pensions, which we 
all have rose-colored glasses on, at their peak, 39 percent of 
private sector workers participated in a defined benefit plan. 
Today, you have somewhere around 60 percent of workers 
participating in some sort of plan, more than that being 
offered a plan.
    So when we think about why employers will offer a plan, we 
have to think of the attributes of the plan. A defined benefit 
pension, a traditional benefit is very onerous on the employer 
to offer both from an administrative standpoint, but also from 
the standpoint of financial liabilities.
    What happened up to the mid-1970s, before we had ERISA, was 
that employers were willing to offer traditional pensions, but 
they didn't fund them, and they set these vesting requirements 
such that literally, like, 92 percent of defined benefit 
participants, according to a Senate Labor Committee study in 
the 1970s, they participated in a plan, they never collected 
benefits because they didn't vest.
    ERISA changed that and said, well, if you are going to 
offer benefits, you have to have reasonable vesting 
requirements and you have to fund them. That is when employers 
said, it is not really worth it for us to cover, to offer these 
plans anymore.
    401(k) plans are much easier for employers to offer, and so 
coverage spread. We have, in relative terms, 50 percent more 
employees participating in 401(k) plans today than we did with 
traditional pensions.
    So you have to think about what is on the employer side and 
how to facilitate them offering that plan, because that is 
really a crucial aspect.
    Mr. Walberg. Dr. Biggs, could you describe the existing 
barriers that may discourage certain employers, especially 
small employers, from offering a retirement plan to their 
employees?
    Mr. Biggs. Yes. Small employers are really where the gaps 
exist. If you look at larger employers, vast majorities of them 
are already offering a plan.
    For small employers, they have a couple of issues. All 
along we have had issue with sort of the fixed costs of 
offering a retirement plan. If you are running a laundromat or 
something like that and you have 10 employees you still have to 
get a financial adviser, you may have some legal fees involved 
with setting it up. So it is a bigger issue, a bigger cost for 
you compared to the number of employees you are going to serve.
    The second issue, which is more recent, is potential 
liability issues. The lawsuits against 401(k) plan providers 
have increased significantly in recent years.
    So if you are a small employer, you may today just say it 
is not worth the trouble to me, that there is a cost burden 
involved, and then I may be taking on a financial risk.
    And so we need to address those things, both smooth the 
costs out for them, but also make very clear what you can do to 
be protected. And I think if you do that, they will be more 
willing.
    But we also need to be realistic. I don't think you are 
going to get a hundred percent coverage among small employers. 
So then we want to think about what other options might be for 
workers in those employers.
    Mr. Walberg. So much more I could ask, but my time has 
ended. So I yield back.
    Mr. Biggs. Thank you.
    Chairman DeSaulnier. Thank you, Representative Walberg. 
Really good questions. As a former small business owner and 
restaurateur who has struggled with this issue, another area 
that I think that we could have a really good discussion about 
on what is best for those small businesses who are already 
struggling to make ends meet.
    Next is the distinguished gentleman from New Jersey, Mr. 
Norcross, somebody who has a unique passion on this issue.
    Mr. Norcross. Well, first of all, thank you, Chairman, for 
holding this meeting and bringing to the front of the line 
something that is near and dear to everyone on this call, 
whether you agree how we get there or not, it's those golden 
years. And, certainly, we work all our lives, and we want to be 
able to enjoy that as we get there.
    And certainly to my colleagues on the other side, Mr. 
Walberg and I have reached many common grounds on this. So I 
think there is a real pathway here.
    When we looked over the past year, it has been a challenge 
to every one of us. Luckily, we finally came together, and this 
is after we served on the bicameral, bipartisan commission a 
couple years ago focusing on how we could save the multi-
employer.
    Somehow we talk about it like it is companies or unions. 
These are people. These are people that we saved. And while we 
might have a disagreement on how we saved it, the fact of the 
matter is literally thousands of men and women are going to be 
able to survive in their retirement, and that is thanks to that 
plan.
    And, by the way, this wasn't just one side. It was UPS, 
Kroger, large companies that literally could be going bankrupt 
if it had not been for this. The Chamber of Commerce, the 
National Association of Manufacturers.
    So what I am going to start out with is, quite frankly, 
what would have happened if we didn't pass this and we went 
down the road.
    So, Ms. Ghilarducci, could you touch base? What would have 
been the cost, social and otherwise, financial, to this country 
had we not saved the multi-employer plan?
    Ms. Ghilarducci. It would have been substantial. As I 
mentioned in my testimony, the dollars spent by the retiree in 
those communities multiplied and created aggregate demand. It 
also allowed the Member to stay in their communities.
    As I said, I was a trustee for the--a director for the 
shareholders of Yellow Freight based in Kansas City, and that 
company would have gone bankrupt if it had to fund the multi-
employer plan all on itself, as they were supporting many more 
retirees than they had Members.
    So it could have caused bankruptcy of major employers and a 
loss of income and vitality in those Midwestern and other 
working-class communities. It would have been far more than the 
$80 billion, probably another 2 or 3.
    Mr. Norcross. Thank you.
    And, listen, we as a country we make these decisions, and 
obviously in Congress, we do. The trillions of dollars we just 
spent propping up businesses through the pandemic, you could 
call that a bailout. No, it is helping Americans. And thank you 
for your discussion on this issue.
    Mr. Certner, I want to talk about SECURE Act 2.0.
    Unfortunately or fortunately, history and human behavior 
have taught us that once an employee gets the money in the 
paycheck, it is so much more difficult for them to turn around 
and contribute to a retirement plan. Why? Particularly in the 
lower economic scale of wages, ``Hey, do I want to send my kid 
to camp? Do I want to buy them a pair of sneakers?'' Extremely 
difficult.
    Those plans across the spectrum that have been successful, 
it is pre-dollars in the paycheck. The SECURE 2.0 talks about 
the automatic enrollment.
    Can you go into a little bit more detail on the 401 and the 
403? Why is that important that we get the auto enrollment 
ahead of the curve when it comes to the outcome?
    Mr. Certner. Thank you, Congressman. Automatic enrollment 
dramatically increases enrollment of the workforce. It usually 
jumps from anywhere close from around 50 percent to around 80 
percent when you have automatic enrollment.
    Again, so if the employee is not paying attention to the 
joining form, they are automatically basically making the right 
decisions for the employee. They are going to be put in the 
plan, they can start saving.
    Now, the employee always has a choice to opt out, but most 
employees, when they join up, are not thinking about 
retirement, and it is good to have the system automatically 
putting them in the right direction. If they want to make other 
choices, that is great, but it is better that we have an 
automatic system that is getting people, A, to sign up, and B, 
are getting them into funds normally, like default lifestyle 
funds, that basically can put them in a more diversified 
investment scenario that is more appropriate for their age. So 
this is putting people on the track to a better retirement.
    Mr. Norcross. And it is a bipartisan approach, and we 
certainly appreciate what they are doing because, again, 
defined benefit, we all participate in; defined contribution, 
so many employers only contribute if the employee contributes. 
And those on the lower economic scale, unfortunately, need to 
eat and take care of life.
    Unfortunately, I have run out of time, but thank you for 
the testimony, and I yield back to the Chairman.
    Chairman DeSaulnier. Thank you, Mr. Norcross. And, again, 
thank you for your passion on this issue. And since I bragged 
on the University of California, I want to brag for you about 
Rutgers University and their Labor Institute in your district.
    Next, Mr. Banks, if you are prepared, you are next in the 
queue. If not, we will go to Representative Harshbarger.
    Mrs. Harshbarger. Thank you, Chairman and Ranking Member 
and all the witnesses today. I am a small business owner, too, 
that offered a 401(k) to my employees, because that helps me 
retain employees, absolutely. And it is a good investment in 
their future as well as the future of the business.
    Mr. Biggs, Dr. Biggs, I am looking over your testimony and, 
you know, I am looking at the increase in, you know, people 
joining 401(k)s and employer ratings. Since 2017, 81 percent of 
joint tax return filers have at least one Member of the couple 
participating in a retirement plan.
    And then we see the Department of Labor statistics that 
show, you know, a 45 percent increase in total private sector 
pension contributions in the last 40 years. And what is 
remarkable is since 1989, retirement savings have increased in 
every age, income, educational, racial, ethnic group. To me, 
that is pretty remarkable, that it encompasses every race, 
every age, every income, every educational and every ethnic 
group. So to me, there is not a discrepancy or disparity there.
    But I do have a couple of questions, and one of the things 
that occurs to me is, we need to make some value-based 
judgments about the respective roles of Social Security, 
employment-based pensions, and individual savings. And I have a 
couple questions about that.
    No. 1 is, do we want to follow the historical, traditional, 
three-leg stool approach to retirement security or just 
disregard it in favor of another approach? And the second part 
of that question is, is there still a role for all three of 
these elements? And the third part is, do we even want there to 
be a role for all three of these elements, and, if so, then we 
need to decide how much of the job should be done by each 
component.
    So if you could offer me some perspectives on those three 
components, I would be very interested in hearing about it.
    Mr. Biggs. Sure. Well, thank you very much. If you look at 
the sort of research literature on retirement, which is pretty 
wonky, but, you know, often we will say, you know, a retiree 
wants to have an income equal to 70 percent of their 
preretirement, a 70 percent replacement rate. When you actually 
look at the research, things differ quite a bit between 
different households of how much income they need in 
retirement. That can depend on your earnings level, the 
children you have, family size, et cetera.
    So you want to leave flexibility. You don't want to set up 
your mandatory savings system like Social Security so it covers 
everything that somebody might need, because we know that is 
going to differ from person to person.
    We also don't want to cover too much of retirement combined 
with Social Security, because that is, to be frank, it is a 
funding system that is not good for economic growth. It may be 
a great system to have, but savings-based systems are going to 
be stronger for economic growth.
    So, we want to leave discretion between people's personal 
choices and what they are getting from Social Security. So I 
think we want to build on what we have. We don't want to 
eliminate that.
    Mrs. Harshbarger. Very good. You know, it is critical that 
we make the changes, just like, you know, improving what we 
already have, the SECURE 2.0.
    Dr. Biggs, do you believe that corporate sponsors of 
pension plans who underestimate their plan liabilities and who 
underfund their pension plans should be bailed out with 
taxpayer money?
    Mr. Biggs. Look, when we think about the multiemployer plan 
problem, we have to remember, you know, we created this in the 
sense that the government set much lower funding standards for 
multiemployer plans than they did for single employer plans.
    So they went into their problems with much lower levels of 
contributions. They took much longer to address their problems. 
So this was a predictable crisis. In fact, you can find things 
going back 20 years ago predicting this crisis would take 
place.
    So the key thing we need to remember here is, A, we created 
this through bad governance, but B, all of the arguments that 
are being made today for bailing out the multiemployer plans at 
$86 billion or whatever they end up being, those same arguments 
apply to bailing out underfunded State and local government 
pensions, whose unfunded liabilities aren't $86 billion. It is 
somewhere north of $4 trillion. If we are going to bail out 
underfunded or, you know, pensions for truckers and miners, are 
we not going to bail out Illinois' policemen and teachers?
    The rationale we are hearing today is exactly the same. And 
I think it is just--it is a very risky proposition to get into 
saying we have just got to bail these things out. At some 
point, the plan is either self-funding and responsible for 
itself, or it is not. And if we are going to socialize these, 
we need to regulate them much more carefully than we did. So we 
really need to think very hard about this stuff.
    Mrs. Harshbarger. Thank you, Dr. Biggs.
    And, Chairman, I yield back.
    Chairman DeSaulnier. Thank you, Representative. Next up is 
Representative Morelle. The floor is yours.
    Mr. Morelle. Thank you, Mr. Chairman.
    I, first and most importantly, thank you for a really 
important conversation. I will admit that, you know, for me, 
thinking about the years I had and thinking about the changes 
in pensions in the United States over the years, I am 
concerned.
    And I talk to my adult children all the time about their 
retirement savings to make sure that they are thinking about 
this. I also tell them that you are going to go from 30 years 
old to 60 years old in about five minutes, and if you don't 
think about it long in advance and really start preparing, you 
are going to find yourself older quicker than you thought that 
you would be.
    So I am really grateful to you for the hearing. I think it 
is really important. I appreciate the witnesses very much for 
their contributions.
    One of the things that I worry about in our country is sort 
of the lack of financial literacy. Right now, I am going 
through--sadly, my mother-in-law passed away a couple of months 
ago, and my father-in-law was smart to think ahead and is 
thinking ahead, but he is a little bewildered by all the things 
that he will have to make decisions about. And some of it is 
pretty confusing. And the more I talk to people, I realize this 
is one of those sort of things that we, perhaps, haven't done 
well enough in the country.
    And I thought, perhaps, Dr. Certner, you might be able to 
comment on any thoughts that you have around increasing 
literacy for young people, as well as people in the workforce 
about their future, any things that we should be doing or 
thoughts that you have on it?
    Mr. Certner. First, we agree 100 percent that literacy has 
been a huge problem in this area, and it has been compounded by 
the fact that now, with 401(k) plans and individual retirement 
accounts, people are asked to take on a lot more of the 
responsibility.
    They need to figure out how much I can save. They need to 
figure out how to invest that money. And then even later on, we 
are seeing with our own Members when they finally get to 
retirement they have some very big decisions to make at 
retirement about whether to take lump sums, or annuities, or 
what distribution option will there be that will help me not 
outlive my money.
    And these are very complicated decisions for people to 
make, and they don't have nearly enough either investment 
experience or financial planning experience to do that. It is 
not an easy answer here. We think some of the education should 
start early. These are great classes I think for high school 
and college kids to have a basic understanding of particularly 
being able to start saving early.
    I think Benjamin Franklin did us a disservice when he said 
a penny saved is a penny earned. He should have said a penny 
saved is a penny compounded. I think that would have gone a 
long way. You know, getting money in early into these plans 
when people aren't thinking about retirement is really one of 
the best ways to get a good head start.
    So having education, having notices and information going 
from the plan and from the providers to the individuals are 
critically important, because that is, very often, who the 
workers are going to listen to is their employers.
    And that is one of the reasons we think it is so important 
that some of this information be provided by paper and not 
electronically, so people can see what is happening with their 
plan. They can see what their investments are. They can see 
what kind of fees that they are paying. They can see what kind 
of investment returns they are getting. If you don't have that 
in your hands and can take the time and look it over, you are 
never going to learn or understand what is going on with your 
plan.
    And one of the side problems with having some of these 
things just done all automatically is that people are paying 
less and less attention to them. Now, that may not be a bad 
thing if they are headed in the right direction, but we also do 
want people to pay attention so that they know what is going on 
with their own retirements.
    Mr. Morelle. I will observe--and I had the privilege of 
Chairing the New York State Assembly Committee on Insurance in 
my service in the State legislature. And the kind of retirement 
vehicles that you can now invest in, to your point, taking lump 
sum distributions or annuities, are they pretax? Are they yet 
to be taxed? How does that impact? Those are all confusing.
    And I often think back that I passed my physics regents 
exam in no small amount to Mr. Uhler and his patience, but I 
think back. I haven't really used my high school physics since 
I left high school. I might have been better served to have 
taken a course in financial literacy, and maybe that is what we 
ought to be encouraging school districts around the country to 
start doing, but, certainly, in the workforce.
    And you are right, when you go to work you start thinking 
about it. So other ways that our witnesses can provide to us 
after this on ways that we can increase financial literacy, I 
think, would be really important.
    With that, Mr. Chairman, again, thanks for the great 
hearing and I yield back, sir.
    Chairman DeSaulnier. Thank you, Mr. Morelle.
    Next up is Representative Miller. You are recognized for 
your five minutes.
    Mrs. Miller. Thank you. Thank you to our witnesses for 
coming to discuss the important issue of retirement security.
    Dr. Biggs, I found your testimony especially thought-
provoking, and I do have a few questions to ask. OK. So I am 
from Illinois, and we are a sinking ship there because, well, 
according to Moody's, as of June 2020, Illinois' pension 
liability was at $154 billion.
    This is unconscionable. The pension liability has been 
growing steadily since 2006. Illinois State pensions have been 
critically underfunded, or possibly overpromised for more than 
a decade, with no end in sight. It is the elephant in the room. 
This fund is supposed to provide benefits to public servants in 
their retirement, but its chronic underfunding threatens to 
fail these workers.
    Dr. Biggs, how do States like Illinois get out of this 
mess? How can we best protect workers and taxpayers from being 
harmed by these critically underfunded and abused State 
pensions? Do you have any policy suggestions for my State?
    Mr. Biggs. Well, thank you very much, Congresswoman. I have 
worked a great deal on State and local pension issues. I am 
also a Member of the Financial Oversight Board that is handling 
the bankruptcy in Puerto Rico. And Puerto Rico's bankruptcy was 
caused in no small part because it just ran its pension systems 
into the ground. They just ran out of money. At that point, 
everything falls apart.
    For Illinois, it will be even more difficult if the pension 
plan runs out of money, because the pension liabilities are so 
large that even if Illinois defaulted on all its debt to 
bondholders, it still wouldn't have enough money to fill them. 
I suspect Chicago will probably go bankrupt 5 years, 10 years 
from now. Illinois may look maybe a little bit further. But 
they need to find ways to get on top of these problems.
    Illinois is very constrained by constitutional protections, 
which you interpret in such a way, you simply can't change 
benefits. It has also been hamstrung, to be honest, by decades 
of poor financial management by the government, and by the 
trustees of this plan.
    This gets to the issue I raise with multiemployer plans. I 
mean, Illinois is a known bad actor when it comes to pensions. 
It increased benefits. It promised too much. It simply refused 
to do what it needed to do. It, even today, will not change its 
State constitution to allow these adjustments.
    They have already talked of getting a Federal bailout. When 
that day comes, you know, everybody today in Congress is going 
to say, We won't bail out these State and local pension plans. 
But 2 years ago, everybody in Congress was saying, we are not 
going to bail out the multiemployer plans, and that is 
precisely what we did.
    So when that day comes, there is going to be huge pressure 
on the Federal Government to bail these plans out. And the 
question is, should the taxpayers in States that have been 
responsible with their pensions, that have funded them fully, 
that made reforms when necessary, should they be on the hook 
for Illinois?
    And this is one--if I had to propose one solution, if we go 
back to when ERISA was started in the 1970s, there was some 
discussion then of subjecting State and local pensions to ERISA 
coverage, to ERISA regulation. That, in retrospect, would have 
been entirely appropriate. We thought back then that the State 
and local governments could be trusted to responsibly fund 
these plans while corporations couldn't. It turns out none of 
them could be trusted. They have the same incentives.
    So I think Federal regulation of these plans with some 
transition period, you know, maybe some incentive to get up to 
good funding, because these plans pose a systemic financial 
threat that goes well beyond the government that sponsors them, 
or the borders of their State. So this is a congressional 
problem, and I really wish Congress would get on top of it 
before it becomes a congressional crisis where we are forced to 
do a bailout.
    Mrs. Miller. Yes. And I am so concerned for the rank-and-
file teacher, policeman in our State that have planned their 
retirement, based on, maybe, a reasonable pension. There is 
just egregious abuse in the pension system.
    I know people that are billing up to three and four 
pensions. And in the private sector, this would never happen 
where you could double-dip like that. Of course, the 3 percent 
COLA and then they don't pay income tax on it, which is all 
fine, but it is overpromised, and we can't afford it. So some 
lawmakers in my State have been calling for the Federal bailout 
of our State pension.
    Do you think it is wise for the Federal Government to bail 
out failing State pension plans and, if not, are there other 
policies in the Federal Government that the Federal Government 
should put in place to protect workers and taxpayers, which I 
know you said if we would have----[inaudible]. Is there 
anything else that you can think of?
    Mr. Biggs. Well, I think Congress needs to act today. You 
know, everybody will say, we are not going to bail out 
Illinois' pensions. If Illinois' pensions go under, Illinois 
goes bankrupt. I can tell you from the experience in Puerto 
Rico that State-level bankruptcy is incredibly difficult 
economically and politically. It is a real, real problem. At 
that point, be it Congress or the Federal Reserve, but somebody 
is going to bail out Illinois.
    So if we can foresee that, the thing we need to do is act 
today, just as we should have acted 20 years ago with 
multiemployer pensions, but we didn't.
    And so the question is, you know, are we going to show 
leadership, or are we just going to be followership? Are we 
going to kick the can down the road like we have done with 
Social Security or multiemployer pensions or whatever, or are 
we going to show some leadership on this?
    State and local pensions, there is no constitutional reason 
they cannot be federally regulated. The Federal Government 
regulates work conditions. They regulate the minimum wage for 
State and local governments. We can do this stuff. It is all 
legal. And there is no reason not to do it, because the States, 
at least the worst ones, have shown they are not capable of 
running these things responsibly.
    Whether we are looking at Illinois or New Jersey or 
Connecticut or Kentucky, these are real problems that are 
existential threats to the finances of their State and, 
therefore, to the economies of their State and even to 
bordering States. So, I think that Congress should really look 
into this and think about whether ERISA should apply to these 
plans.
    Mrs. Miller. So now----
    Chairman DeSaulnier. Excuse me, Doctor.
    Representative Miller, your time is up. If you want to wrap 
up, go ahead.
    Mrs. Miller. Well, now we can see that we needed Federal 
Government regulation, and, perhaps, we can get that rolling, 
like you said, today, to act today. But what are we going to do 
about the problem that we are bankrupt and we can't pay these?
    Mr. Biggs. Ultimately, you may default to your bondholders. 
Beyond that, it is really, really a tough decision. You know, 
every public policy analyst says, I have some magic solution 
for you. Now, my magic solution is a time machine to go back 25 
years and fix it then. Once you are where Illinois is today, it 
is really hard to get out of it.
    Chairman DeSaulnier. Thank you, Doctor. Thank you, 
Representative.
    Now I am going to recognize the gentleman from Michigan, 
and I am going to ask him to step in to Chair the hearing for a 
short while, while I go off to another hearing. Andy, the floor 
is yours.
    Mr. Levin. [Presiding.] Thank you so much, Mr. Chairman. I 
will ask my questions and then recognize others in order. It is 
so good to see everybody, and I really appreciate all of our 
witnesses here for participating in this vital hearing.
    You know, retirement security should be a right of every 
American. And I am proud that the Democratic majority passed 
much-needed relief for multiemployer pension plans as part of 
the American Rescue Plan. It was the right thing to do to 
prevent a crisis and protect retirees who were on track to see 
their pensions reduced, even, in some cases, to zero in the 
midst of a huge economic crisis.
    Unfortunately, my Republican colleagues have spent a lot of 
time criticizing and mischaracterizing the special financial 
assistance program for multiemployer plans that congressional 
Democrats included in the American Rescue Plan.
    For all the reasons Chairman DeSaulnier mentioned in his 
opening statement, they are wrong. But I think it is also worth 
discussing how consistently wrong they have been over the 
decades when it comes to retirement security.
    In 1935, House and Senate Republicans attempted to 
eliminate the old age pension section of the Social Security 
Act. If they had been successful, there would be no Social 
Security as we know it today. More recently, in 2005, President 
George W. Bush and congressional Republicans made privatizing 
Social Security one of their top policy priorities.
    These are just two examples. We need to remember our 
history and examine what the consequences of these proposals 
might have been so that we can analyze future proposals 
properly, and make sure our actions do not prevent our 
constituents from retiring with dignity with the basics they 
need to live a decent life.
    Dr. Ghilarducci, what do you think would have happened if 
Republicans were successful in privatizing Social Security a 
few years before the financial crisis and the Great Recession?
    Ms. Ghilarducci. People would have withdrawn from their 
Social Security system, and 10 years later they would not have 
had the annuities to fall back on. The only logical prediction 
would have been more poverty in old age and more stress for 
families even if they weren't old.
    But I want to point out that what you could do today is to 
make sure that you expand coverage. We know, we all agree, 
Andrew, all of us agree if you start early in the financial 
market, you will be better off. But if Congress sets up a 
system where people can take out money during their lives in 
divorces and recessions, you have provided emergency savings 
money. Congress has not provided retirement security.
    So do what all of our other countries, our peers do--
Australia, the Netherlands, the U.K.--build an advance funded 
system on top of the Social Security system and leave that 
money in. But people need to have not financial education in 
fourth grade, but they need a safe place to invest that money. 
So accumulate it, invest it well, and deaccumulate it in a safe 
way.
    Mr. Levin. Thank you. Well, I would love to talk to you 
about adding a level beyond our current Social Security system 
that is universal, national, that every worker and employer can 
pay into without friction.
    But in my little time remaining, let me ask you a question, 
Dr. Rhee. You know, occupational segregation so often results 
in people of color working in jobs that do not offer retirement 
savings plans. So I would like to ask you to discuss how that 
factors into the disparities that you highlighted in your 
testimony?
    Ms. Rhee. Absolutely. So there is a lot of money in the 
401(k) and IRA system, most of the IRAs, which are Individual 
Retirement Accounts, actually are rollovers from the 401(k) 
system. So basically, it requires participating in an employer-
sponsored plan to save for retirements, and that is just human 
behavior.
    And the evidence clearly shows that workers of color, in 
particular, have difficulty accessing it and basically wind up 
with no retirement savings, right? Most Latino and Black 
households have no retirement savings. They are not seeing it. 
So there may have been increases, but if you just look at who 
has any and what those balances are, it is just woefully 
inadequate.
    And this is why we need to actually make sure, in one way 
or another, to have universal coverage, either through the 
employer-sponsored system or through a complementary system, 
which is what the U.K. match program does.
    Mr. Levin. Thank you so much, and not only for that great 
answer, but being so brief that you answered in the time I had 
remaining.
    All right. Now I would like to have the honor of 
recognizing the Ranking Member of our full Committee, Dr. Foxx. 
Dr. Foxx, you have the floor for five minutes.
    Ms. Foxx. Thank you very much, Mr. Levin. That is a very 
nice way to introduce it.
    Dr. Biggs, you explained your testimony that retirement 
savings increased dramatically upon the introduction of a 
defined contribution and individual account plans, like the 
401(k). Can you describe further how these plans have helped 
millions of Americans save for retirement, and why they are so 
important to American workers and their families?
    Mr. Biggs. Thanks very much, Congresswoman Foxx. I think in 
these kind of hearings and discussions, I find it very 
interesting, we are often talking about, as we transition from 
traditional defined benefit pensions into 401(k)s, so and so, 
good or bad things might happen. It is worth noting, 
participation in defined benefit pensions peaked at something 
like 39 percent of the private sector workforce in 1975. I 
think we are far enough along now to know what is going to 
happen here.
    The 401(k) was introduced in 1979, started growing in the 
1980s. If you look at a chart in my testimony, it looks at 
Federal Reserve data on total retirement savings, you can see 
there is an inflection point there where savings in IRAs and 
401(k)s started shooting up. And that helps explain why total 
retirement savings today are literally seven times higher than 
they were in the 1970s. Now, that money has got to go 
somewhere, and it is not all going to the rich.
    So the 401(k)s work. First, more employers are willing to 
offer a 401(k) than a traditional pension. That means more 
opportunities to save.
    Second, 401(k)s have contributions from both the worker and 
the employer, while traditional pensions had just the employer. 
That is two parties paying in, not just one.
    Third, 401(k)s vest almost immediately. Traditional 
pensions have much stricter vesting requirements. In his 
opening statement, the Chairman noted that employees may switch 
jobs 12 times over their career. For that employee, a defined 
benefit pension would be a disaster, because they would be 
failing to vest, then failing to vest, then failing to vest, 
and they wouldn't get any money back.
    We already see this in the public sector where there are 
still defined benefit pensions. Employees who shift around 
early in their careers get nothing. It is only the full career 
employees who get that. In the private sector, that doesn't 
exist anymore. We are switching around.
    So we need a flexible system that allows people to save, 
take their savings with them. Say, if you are a mom and you 
take time out of the workforce, with a 401(k) that money still 
earns interest while you are caring for your kids. And you come 
back in and transfer it to a new plan. If you had a traditional 
pension, you might fail to vest in your benefit and get 
nothing. So we----
    Ms. Foxx. You have answered. You have answered two 
questions for me in that explanation. I appreciate it.
    Earlier this year, Dr. Biggs, congressional Democrats 
enacted an $86 billion taxpayer bailout of failing 
multiemployer pension plans under the guise of COVID-19 relief. 
Mismanaged multiemployer pension plans were failing to keep 
their promises to retirees long before the pandemic. Unlike 
previous Democrat proposals to provide, quote, ``loans,'' end 
quote, to these plans, their taxpayer-funded handout will not 
have to be repaid.
    Dr. Biggs, I am concerned my Democrat colleagues believe 
they have somehow solved the problems facing multiemployer 
pension plans. Do you believe that simply throwing taxpayer 
money at these plans will help workers and retirees in long 
term? What changes should this Committee and Congress consider 
to address the chronic mismanagement and underfunding plaguing 
these plans? And I have one more question I would like to get 
in.
    Mr. Biggs. Well, you made the important point, that all 
along, assistance to multiemployer plans was framed in terms of 
loans. They need some help to get over the hump or to give them 
some money. They will pay it back. And then in the 
reconciliation bill, boom, the loans are gone. They are grants 
that no longer need to be repaid. This happened very quickly. 
As far as I can see, not much justification for it.
    Now, the cost estimate so far is around $86 billion. That 
may well go up, because the total unfunded liabilities for 
multiemployer plans are $86 billion, something like that. And 
the plans will try to act strategically. These are not well-run 
plans where the trustees, which is employers and the unions, 
have not acted as good stewards for the employees.
    Ms. Foxx. Right.
    Mr. Biggs. If these were single-employer plans, they would 
be taken over by the PBGC. They would be frozen so they are not 
continuing to promise new benefits. We threw all of that out. 
And I think we just really need to rethink how we handle this.
    Ms. Foxx. And with respect to my colleague from Michigan, 
who was so nice to me, having more government-type plans like 
this isn't going to solve the problem.
    I want you to talk a little bit about the SECURE Act and 
how programs have built on the progress of the SECURE Act and 
expands retirement plan coverage, especially workers employed 
by small businesses, in terms of their being able to band 
together, as quickly as you can.
    Mr. Biggs. We talked earlier about----
    Mr. Levin. The gentlewoman's time has expired, so please 
answer quite briefly.
    Mr. Biggs. OK. We talked earlier about the difficulty small 
businesses have starting retirement plans, the fixed costs that 
are there for them. What the SECURE Act did for small employers 
and SECURE Act 2 did for nonprofits is let them band together 
to create multiple-employer plans.
    Now, those are different from the ones we just bailed out. 
But what would happen here is it spreads those fixed costs over 
a larger group of companies and makes it easier for them to do 
this. So I think that was really a worthy addition.
    Ms. Foxx. Thank you. Thank you, Mr. Chairman, for your 
patience. I am very grateful to you.
    Mr. Levin. Thank you so much. And I would like to point out 
for the record that I have changed jobs at least 12 times 
myself, and I have vested in two pension plans. And they are 
awesome, and I am super grateful that I will have that income 
in my retirement.
    So let me now call on the gentleman from Indiana, Mr. 
Mrvan, who is next on the list. You have five minutes, sir.
    Mr. Mrvan. Thank you very much.
    Union Members typically have greater access to retirement 
savings plans than their nonunion counterparts. They also 
participate in these plans at a far greater rate than 
nonunionized workers. This is a part of what is referred to as 
the union advantage.
    In fact, according to the Bureau of Labor Statistics, 91 
percent of union workers have access to private sector 
retirement benefits and 85 percent of the union workers 
participate in retirement plans. Meanwhile, 65 percent of 
nonunion workers have access to private sector retirement 
benefits, and only 51 percent of nonunionized workers 
participate in plans.
    Dr. Rhee, do you think an increase in unionized workers 
might help address the disparities you mentioned in your 
testimony regarding access to the participation rates in 
private sector retirement plans, particularly among women and 
people of color?
    Ms. Rhee. So, absolutely. Thank you so much for bringing 
this up. So, insofar as workers of color have a retirement 
plan, whether it is a pension or 401(k), it actually is 
disproportionately through the unionized sector of the economy.
    And also, with regard to women and pensions, I also want to 
actually highlight they are more likely to have defined benefit 
pensions versus 401(k). They are just more likely to have more 
retirement savings. And I would like to say that, in terms of 
the households that are doing OK, or well in terms of 
retirement readiness, you are either in the top 20 percent 
income bracket, or you have a pension.
    With regard to women and pensions, it is particularly 
important because of the life expectancy issue. And if you 
would look at the data for current retirees, it is the women 
who used to be teachers who have the best retirement incomes. 
It is because they have that nice chunky pension that 
supplements Social Security.
    So both pensions and unionization are absolutely critical 
for both workers of color having retirement security and women 
having retirement security.
    Mr. Mrvan. Thank you. Dr. Ghilarducci, your testimony 
indicates that fewer than 15 percent of the workforce has a 
secure defined benefit pension plan now, but back in the 1970s, 
all workers with a retirement plan had a defined benefit plan.
    Do you think there is a relationship between the decline in 
union density in our country over the past 40 years, and the 
decline of traditional defined benefit plans?
    Ms. Ghilarducci. Definitely. Unions didn't just get pension 
plans for themselves. They got the plans for their spouses, and 
also the spillover effect of other employers mimicking what was 
the norm in those industries.
    So when the auto workers got a defined benefit plan, the 
salaried workers wanted it as well, as well as the auto parts 
and the local department store. We saw this all over the 
Midwest. And I am happy to see someone from Indiana. I miss it 
a lot.
    The point is, is that what Representative Levin said, that 
really does obviate what Andy said, is that having multiple 
defined benefit plans adds up, because by the time that you get 
to retirement, whether from your spouse, from your own work, it 
adds up to income for the rest of your life.
    I think we could all agree here--I am hearing it--that 
everyone needs access to a plan they can save for early on. I 
really commend you to look at, like, Kevin Hassett, the 
Republican, and my plan to offer a TSP-like plan to everybody 
to start. And we would look like the rest of other countries, 
and we would really fulfill the promise that the 401(k) failed. 
The 401(k) plan is a failure. Coverage hasn't expanded, and 
most of the benefits have gone to the top.
    Mr. Mrvan. Very quickly. How would enacting legislation 
like the PRO Act, which strengthens workers' ability to 
organize and collectively bargain, help workers' retirement 
security?
    Dr. Ghilarducci. Oh, it would actually multiply. I think 
every one new union Member, the PRO Act would help would add 
three more people to a pension plan. So the multiplier for a 
union plan is about one to three. So the PRO Act would provide 
retirement security.
    Mr. Mrvan. Thank you, Doctor.
    With that, Chairman, I yield back my time.
    Mr. Levin. Thanks, Mr. Mrvan.
    Well, Dr. Ghilarducci, Indiana is very well-represented 
here, because I am next going to recognize another gentleman 
from Indiana, Mr. Banks. And then I believe I will turn back 
the gavel to our Chairman, who has returned.
    So, Mr. Banks, you have five minutes.
    Mr. Banks. Thank you, Mr. Chairman.
    Dr. Biggs, the issue of reuniting missing participants with 
their savings is a growing problem. Plan sponsors often incur 
heavy costs searching to find up-to-date information to connect 
these individuals with their retirement accounts.
    I am wondering if you think that--would electronic delivery 
of retirement plan documents enhance portability by allowing 
individuals to easily update their contact information, or 
monitor their savings accounts after changing jobs? I hope you 
heard that. I briefly was interrupted there. But if you got the 
gist of that, Dr. Biggs, if you could talk about how you 
reunite missing participants with their savings using enhanced 
portability, I would appreciate it.
    Mr. Biggs. Yes, I did. The issue of lost accounts is a 
problem associated--one of 401(k)s main advantages. 401(k)s are 
portable in ways that traditional pensions never were, which 
means that when you leave a job during one of these 12 job 
changes that we think that every person will have, those 
savings don't go away. They go with you.
    One problem, though, is some of these accounts get lost. 
The Social Security Administration, where I formerly worked, 
did some research and found that something like one in six 
workers who participate in a retirement plan, if you ask them 
whether they participate in a retirement plan, they will tell 
you they don't. They may be unaware. You know, we don't know 
exactly what happens. But they leave, and then if they don't 
leave a forwarding address, or whatever happens and the account 
gets disconnected from them.
    So the issue is, how do we reconnect these? There are 
proposals now of having a centralized data base at Treasury 
PBGC. And so, when a retirement plan sponsor has these lost 
accounts, they have to go do their due diligence to find the 
person. If they can't, then they report the account to the data 
base.
    The issue I think is what happens to the account, who holds 
it. I would prefer that it continue to stay and earn interest, 
since a lot of these accounts, the lost accounts, will be from 
younger workers. You want them to stay invested, not get 
shifted to Treasury bonds or something.
    But then you have the question of how do you try to 
reconnect with these people. And there is one question, do you 
do it by paper or do you do it electronically? I suspect today 
electronically is an easier way of doing it. I know I have done 
work on the Social Security statement, because a paper 
statement people would get, often people would get that and 
they would look at it and it goes in the trash.
    If you get an email from your employer trying to find you, 
that is something you can search on. It saves it for you in 
that way. You can access it more easily.
    So I tend to favor electronic communication with people, 
because I just think it is an easier way of reaching people 
today, and it is easier for them to get back in touch with you 
via link to the internet.
    So I think this is doable, but it is a challenge associated 
with one of actually the main plus points of 401(k) plans.
    Mr. Banks. So sticking with that, Dr. Biggs, nearly 15 
million American workers who saved for their retirement through 
a defined contribution plan change jobs every year. These 
workers deserve to keep the money they previously saved for 
retirement, but far too often, they are unable to locate their 
hard-earned investments.
    I know there are private sector solutions that exist to 
ensure some missing participants maintain balances in an IRA 
that are not cashed out. Can you talk a little bit about some 
of the hurdles that people face when they are trying to roll 
their money over, and as policymakers, what we can do to make 
that process easier?
    Mr. Biggs. Sure. One of the problems that often happens 
with small account balances, less than $1,000, is that when you 
leave your job, the employer will simply issue you a check. 
Now, in theory, you could take that check, reinvest it in an 
IRA, maintain the savings, maintain the tax preference, but as 
we have seen in general, people don't do it. They see a check 
and they just cash it, and those savings are then lost.
    So the issue is how do you find a way to keep that money 
invested. And, so, I think looking at the idea of the data 
bases of--there are private sector firms already that handle 
these small accounts, and if you want to look more closely at 
that. But it is keeping the money invested.
    A lot of young folks--and it is for the same reasons you 
don't sign up for a retirement plan in the first place. You are 
busy. You are distracted. You may be changing jobs. You may be 
changing homes or cities. We are human beings, and things tend 
to fall by the wayside.
    But going back, I think electronic communications is a 
great way of handling this, because electronically, we can find 
you everywhere these days. Your mailing address may change, 
your email address won't. And so that is an easier way of 
overcoming some of these hurdles that we have seen in the past.
    Mr. Banks. Very good. Thank you very much.
    I yield back.
    Chairman DeSaulnier. [Presiding.] Thank you, 
Representative.
    I now want to recognize--well, first I want to thank Andy 
for stepping in. And then, I want to recognize the 
Representative from Michigan, Ms. Stevens, for five minutes. 
You are recognized.
    Ms. Stevens. Great. Thank you, Mr. Chair.
    For years, workers, retirees, and participating businesses 
have been waiting for Congress to deliver a solution to the 
multiemployer pension crisis. And I am more than thrilled and 
delighted to have been involved in that, in delivering that fix 
through the American Rescue Plan Act, which provided financial 
relief to the multiemployer pensions, and over 1.3 million 
hardworking Americans whose very livelihoods were hanging in 
the balance while we were waiting for Congress to fix this.
    The Central States Pension Fund is no longer at risk of 
being insolvent. That is where we are today. And now, over 
43,000 Michiganders will have their retirement security that 
they deserve. Over 260 businesses that serve as the lifeline 
for Michigan's economy no longer face increased liabilities 
that put jobs at risk.
    And, Dr. Ghilarducci, could you speak about the importance 
of passing this crucial fix and what consequences may have been 
had Congress not have acted?
    Ms. Ghilarducci. Yes. If those multiemployer plans had not 
been bailed out, the areas of the country where the devastation 
would have laid because those workers would not have incomes 
was very concentrated in the industrial Midwest, in the South, 
and in spotted communities.
    So, notwithstanding the fact that these families would go 
from being lower middle class to poverty, and then rely on 
Medicaid and all sorts of poor relief, they would leave middle 
class, go to welfare, a tragedy for their households, it would 
have reverberated into their already devastated communities by 
probably a multiplier of 1.5 to 2.
    Ms. Stevens. Thank you.
    And, Mr. Chair, I ask for unanimous consent to enter into 
the record the Central States district sheet for every HELP 
Subcommittee Member.
    Chairman DeSaulnier. Without objection, so ordered.
    Ms. Stevens. Thank you.
    And then, Dr. Rhee, in your testimony you mention that 
workers face an increasing retirement savings burden, and that 
workers of all backgrounds are worried about retirement, 
including millennials, who are now hitting age 40.
    Could you please expand on why millennials are worried and 
what the data suggests about their access to and participation 
in retirement savings plans?
    Ms. Rhee. Yes. Thank you. So, I am going to reference, 
because I can't remember the exact statistics, some of the 
surveys that I have cited in my written testimony.
    So millennials have had a really rough time, right? So they 
kind of came into the labor market during the 2007-2008 
financial crisis and the long recovery from the recession that 
followed. And I think that really sort of influenced their 
thinking about retirement security.
    If you look at some of the work done by the National 
Institute on Retirement Security and their survey work focused 
on millennials, they found that they are actually very 
supportive of pensions, right? So it really kind of goes 
against this image of a free-flowing millennial who is just 
going to skip from job to job and wants all this flexibility.
    And I think in some ways, millennials have had flexibility 
imposed on them by the labor market and economic structure. And 
at the same time, there actually is this kind of heightened 
awareness of risks imposed by the market. And so, there 
actually is worrying and thinking about retirement savings. 
They are saving for retirement when they can. And also, there 
is actually a high level of support for pensions.
    Ms. Stevens. Thank you.
    And, with that, Mr. Chair, I am going to yield back.
    Chairman DeSaulnier. Thank you, Representative.
    The Chair now recognizes Representative Fitzgerald for five 
minutes. You are recognized.
    Mr. Fitzgerald. Thank you, Mr. Chairman.
    Mr. Biggs, I----
    [inaudible]----You know, we are all very familiar kind of 
with automatic enrollment, but SECURE Act 2.0 would expand 
automatic enrollment, obviously, to the 401(k) plans.
    You know, what impact does this typically have on the 
employees? Has there been any analysis done on that or----
[audio malfunction]
    Mr. Biggs. I apologize.
    Mr. Fitzgerald [continuing] ----you know, has anybody 
looked further?
    Chairman DeSaulnier. Mr. Biggs, did you get the gist of 
that?
    Mr. Biggs. Just the gist of it. I think it is about 
automatic enrollment in 401(k) plans and the SECURE Act. I 
apologize. The signal was not great.
    Automatic enrollment is a great example of----
    Mr. Fitzgerald. That you aware of, and then what effect 
does it have actually on employers? I mean, everyone I think 
assumes that, you know, the automatic, kind of, forced savings 
is just a great thing for everyone, but I am wondering if 
anybody took a little bit longer or----
    Mr. Biggs. OK. Going back to late 1990, a lot of what is 
now being called behavioral economics research looked at the 
effect of defaults on people's behavior. We always assumed that 
people who needed to save or wanted to save would participate, 
the people who didn't wouldn't.
    It turns out that most people do whatever they are 
defaulted into. If the default is to participate, 70 percent of 
people participate. If the default is not, then participation 
is going to be a lot lower.
    So you can really influence people's behavior by choosing 
to make it automatic to participate and sign them up rather 
than not signing them up. And I think that is just a great 
example of how, you know, this retirement research that, you 
know, Teresa and Nari and I work in actually has translated 
into the real world. And that is very encouraging.
    So as automatic enrollment is adopted, you see greater 
participation. The question is, how far is that going to go on 
its own? I personally favor what you see in SECURE Act 2.0 of 
making automatic enrollment sort of the default for newly hired 
employees. It strikes me as the best practice just to sign 
people up. And, you know, there are low-income people who don't 
need to save where it is a little more problematic, but, by and 
large, I think that is going to be a good policy.
    The issue kind of I think you are getting at is what 
happens beyond that? You know, if an employer is making a match 
to their employee's 401(k)s and participation goes from 50 
percent to 100 percent of their workforce just for instance, 
the cost to the employer is going to increase.
    And the question is, how are they going to handle that? Are 
they going to offset that? You know, are they going to lower 
the match rate? Are they offsetting as health benefits, lower 
wages or whatever? I mean, that is the standard economic logic.
    But there is also the issue of how will, sort of, lower 
income people who are automatically enrolled in a plan, how 
will that affect their sort of total savings? There is some 
evidence that looked at automatic enrollment in the Federal 
Government that, by and large, it increased savings. For less 
educated workers, though, they increased savings in their TSP 
plan, but debts and assets outside of it tended to decline, 
which goes to show that, you know, you can lead a horse to 
water, it is hard to make them drink. If they are really low 
income, and they are thinking about putting food on the table 
or, you know, sending their kids to summer camp or buying shoes 
for their kids, it is a tougher proposition.
    So I think, by and large, automatic enrollment is a worthy 
thing, it is a great innovation, but we shouldn't think that 
just all our solutions lie in that. Life is more complicated 
for people, and they are going to try to make choices to make 
their lives as best they can. And often we in government who 
are policymakers can't foresee that accurately, so we just want 
to be modest about our claims.
    Mr. Fitzgerald. Very good. Very good. Thank you very much 
for that answer.
    Just real quick then, too, the other thing I hear when I am 
in the district and visit with a small, you know, business 
employer, and they are frustrated I think sometimes because 
they say, Listen, I want to be a good employer. I want to set 
up a retirement account for the employees that work for me, 
but, quite honestly, the cost of it and the regulations 
involved that we have to work toward meeting are too much.
    And as a result of that, they never really can successfully 
launch that retirement program. And is there anything that we 
could do, as Members of Congress, to lessen that, or change 
that dynamic?
    Mr. Biggs. Well, this is an area where I feel a little 
worried about introduction of the State-based automatic IRA 
plans, like Dr. Rhee mentioned CalSavers. I live in the State 
of Oregon. We have OregonSaves.
    On the one hand, you have small employers who are thinking 
they would like to offer a retirement plan for their employees, 
but there is cost to them increasing, there are legal 
liabilities to doing it. So they wonder what they are getting 
themselves into.
    And they still might have done it, but if they see the 
automatic IRA plan, they may say, let's just put the employee 
into that instead. The issue, though, is a 401(k) is a much 
better retirement savings vehicle than an IRA, first, because 
you have employer matching it, and, second, because the savings 
limits are much higher than with IRAs.
    So I am a little afraid we have set up this situation where 
small employers see some problems in setting up their own 
retirement plan. They see an easy out. Hey, let's just put them 
in the State plan. The State plan isn't as good as a 401(k).
    So I think we want to think both about what the State plans 
or some Federal version of them can offer, but also think how 
do we really make this easy on the smaller employers. SECURE 
Act 1 and SECURE Act 2 are movement in that direction, to make 
it lower cost and hopefully lower the scorecard.
    Chairman DeSaulnier. Thank you, Mr. Biggs.
    Mr. Fitzgerald, your time is up. Any concluding thoughts? 
No.
    All right. The Chair will now recognize the Ranking Member 
for five minutes of questions. Mr. Allen, the floor is yours.
    Mr. Fitzgerald. Thank you, Mr. Chair. I yield back. Thank 
you.
    Chairman DeSaulnier. Thank you, Mr. Fitzgerald.
    Mr. Allen.
    Mr. Allen. Thank you, Mr. Chairman.
    Dr. Biggs, you stated in your testimony that more Americans 
are saving for retirement than ever before, more employers are 
offering retirement plans than ever before--and, of course, we 
had that experience in our own company--and employees are 
saving more in these plans than ever before.
    This is great news. And I believe we can build on this 
success. What more can this Committee and Congress do to 
increase the number of small businesses providing retirement 
plans for their workers? And how can we reduce the cost and the 
regulatory issues? I know that is one thing that we faced was, 
you know, all the, you know, the legal and other aspects you 
have to deal with in setting these things up. What can we do to 
reduce the cost to providing these plans to our employees?
    Mr. Biggs. Well, the facts that you point out on 
participation retirement plans, contributions, savings levels, 
number of retirees getting benefits, the reason why I push back 
so hard on the sort of retirement crisis meme that comes out, 
this idea that we are entering some, you know, apocalyptic 
period of retirement is because it will cause us to ignore all 
the progress we have made, and forget that what we really have, 
in a lot of ways, is kind of a mopping-up operation.
    We need to say, where are the gaps in the current 401(k) 
system or the retirement plan? How do we fill those gaps? If we 
have this retirement crisis claim, people might say, Let's just 
throw the whole thing out. But the reality is the whole thing 
has worked remarkably well in improving retirement savings.
    In my testimony, I point out U.S. retirement savings 
relative to other countries, very high. I point out, you know, 
Americans' ability to maintain their preretirement standard of 
living when retired is much better than in Europe that has the 
much more centralized sort of ways of doing things. We have to 
remember our successes.
    We also want to say, where are the shortcomings? The 
shortcomings, I think, are largely in the small employer 
community where, as we have talked before, the fixed costs of 
setting up a plan are higher relative to the number of 
employees who are going to be served, and, second, the legal 
liabilities are just much more daunting. If you are a large 
employer, you can handle those things pretty easily, and almost 
all of them today are offering a plan. If you are a small 
employer, it is much harder.
    So, I think we really need to think about first, lowering 
cost and protecting its legal liabilities for small employers, 
but we also, I think realistically, need to think about if 
there are alternatives for people in those employers. I mean, 
the employers just aren't up to--you know, they are running a 
taco stand or something like that. If running a 401(k) is not 
what they can do, what other alternatives? And that may be 
State plans or a Federal version of that.
    Mr. Allen. And, perhaps, for just individuals that some 
type of incentive to do this.
    Dr. Biggs, according to the most recently available PBGC 
data, the multiemployer pension plans are collectively 
underfunded by $673 billion. Now, I said in my opening 
statement that, you know, we are dependent on the taxpayer, or 
at least the Democrats passed the American Rescue Plan and we 
took supposedly taxpayer money and--to the tune of eighty-six 
billion dollars to extend that plan process.
    Right now, obviously, all of this money that is being 
spent, we are maintaining our standard of living on the backs 
of generations of Americans. I mean, you know, there may be 
four or five, six generations as this debt mounts up.
    And so what do you see right now if we said, OK, what is 
actually staring us in the face? I think you mentioned $4 
trillion of unfunded mandates that we have right now. And is 
that the entirety of it?
    Mr. Biggs. It is never the entirety. I think with the 
multiemployer issue, we should have been honest with ourselves 
and with the American people all along. For decades, the 
American people were told, you know, the PBGC is self-funding. 
There is no liability on the Federal Government, no obligation 
on the Federal Government to pay anything. The multiemployer 
participants, if one withdraws or goes bankrupt, the others are 
going to bail it out. And because of that, they don't have to 
use strict accounting rules. They can kind of cowboy it.
    And then we said, Oh, well, these are not going to be 
bailouts. These are going to be loans. All of that, at its 
core, was not honest. I mean, you had to know that, politically 
speaking, if these plans go under, the Federal Government is 
going to bail them out, just as at the end of the day we are 
going to bail out the Illinois firefighters, because we will 
say they don't deserve to get hit.
    The key, though, is, first, how do we manage these plans 
and regulate them so we don't end up in that situation? And 
people were warned about this for decades. They refused to do 
it because there was a political cost.
    But, second, when we go to a solution, I mean, maybe--and I 
wasn't against any financial assistance for multiemployer 
pensions. But to say this is all people who are going to be on 
welfare or Medicaid, a third of the folks at Central States 
were getting more than $3,000 a month on top of Social 
Security.
    These were generous pensions. You could have trimmed them 
somewhat while maintaining the benefits at the bottom, cut the 
cost to the taxpayer. And that would have been, I think, a more 
responsible approach to this than simply saying, we are going 
to cut a check for $86 billion, and whatever it ended up being 
and call it solved.
    To be honest, if my 401(k) drops when I am about to retire, 
where is my $86 billion? I am a taxpayer, too. I am an 
American, too. Why does one group of Americans get treated so 
much better? The answer is political power, we know that. But 
it is just, let's be good regulators about this. Let's think 
about these plans seriously and be responsible about them.
    Mr. Allen. Exactly. Point well taken. And thank you so much 
for your testimony. I thank all the witnesses.
    And I yield back, Mr. Chairman.
    Chairman DeSaulnier. Thank you, Mr. Allen.
    That is the last individual of the Subcommittee that I have 
who wishes to speak. So, again, I want to thank the panelists. 
And we will go to closing comments in just a second.
    And just a little housekeeping: For material submitted to 
the hearing record, pursuant to Committee practice, materials 
or submissions to the hearing record must be submitted to the 
Committee Clerk within 14 days following the last day of the 
hearing. So by close of business on July 7th, preferably in 
Microsoft Word format.
    Only a Member of the Subcommittee or an invited witness may 
submit materials for inclusion into the hearing record, and the 
materials must address the subject matter of the hearing. 
Please submit materials to the Committee Clerk electronically 
by emailing submissions to [email protected].
    Witness questions for the hearing record. Again, I want to 
thank the witnesses. You were terrific. Lots to digest and to 
continue in conversation. I very much appreciate your 
contributions today. Members of the Subcommittee may have 
additional questions for you, and we ask that you please 
respond to those questions in writing. The hearing record will 
be held open for 14 days in order to receive those responses.
    I want to remind my colleagues that, pursuant to Committee 
practices, witness questions for the hearing record, again, 
must be submitted to the Majority Committee Staff or Committee 
Clerk within 7 days. The questions submitted must address the 
subject matter of the hearing.
    And now, for closing statements, we will go back to Mr. 
Allen for the Ranking Member's closing statement.
    Mr. Allen. Thank you, Mr. Chairman.
    And, again, I would like to thank our witnesses for 
participating in this important discussion this morning.
    I would like to also note that folks in Georgia and across 
the country work very hard so they can enjoy a comfortable and 
meaning retirement.
    Bipartisan updates to ERISA can help our constituents in 
many ways. We can simplify and reduce the cost of administering 
retirement plans. We can expand the number of retirement 
options available to small business employees. And we can boost 
access to defined contribution plans for workers.
    Taxpayer-funded bailouts of outdated multi-employer pension 
plans are an irresponsible and unsustainable solution. We must 
fix this.
    We must also focus on pro-growth economic policies to help 
more Americans succeed in the long term.
    And I will say it again: I believe there is room for 
bipartisanship in the months ahead.
    Thank you again to all the witnesses for participating in 
today's hearing and sharing your expertise. I look forward to 
working with all of you to ensure a strong American retirement 
system.
    And, Mr. Chairman, with that, I yield back.
    Chairman DeSaulnier. Thank you, Mr. Allen. It is always 
terrific to work with you. And I appreciate the fact that we 
can respect our differences but work to a common goal, which in 
this institution sometimes is very hard to get. So appreciate 
your friendship.
    Mr. Allen. Yes, sir.
    Chairman DeSaulnier. And I now recognize myself for the 
purpose of a closing statement.
    Again, I want to thank the panelists. Terrific 
presentation. I really look forward to continued conversation.
    I want to thank all my colleagues who spent time and joined 
us on this important subject matter.
    I do want to talk about one thing we didn't talk about in 
this and the three-legged stool. It is home ownership and moral 
hazard and appropriate congressional action to make sure that 
we have an appropriate risk assessment.
    I am very involved in State and local government, both with 
CalPERS and my own county, a ``37 Act'' county, here in 
California. And, clearly, we did some things. We assumed that 
our actuaries sometimes were too aggressive in terms of our 
rate of return. And, of course, that is what we want--one of 
the things we want to address.
    So in terms of responsibility, we should remember that, as 
Madison famously said: If humans were angels, there would be no 
need for government. And this is one of those areas, I think, 
whether it is in the financial service industry and what 
happened in the housing industry where so many people, 
particularly people who are disadvantaged by this economy.
    And, Mr. Biggs, I appreciate your comments. I don't want to 
be Polyannish, but I also think it is irresponsible not to 
recognize the sort of Dickens aspect of some of the challenges 
we have, that if you are a poor person, particularly a poor 
person of color, and your wages are limited, it is harder.
    Also completely agree with the small business argument. 
When I did 401(k)s and was able to afford it as a restaurant 
owner, if I had a dime for every time one of my younger 
employees said, ``You know, I would rather you just give me the 
money rather than put it in whatever this is.'' So it is 
daunting.
    But I think we should be proportionate and be mindful about 
all of the risks and reinforce a responsible management and a 
responsible risk assessment by the managers of these retirement 
plans, irrespective of what their legal structure is, and also 
not have selective amnesia about risk assessments and moral 
hazards in financial institutions, because they are clearly 
intertwined, and particularly intertwined when it comes to home 
ownership, which we know is an important part, historically, of 
that third pillar.
    Sorry to digress, but I wanted to bring that up.
    I also wanted to thank and just remind folks that, 
accepting some of the criticism, we have a different 
perspective on our legislation to help save those multi-
employer plans and that we did have support from AARP, the AFL-
CIO, the National Association of Manufacturers, the U.S. 
Chamber of Commerce, and scores of other stakeholders who 
supported our efforts.
    So the evidence-based research, Mr. Allen, you brought that 
up, and I am all in on that. So let's continue to do that.
    Today's hearing also confirmed how vital and necessary 
pensions are to Californians, my home State, and all Americans. 
It highlighted the challenge and inequities in private sector 
retirement systems, particularly as it relates to access to and 
participation in employer-provided plans. And we have a lot of 
work to do.
    I appreciated the witnesses' analysis of the SECURE Act 
2.0. The Education and Labor Committee is expected to mark up 
the bill in the coming months. And look forward to more 
communication with all of my colleagues as we lead up to that.
    And I also look forward to the fact that we must not stop 
there. We must continue to prioritize and enact other policies 
that boost workers' wages, strengthen Social Security, and make 
it easier for Americans workers to organize and collectively 
bargain for their best interest and also be respectful of 
employers.
    I look forward to working with all of my colleagues on 
these important issues.
    If there is no further business, thank you all again.
    Without objection, the Subcommittee stands adjourned.
    [Additional submission by Chairman DeSaulnier follows:]
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    [Additional submission by Chairman DeSaulnier and Mr. Allen 
follows:]
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    [Additional submissions by Mr. Allen follow:]
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    [Additional submission by Chairman Scott follows:]
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    [Additional submission by Ms. Stevens follows:]
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    [Whereupon, at 12:19 p.m., the Subcommittee was adjourned.]

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