    [Senate Hearing 117-186]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-186

                              RETIREMENT SECURITY:
                            BUILDING A BETTER FUTURE

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

                                    HEARING

                                     OF THE

                        COMMITTEE ON HEALTH, EDUCATION,
                              LABOR, AND PENSIONS

                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

      EXAMINING RETIREMENT SECURITY, FOCUSING ON BUILDING A BETTER FUTURE

                                   __________

                                  MAY 13, 2021
                                   __________

     Printed for the use of the Committee on Health, Education, Labor, and
                                    Pensions

                      [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

                                  ___________

                        U.S. GOVERNMENT PUBLISHING OFFICE

    46-766 PDF                WASHINGTON : 2022

              COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                        PATTY MURRAY, Washington, Chair
    BERNIE SANDERS (I), Vermont          RICHARD BURR, North Carolina,
    ROBERT P. CASEY, JR., Pennsylvania       Ranking Member
    TAMMY BALDWIN, Wisconsin             RAND PAUL, M.D., Kentucky
    CHRISTOPHER S. MURPHY, Connecticut   SUSAN M. COLLINS, Maine
    TIM KAINE, Virginia                  BILL CASSIDY, M.D., Louisiana
    MAGGIE HASSAN, New Hampshire         LISA MURKOWSKI, Alaska
    TINA SMITH, Minnesota                MIKE BRAUN, Indiana
    JACKY ROSEN, Nevada                  ROGER MARSHALL, M.D., Kansas
    BEN RAY LUJAN, New Mexico            TIM SCOTT, South Carolina
    JOHN HICKENLOOPER, Colorado          MITT ROMNEY, Utah
                                         TOMMY TUBERVILLE, Alabama
                                         JERRY MORAN, Kansas

                         Evan T. Schatz, Staff Director
                   David P. Cleary, Republican Staff Director
                      John Righter, Deputy Staff Director

                                C O N T E N T S

                                  ----------

                                   STATEMENTS

                             THURSDAY, MAY 13, 2021

                                                                       Page

                               Committee Members

    Murray, Hon. Patty, Chair, Committee on Health, Education, Labor,
      and Pensions, Opening statement................................     1
    Burr, Hon. Richard, Ranking Member, a U.S. Senator from the State
      of North Carolina, Opening statement...........................     3

                                   Witnesses

    Lucas, Lori, President and CEO, Employee Benefit Research
      Institute, Washington, DC......................................     5
        Prepared statement...........................................     8
        Summary statement............................................    26
    Akabas, Shai, Director of Economic Policy, Bipartisan Policy
      Center, Washington, DC.........................................    26
        Prepared statement...........................................    30
        Summary statement............................................    47
    Kyle, Deva, Counsel, Bredhoff & Kaiser, Washington, DC...........    47
        Prepared statement...........................................    49
        Summary statement............................................    54
    Gray, Dave, Head of Workplace Retirement Products, Fidelity
      Investments, Boston, MA........................................    55
        Prepared statement...........................................    56

                              RETIREMENT SECURITY:
                           BUILDING A BETTER FUTURE

                                  ----------

                             Thursday, May 13, 2021

                                           U.S. Senate,
           Committee on Health, Education, Labor, and Pensions,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:05 a.m., in
    room 106, Dirksen Senate Office Building, Hon. Patty Murray,
    Chair of the Committee, presiding.
        Present: Senators Murray [presiding], Casey, Murphy, Kaine,
    Hassan, Smith, Rosen, Burr, Braun, Marshall, Scott, Tuberville,
    and Moran.

                      OPENING STATEMENT OF SENATOR MURRAY

        The Chair. Good morning. The Senate Health, Education,
    Labor, and Pensions Committee will please come to order.
        Today, we are having a hearing on retirement security, and
    this is the first this Committee has had since 2013. So, I want
    to thank Ranking Member Burr for working with me to hold this
    bipartisan hearing. Senator Burr and I will each have an
    opening statement, and I will introduce our witnesses. After
    they give their testimony, Senators will each have 5 minutes
    for a round of questions.
        Before we begin, as usual, I want to walk through the
    COVID-19 safety protocols in place. We are all, again, grateful
    to our Clerks and all of our staff who have worked hard to get
    this set up and help make sure everyone stays healthy and safe.
        We will follow the advice of the Attending Physician and
    the Sergeant at Arms in conducting this hearing. Committee
    Members are seated at least 6 feet apart, and some Senators are
    participating by videoconference. And while we are unable to
    have the hearing fully open to the public or media for in-
    person attendance, live video is available on our Committee
    website at help.senate.gov. And if you are in need of
    accommodations, including closed captioning, you can reach out
    to the Committee or to the Office of Congressional
    Accessibility Services.
        Even before this pandemic wreaked havoc on our Nation, it
    was clear, our economy did not work for a lot of working
    families, and too many people in Washington State and across
    the Country were struggling just to get by, let alone plan for
    the future.
        Calculations from the World Economic Forum found that the
    gap between what our Country is saving for retirement and what
    people will need was $28 trillion in 2015 and would be $137
    trillion by 2050.
        In 2016, over half a million full-time workers in
    Washington State worked for an employer that did not offer a
    retirement plan.
        Only one in three workers in our Country is saving enough
    to retire comfortably, with the average worker on track to have
    their standard of living cut by one-fifth in retirement, and
    the situation is even worse among women and workers who are
    paid low income.
        It is not just people's financial futures that have been in
    jeopardy. In 2018, the Federal Reserve found almost 40 percent
    of Americans said they would struggle to come up with $400 in
    an emergency. A historic pandemic that causes millions of lost
    jobs and millions of people to be forced out of the workforce
    to care for their families is exactly the kind of emergency
    people cannot afford.
        That is why we took action in our relief bills, so people
    could draw on retirement savings to weather the storm without
    being penalized; and to provide direct financial assistance, as
    well, since helping people access their retirement can only go
    so far when one in four people in our Country do not have
    retirement savings to start with, and one-third say they are
    not on track for retirement.
        Even before this crisis, women were more likely than men to
    face poverty in retirement, in part due to the wages they lose
    over the course of their careers to pay discrimination, lack of
    quality, affordable childcare, and national paid family leave.
        Injustices, like investments, compound over time, leaving
    the average woman with over 400,000 less in earnings than her
    male colleagues over a 40-year career. That gap is even larger
    for women of color, who are estimated to lose around $1 million
    over the course of their career due to the wage gap. And, now,
    after this pandemic, one-fifth of Americans, one-quarter of
    women, and over one-quarter of people of color say they are
    worse off financially. Over half of Americans say they are more
    worried about retirement than they were a year ago, and nearly
    half do not think they will ever be able to retire.
        We were facing a retirement crisis before COVID-19, but, as
    with so many other things, this pandemic has just poured
    gasoline on the fire.
        If we are going to rebuild our Country stronger and fairer,
    we have to address the reality that, for far too long, the ways
    we helped families plan for the future have been stuck in the
    past; stuck in a time when women were not half of the
    workforce; when student debt was not at a historic high; when
    healthcare was less expensive; when more employers offered
    strong retirement benefits, like pensions; and when it was
    unthinkable that cyberattacks could throw the life savings of
    millions of people into jeopardy with just a few keystrokes.
        We need to take steps today to protect families' plans for
    tomorrow. We need to make it easier for people to save for an
    emergency, enroll in a quality retirement plan, and get the
    tools and knowledge they need to plan their financial futures.
        We need to address longstanding threats to families'
    finances, like the racism, sexism, and ableism that have
    chipped away at the economic security of so many people for
    decades, and new threats, like cyberattacks, which our
    retirement system has yet to fully reckon with.
        A lot has changed for families across the Country over the
    last year, to say nothing of the last 8 years since our last
    retirement hearing. So, I am incredibly glad we are able to
    have this hearing today, and I am looking forward to continuing
    the conversation we are having today and working with my
    colleagues on both sides of the aisle to address pressing
    challenges and make long-needed updates to our Nation's
    retirement security.
        With that, I will turn it over to Ranking Member Senator
    Burr for his opening remarks.

                       OPENING STATEMENT OF SENATOR BURR

        Senator Burr. Thank you, Madam Chair, for scheduling this
    hearing and highlight the needs for Americans to save more for
    their future. I hope this bipartisan hearing is a sign that the
    Committee will work collaboratively on retirement legislation
    in our jurisdiction instead of using reconciliation again to
    move partisan ideas or more expensive bailouts.
        I want to welcome our witnesses. I want to thank you for
    being here and for your expertise. And I want to especially
    welcome Dave Gray. North Carolina, Madam Chair, is the home of
    a lot of Fidelity employees, so we look to Fidelity for more
    than just the advice they give us today. They are the backbone
    of employment.
        Some Members of the HELP Committee, like myself, serve on
    other committees, like Finance and Aging, who have held recent
    hearings on retirement matters. The hook into retirement issues
    for Labor Committee is ERISA, and the Employee Retirement and
    Income Security Act, ERISA, sets standards for retirement and
    health plans in private industry to protect individuals in
    these plans.
        The Tax Committee in Congress handles the Internal Revenue
    Code portion.
        There is an overlap between Committees that typically gets
    worked out very smoothly. That said, as a Member of the HELP
    Finance and Aging, I consider my office a one-stop shop on
    retirement and aging matters. I will personally get engaged in
    any bipartisan retirement matter without worry of jurisdiction,
    but for today, we will concentrate on the HELP piece.
        Our particular focus today is to find contribution plans,
    the reliable superstar of the retirement world. The question
    before us is, what is working well and what is lagging and
    needs improvements?
        The answer to that question is easy at the surface level.
    The system works great. The system does not work great when you
    do not or cannot participate. What we need to do is help
    Americans and their employers offer, operate, and fund
    individual retirement plans.
        We also need to make sure that people who have screwed up
    nearly every other retirement plan in America do not get their
    hands on the freedom and flexibility Americans have in their
    private retirement accounts. Many Americans who look ahead at
    their retirement have to look at the newspaper to see what is
    happening with Social Security, with their company or union
    defined benefit plan, or their catastrophically underfunded
    state and local pension plans.
        Not so with defined contribution. Americans in defined
    contribution plans pick up a piece of paper and see two
    things--their name and their account balance. It is their
    money, and it is there. It is not a promise. It is not an
    accounting notation. It does not require a bailout. It is their
    money. It requires time, it requires personal contributions,
    maybe an employer match, and some basic financial knowledge.
    While investments must be managed well, market fluctuations
    must be weathered and smart decisions made as you near
    retirement. No politician can steal your 401(k) or IRA--at
    least not yet.
        Congress is good at two things--overreacting and
    underreacting. Individual retirement plans have not gotten a
    lot of attention in some respects because they work. Individual
    retirement plans show that regular folks benefit from the
    success of corporate America and, quite frankly, investments.
        Despite the anti-business rhetoric we hear from some in
    Congress and the Administration, it would surprise many that
    the energy or pharmaceutical companies that the Biden
    administration intends to put out of business are mainly owned
    by retirement plans, and that, in fact, is Americans. That is
    you and me and anyone else with a retirement account.
        This irks some. It does not jibe with their government-
    centric philosophy. It does not jibe with their desire to
    demonize business when business is owned by Americans'
    retirement plans.
        Retirement works when Americans control their own money. It
    goes wrong when we add middlemen with goals other than putting
    real money into a nest egg and growing that.
        What happens when people other than you control your
    retirement? In the American Rescue Plan Act passed by Congress
    and signed into law in March, they included a massive bailout
    for certain multi-employer pension plans. These are retirement
    plans negotiated and promised by private sector employers and
    unions to private sector workers. Employers and unions could
    not afford the promises they made to workers over the past
    several decades, so they gave them $80 billion. That is, they
    gave them $80 billion of taxpayer funds to make private
    agreements work. A bailout, pure and simple, with no reforms to
    these plans to make sure that the promises will be able to be
    honored in the future.
        The Federal Government cannot afford to guarantee every
    retirement promise made between private companies and their
    workers, or between poorly run states and their public unions.
    We have a national debt of $28 trillion, and that is just
    today.
        There are numerous mismanaged pension systems that have
    failures looming both in the private and public sectors as we
    sit here. The latest data in 2018 from the Federal Reserve
    estimates $4.5 trillion in public plan underfunding. Four point
    five trillion dollars in underfunding.
        Employees, states, and retirees should not and cannot rely
    on government bailouts for the future, so that means Congress
    needs to work together to shore up retirement options and to
    help Americans save for their own retirement.
        Americans need to start saving more. With fewer Americans
    having access to an employer-sponsored pension plan, old rules
    of thumb about how much to save are outdated. The gap between
    the retirement savings Americans have and the savings they need
    is already in the trillions and likely to grow.
        Not only are many Americans struggling to keep pace with
    their savings needs, even more alarming is how many people have
    no savings outside of Social Security. The data we have seen
    says that over one-quarter of non-retirees have nothing in
    their retirement piggy banks, many of whom are already nearing
    the traditional retirement age.
        While the long-term impact of the pandemic and economic
    lockdowns remains to be seen, we know that many Americans
    needed to tap into their retirement savings to pay more
    immediate needs in the past year, draining assets that were
    intended for retirement.
        On the bright side of these discouraging numbers is what we
    know that works. AARP says that workers are 15 times more
    likely to save for retirement if they have access to a payroll
    deduction plan at work. You don't spend what you don't see.
        We have also seen the success of a defined contribution
    plan, features like automatic enrollment and employer matching,
    which show that most workers will not opt out of an employer-
    sponsored savings plan if they are already enrolled, and many
    will set their payroll deduction to maximize the level they
    earn on the employer match.
        The question of how to improve the average American's
    retirement outlook is not how do we bail out the systems that
    make up multi-trillion dollar savings gaps. Instead, it is, how
    do we help employers--employees and employers take advantage of
    the savings programs that already work.
        I look forward to the hearing today. I look forward to the
    expertise of our panelists, and I thank the Chair for her
    indulgence.
        The Chair. Thank you, Senator Burr.
        I will now introduce today's witnesses.
        Lori Lucas is the President and CEO of the Employee Benefit
    Research Institute in Washington, DC.
        Thank you, and welcome, and thank you for joining us today.
        Next, I would like to introduce Shai Akabas, the Director
    of Economic Policy at the Bipartisan Policy Center in
    Washington, DC.
        Thank you for joining us today.
        Next, Deva Kyle serves as counsel to Bredhoff & Kaiser,
    PLLC and advises clients on a wide range of issues under
    retirement and Internal Revenue code, laws, and regulations.
        We are glad to have you here today.
        Finally, I would like to introduce Dave Gray. Mr. Gray is
    the Head of Workplace Retirement Offerings and Platforms at
    Fidelity Investments in Washington, DC.
        Thank you for being here today.
        Ms. Lucas, we will begin with your opening statement.

     STATEMENT OF LORI LUCAS, PRESIDENT AND CEO, EMPLOYEE BENEFIT
                   RESEARCH INSTITUTE, WASHINGTON, DC

        Ms. Lucas. Good morning, and thank you to Chair Murray,
    Ranking Member Burr, and Members of the Committee for inviting
    me to testify on the important topic of retirement security.
        The events of the past 14 months, including pandemic-
    related job loss, increased care giving needs, and heightened
    stress have, among other things, highlighted the need for
    savings and financial security.
        My name is Lori Lucas, and I am the CEO of the Employee
    Benefit Research Institute. EBRI is a non-partisan, tax-exempt
    organization that contributes to sound employee benefit
    programs and public policy through independent, objective,
    fact-based research.
        I want to start by thanking the Senate HELP Committee for
    the good work they have done in improving the U.S. retirement
    system over the years.
        To put things in context, I believe that the best way to
    think of the U.S. retirement system is pre-and post-2006
    Pension Protection Act. Prior to the PPA, defined contribution
    plans largely relied on individual workers to be engaged and to
    navigate savings and investing on their own. It was essentially
    a do-it-yourself system. However, the average worker is not a
    professional investor. They need help.
        The PPA recognized this and incentivized employers to
    automate their defined contribution plan so that the default is
    for workers to be enrolled in the plan, to save at higher
    levels over time, and to invest in a diversified portfolio.
        Yet, there are areas that the PPA did not fully address,
    creating the opportunity today to further improve the system.
    These include greater access, reduced plan leakage, and
    supporting thoughtful, post-retirement spending.
        When it comes to improving access, EBRI research shows that
    the probability of successful retirement depends to a great
    extent on whether employees are eligible to participate in the
    defined contribution plan. Using EBRI's retirement security
    projection model, we find that merely having access to an
    employer-sponsored DC plan increases the chances that workers
    will have enough money to sustain themselves in retirement by
    50 percent.
        Yet, we find that about four in ten workers are projected
    to fall short of what they need in retirement savings,
    resulting in an aggregate retirement deficit across all U.S.
    households of $3.68 trillion in today's dollars.
        This deficit is owed in part to the fact that many American
    workers, mainly those who work for small employers, do not have
    access to employer-sponsored retirement plans. Indeed, while 90
    percent of workers at large companies have access, only half of
    workers at smaller companies do. Simply put, smaller companies
    often cannot afford to offer the existing traditional
    retirement plans.
        The recently passed SECURE Act recognized this and created
    an alternative--pooled employer plans. PEPs allow multiple
    employers to offer a single plan that is run by an outside
    administrator, who also serves as the plan's fiduciary. The key
    to PEPs fulfilling their potential for expanding access,
    however, is to streamline legal and compliance needs, namely
    non-essential reporting, auditing, and compliance requirements
    that can cost--that can increase costs, and thereby reduce
    employer adoption rates.
        Turning to plan leakage, the main culprit here is cash-outs
    by employees when they leave their employer. Each year,
    approximately 40 percent of terminated participants elect to
    prematurely cash out of their defined contribution plan, and
    these are mainly younger workers with small balances. Part of
    the reason is that cash-outs are easy. In contrast, under the
    current rules, rolling over money into your new employer's plan
    can be extremely challenging.
        How cannot cashing out be made easy? One way is through
    auto portability. That is where a participant's account from a
    former employer's retirement plan is automatically combined
    with their active account in the new employer's plan. This
    helps keep the assets in the retirement system and reduces
    leakage from cash-outs.
        EBRI research finds that if we were to completely eliminate
    cash-outs, the youngest workers in the lowest income quartile
    would have a 35.5 percent increase in balances at retirement.
    Policies and support reducing or eliminating cash-outs from
    workplace retirement plans can improve outcomes, especially for
    lower-wage workers.
        I want to conclude with a discussion of financial security
    in retirement. EBRI spending and retirement survey identifies
    two types of retirees who stand in stark contrast to one
    another. First are highly indebted retirees, who are a
    significant and growing group. They are characterized as
    predominantly female, divorced, people of color, with
    relatively low financial assets and crushing or unmanageable
    debt. Their retirement lifestyle is fraught with challenges,
    uncertainty, frustration, and the sense that they are barely
    hanging on.
        Policies that promote financial wellness initiatives, such
    as budgeting, debt management, and financial coaching through
    the workplace during the accumulation phase can benefit workers
    in real time and also provide skills that can be carried over
    to retirement to potentially address the growing issue of debt
    in older ages.
        On the other end of the spectrum, you have long-term,
    secure retirees, who have many sources of income, and they are
    often guaranteed, such as defined benefit plans or retiree
    medical coverage. These retiree lives are comfortable, stable,
    and secure.
        But, unfortunately, this long-term secure cohort is likely
    to shrink as defined benefit plans and retiree medical plans
    become less prevalent. A possible solution would involve
    policies that promote sources of guaranteed income within the
    workplace, other than defined benefit plans, such as immediate
    or deferred income annuities.
        In conclusion, the U.S. retirement system has made a lot of
    progress in the past 15 years. However, there is more to do.
    Taking lessons from the PPA, solutions that employ automation,
    that leverage the current system without undermining it, and
    that understand the needs of American workers to improve
    access, stem leakage, and create better retirement spenders.
        Thank you for all you have done to improve the retirement
    system over the years. With your support and perseverance, we
    can build an even better future for Americans' retirement
    security.
        [The prepared statement of Ms. Lucas follows:]
                        prepared statement of lori lucas

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

                       [summary statement of lori lucas]
        The 2006 Pension Protection Act achieved great strides in improving
    the defined benefit retirement system by incentivizing employers to
    ``automate'' their defined contribution plans so that the ``default''
    is for workers to be enrolled in the plan, to save at higher levels
    over time, and to invest in diversified portfolios.

        Yet, there are areas that the PPA did not fully address, creating
    the opportunity today to further improve the system. These include
    greater access, reduced plan leakage; and supporting thoughtful post-
    retirement spending.

              Improving Access: Pooled Employer Plans can improve
            access for employees of small companies because they
            potentially offer reduced costs and administrative burden to
            small employers by allowing multiple employers to offer a
            single plan that is run by an outside administrator who also
            serves as the plan's fiduciary. The key to PEPs fulfilling
            their potential for expanding access, however, is to streamline
            legal and compliance requirements--namely, nonessential
            reporting / audit / and compliance requirements that can
            increase costs and thereby reduce employer adoption rates.

              Reducing Plan Leakage: The main culprit when it comes
            to workplace plan leakage is cash outs by employees when they
            leave their employer. They do this because it is easy under the
            current system. Policies that support solutions that make is
            easy to NOT cash out from workplace retirement plans--which may
            include auto portability--can improve outcomes, especially for
            lower wage workers who are more likely to cash out their
            smaller balances as they change jobs.

              Supporting Employers' Interest in Helping with
            Emergency Savings: Employers increasingly seek to facilitate
            emergency savings through workplace programs. Policies that
            promote adoption of such solutions, including solutions made
            available through the existing workplace defined contribution
            plan structure, could lead to wider availability of these
            offerings by employers--which could also take pressure off core
            defined contribution assets to serve as de facto emergency
            savings during times of crisis.

              Facilitating Post-Retirement Spending: (1) Highly
            indebted retirees are a significant and growing group. Policies
            that promote financial wellness initiatives, such as budgeting,
            debt management, and financial coaching through the workplace
            during the ``accumulation phase'' can benefit workers real
            time, and also provide skills that can be carried over to
            retirement to potentially address the growing issue of debt in
            older ages. (2) As defined benefit and retiree medical plans
            become less and less prevalent, the need for other sources of
            guaranteed income increases. A possible solution could involve
            policies that promote sources of guaranteed income within the
            workplace, other than defined benefit plans, such as immediate
            or deferred income annuities. Also, for workers that no longer
            have access to retiree medical plans, facilitating usage of
            health savings accounts for retirement health care expenses may
            ultimately give retirees greater comfort that they can cover
            out of pocket health care expenses in retirement.
                                     ______

        The Chair. Thank you.
        Mr. Akabas.

        STATEMENT OF SHAI AKABAS, DIRECTOR OF ECONOMIC POLICY,
                BIPARTISAN POLICY CENTER, WASHINGTON, DC

        Mr. Akabas. Good morning, Chair Murray, Ranking Member
    Burr, and distinguished Members of the Committee. Thank you for
    inviting me to testify today about the state of retirement
    security in America and where we go from here.
        My name is Shai Akabas, and I am Director of Economic
    Policy at the Bipartisan Policy Center, a non-profit
    organization that combines the best ideas from both parties to
    promote health, security, and opportunity for all Americans.
        The U.S. retirement system is working well for many people,
    particularly those with stable employment, sufficient income,
    and opportunities to save throughout their life. While the
    structures in place have room for improvement, they result in
    positive, financially stable outcomes for a majority of
    households.
        But, millions of Americans are falling through the
    proverbial cracks in the system, and cracks is really an
    understatement. These are gaping holes in need of reform. My
    testimony will discuss where these holes are and how this
    Committee can start to repair them.
        I will start by briefly discussing the challenge. A
    majority of Americans worry about running out of money in
    retirement, making it the Nation's top financial concern.
    Recent trends from the COVID pandemic and recession to rising
    healthcare costs, to increasing life expectancies, have made
    building a secure retirement both more important and more
    challenging.
        Although the retirement security challenge is faced by all
    Americans, the ability to meet it varies significantly. Workers
    with low incomes, those without college degrees, people of
    color, women, and part-time, seasonal, and temporary workers
    all disproportionately struggle to save for retirement.
        Even when these workers can and want to save, they
    frequently do not have access to a workplace retirement plan. I
    hope this Committee will appreciate how the current retirement
    system often works well for people like us in this room and
    focus on how to make it work just as well for those it
    currently leaves behind.
        In 2016, BPC convened a bipartisan commission on retirement
    security and personal savings, co-chaired by former Senator
    Kent Conrad and Jim Lockhart, a senior Bush administration
    official. The commission spent 2 years studying the status of
    retirement security in the U.S. and made recommendations in six
    key areas. They were:

        One, improving access to and the design of workplace
    retirement savings plans.

        Two, promoting personal savings for short-term needs and
    preserving retirement savings for older age.

        Three, facilitating lifetime income options to reduce the
    risk of outliving savings.

        Four, facilitating the use of home equity for retirement
    consumption.

        Five, improving financial capability among all Americans.

        Six, strengthening Social Security's finances and
    modernizing the program.

        I know it is outside this Committee's jurisdiction, but
    looming over the retirement landscape is the impending
    depletion of the Social Security Retirement Trust Fund. While
    policymakers can debate the best way to restore the program to
    financial sustainability, I want to emphasize that the longer
    Congress waits to make changes, the less palatable and the more
    drastic they will be. And the delay is incredibly unfair to
    Americans trying to plan for retirement. Social Security's
    financial challenges are solvable, but they will be easiest to
    address if we start now.
        There is no silver bullet to America's retirement security
    challenge, and different solutions will help different groups
    of savers. We need an all-of-the-above approach to maximize the
    reach and effectiveness of our current retirement system.
        I am going to briefly propose three good bipartisan places
    to start.
        One, in the private sector, only two-thirds of workers have
    access to a workplace retirement plan, and only half actually
    participate. Employees of small-and medium-sized businesses are
    especially unlikely to have access to an employer-sponsored
    plan.
        When you ask these businesses why they do not offer plans,
    the No. 1 reason cited is often cost or administrative burden.
    The emerging PEPs authorized by the SECURE Act could help in
    this regard, but there is another part of the equation. Most
    employers wishing to offer a retirement plan today also must
    accept the fiduciary responsibility that goes along with it.
    For businesses with small or non-existent H.R. departments,
    this task is daunting or simply impossible without paying for
    external support.
        To help these businesses offer plans while ensuring that
    their employees are protected, Congress should further relax
    fiduciary obligations for small businesses while making sure to
    transfer that responsibility to other private sector entities
    and regulators who are better equipped to handle them.
        Meanwhile, several states have enacted laws requiring all
    employers over a certain size to automatically enroll their
    workers in some form of retirement savings plan. More states
    are following suit. But, workers in states without these
    requirements are getting left behind, while the emerging
    patchwork of different requirements in different states is a
    headache for businesses that operate across state lines.
        Congress can extend coverage to Americans everywhere and
    streamline regulations by creating a national minimum coverage
    standard that preempts the multitude of mandates at the state
    level. One study found that this approach could increase
    average retirement savings for middle income earners by roughly
    50 percent.
        No. 2, without emergency savings, a sudden loss of income
    or a surprise expense can upend a worker's financial life. It
    can also lead them to raid retirement savings. Unfortunately,
    an alarming share of Americans have very little emergency
    savings, or even none whatsoever.
        A promising way to help workers build emergency savings is
    to take a tool from the retirement world and apply it to
    retirement savings for emergencies--excuse me, apply it to
    building savings for emergencies. Automatic enrollment has
    proven to be an extremely powerful way to increase
    participation and boost retirement savings.
        Employers that want to should be able to similarly default
    their workers into an emergency savings plan that deposits a
    portion of each paycheck into an emergency savings account.
    Unfortunately, the law is unclear for employers that want to
    adopt automatic enrollment for these accounts. Providing
    regulatory clarity, along with reasonable consumer protections,
    will open the door to this promising tool, and with it, better
    savings outcomes.
        No. 3, several pieces of pending bipartisan legislation
    would build on the success of automatic features, incorporating
    them into more retirement plans. I have touched on that in my
    written testimony and will be glad to discuss it further in the
    Q and A.
        Finally, retirement security has been a standout area for
    bipartisan cooperation in Congress, in no small part thanks to
    the leadership of many Members of this Committee. We at BPC
    have seen the power that a broad coalition can bring to an
    issue like retirement security. We launched the Funding Our
    Future initiative in 2018, and our coalition now unites more
    than 50 organizations from the academic, non-profit, trade
    association, and corporate sectors. I can attest that its
    strength comes from its bipartisan makeup.
        Funding Our Future's three goals are to make savings easier
    for Americans at all ages, to help them transform nest eggs
    into retirement income, and to ensure that Social Security is
    financially stable both for current and future retirees. We at
    BPC and Funding Our Future are eager to continue working toward
    those goals with all of you.
        Thank you for your time, and I look forward to your
    questions.
        [The prepared statement of Mr. Akabas follows:]
                       prepared statement of shai akabas

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

                       [summary statement of shai akabas]
            1. Too many workers lack the ability to save in a workplace
            retirement plan--especially workers who are disadvantaged or
            employed at small businesses. Lawmakers can most effectively
            increase access by relaxing regulatory burdens that prevent
            small-and medium-sized businesses from starting retirement
            plans and by creating a nationwide minimum-coverage standard to
            harmonize the patchwork of rules being created at the state
            level.

            2. Workers need emergency savings for short-term financial
            stability and to protect retirement savings from current
            spending needs. Congress can help Americans build emergency
            savings by clearing the way for firms to automatically enroll
            their employees in workplace emergency savings plans.

            3. Automatic enrollment and automatic escalation of employee
            contributions are critical features for retirement plans to
            incorporate. Widespread adoption will mean more savers and
            greater savings. Legislation that would increase the use of
            these features could significantly boost retirement outcomes.

            4. Retirement security has been a standout area of working
            across party lines. This issue can and should remain bipartisan
            to most effectively help Americans meet their retirement goals.
                                     ______

        The Chair. Thank you.
        We will turn to Ms. Kyle.

    STATEMENT OF DEVA KYLE, COUNSEL, BREDHOFF & KAISER, WASHINGTON,
                                   DC

        Ms. Kyle. Chair Murray, Ranking Member Burr, and Members of
    the Committee, thank you for the opportunity to testify today
    about disparities in retirement savings.
        My name is Deva Kyle, and I am of counsel with the law firm
    of Bredhoff & Kaiser. Since joining the firm in 2019, I have
    represented pension plans and labor organizations in the public
    and private sector in a range of industries, including food
    service, education, manufacturing, cleaning services, and
    construction. I work principally as benefits counsel, providing
    advice on Federal and state compliance as it relates to 401(k)
    and other defined contribution, defined benefit, and health and
    welfare plans.
        Before joining Bredhoff & Kaiser, I spent 15 years in
    government. I worked at the Pension Benefit Guaranty
    Corporation on detail with the Treasury Department, and the
    House of Representatives Ways and Means Committee, where I
    advised on a range of tax and retirement issues. I have
    dedicated the better part of the last two decades to supporting
    the retirement systems so many rely on in this Country.
        In my testimony today, I will be discussing retirement
    savings with a focus on class disparities, racial disparities,
    and gender disparities. While the numbers are different in each
    of these groups, the story is the same. Retirement policy that
    relies on the ability of individuals to save will only
    exacerbate the income inequality already present in this
    Country.
        In 2019, high-income families were 14 times more likely to
    have retirement savings accounts than low-income families.
    Those with incomes in the bottom 20 percent of earners have
    zero savings, and those in the second bottom 20 percent of
    earners have only $860 in savings.
        When you look at the median working family that actually
    does have retirement savings, they have, on average, only
    $11,700 saved in their retirement accounts.
        Part-time workers, whose jobs are the most insecure, not
    only do not save for retirement, but do not see retirement as
    an option. Over half of part-time workers in a recent survey
    said they will keep working past normal retirement age, and
    over one in five said that they will never retire.
        When we look at retirement disparities among race and
    ethnic lines, the picture is even worse. By and large, White
    people have substantially more retirement savings and
    retirement plan participation than people of color. In 2016,
    the average White family had almost $160,000 in liquid
    retirement savings, compared to only about $25,000 for Black
    families and $29,000 for Hispanic families. Most Black and
    Hispanic households have no retirement savings at all.
        Many of the disparities we see by gender come from the fact
    that women are disproportionately low-wage workers and work in
    industries that do not provide access to employer-sponsored
    retirement plans. Disparities in retirement savings between men
    and women also are a result of the persistent gender wage gap.
        Because labor unions fight and achieve improved wages and
    benefits for working people, it is not surprising that union
    membership substantially improves access to the participation
    in retirement benefits that are provided through employment,
    especially for blue collar jobs. The U.S. Bureau of Labor
    Statistics reported that in 2019, over 90 percent of union
    workers had access to private retirement benefits, compared to
    less than two-thirds of non-union workers.
        Women and people of color have faced increased difficulties
    in saving for retirement as a result of the COVID-19 pandemic,
    and many no longer have jobs to provide income that allow them
    to save for retirement. In total, over 2.3 million women left
    the labor workforce from February 2020 to February 2021, a
    disproportionate number as compared to their percentage in the
    overall workforce. When women and people of color cannot pay
    for their day-to-day needs, they cannot save for retirement.
        As these disparities make clear, retirement insecurity is
    highly correlated to whether workers have the disposable income
    to afford to save for retirement, but this does not have to be
    the case. Policies that improve worker wages, expand access,
    and require employer contributions--not just matching
    contributions--to defined contribution plans and provide
    workers with funds to cover emergencies so that they can save
    for retirement all will bolster retirement savings for working
    people.
        Proposals that are targeted to retirement disparities will
    also help. The Women's Retirement Protection Act, for example,
    extends spousal consent requirements into defined contribution
    plans so women do not unknowingly lose their retirement at
    divorce, and allows more long-term, part-time workers, who are
    disproportionately women, to participate in company plans.
        I testify today about the disparities in retirement, but I
    am not a sociologist and I am not an economist. I am an
    attorney who sees these disparities in my work with working
    people every day. I see it when plans review the impact of
    robust stock markets on plan investments and then turn to
    consider appeals for members with limited means who have been
    denied benefits. I see it when corporations decide to work from
    home and their janitors lose their jobs and their retirement
    savings all at once.
        I ask as you consider retirement policy that you remember
    these workers and three things:
        Defined contribution plans are an important source of
    retirement income for many Americans, but right now they are
    insufficient to provide lifetime income for most.
        Unions help the most vulnerable workers advocate for
    better, more secure retirement, and public policy should
    reflect that.
        Last, adequately funding Social Security will have the
    biggest impact on retirement security for most workers in this
    Country because these workers simply do not make enough money
    in their working years to cover decades of retirement.
        I would like to thank the Committee for their time and
    attention today and for their commitment to closing disparities
    in retirement savings in this Country.
        [The prepared statement of Ms. Kyle follows:]
                        prepared statement of deva kyle
        Chair Murray, Ranking Member Burr, and Members of the Committee, I
    want to thank you for the opportunity to testify today about
    disparities in retirement savings in furtherance of your efforts to
    ensure all Americans have the means to enjoy a secure retirement.

        My name is Deva Kyle, and I am Of Counsel with the law firm of
    Bredhoff & Kaiser, P.L.L.C. Since joining the firm in 2019, I have
    represented pension plans and labor organizations that represent
    workers in the public and private sectors in a range of industries
    including: food service, education, professional sports, home
    healthcare, manufacturing, cleaning services, and construction. I work
    principally as benefits counsel providing advice on Federal and state
    compliance as it relates to 401(k) and other defined-contribution,
    defined-benefit, and health and welfare plans.

        Before joining Bredhoff & Kaiser, I spent 15 years in government.
    After graduating from Georgetown University Law Center in 2004, I
    worked at the Pension Benefit Guaranty Corporation serving first as a
    staff attorney and Assistant Chief Counsel before moving into
    retirement policy in the role of Staff Director of Policy and External
    Affairs. In 2015, I went on detail to assist the Treasury Department
    with what was then a new pension program under the Multiemployer
    Pension Reform Act of 2014 and served on detail in the House of
    Representatives as Tax Counsel with the Ways and Means Committee,
    advising on a broad range of tax and retirement issues. I have
    dedicated the better part of the last two decades to supporting the
    public and private retirement systems so many rely on in this country.

        In my testimony today, I will be discussing retirement savings with
    a focus on class disparities, racial disparities, and gender
    disparities. While the numbers differ for each of these groups, the
    story is the same--retirement policy that relies solely on the ability
    of individuals to save will only exacerbate the income inequality
    already present in this country.
                 Retirement Security Still Unavailable to Many
        Many Americans have begun contemplating retiring years earlier than
    planned. \1\ 2.7million Americans over 55 years old are considering
    early retirement, and ``[t]he number of people expecting to work beyond
    age 67 fell to a record low of 32.9 percent last month.'' \2\ Some of
    these individuals are choosing to retire early because of fatigue from
    the global pandemic. \3\ Those with the luxury to even contemplate
    early retirement can do so because they have savings sufficient to last
    them their whole lives. These potential early retirees are
    disproportionately white with high salaries and large amounts of
    accumulated wealth. \4\ Many working-class people, people of color, and
    women, however, cannot retire early or at all because their savings are
    not and will never be sufficient to last them into old age.
    ---------------------------------------------------------------------------
        \1\  Michael Sasso and Alexandre Tanzi, Affluent Americans Rush to
    Retire in New `Life-Is-Short' Mindset, Daily Lab. Rep. (BL) (Apr. 30,
    2021), available at https://www.bloomberg.com/news/articles/20210430/
    more-americans-are-considering-retirement-because-of-covid (last
    visited May 10, 2021).
        \2\  Id.
        \3\  Id.
        \4\  Id.

                            i. Socioeconomic Status
        In 2013, the median income for individuals with retirement savings
    was three times that of individuals without retirement savings. \5\
    Broadly speaking, the societal shift from pension plans to defined
    contribution plans has amplified disparities in retirement savings
    along class lines. In 2019, 72 percent of families below retirement age
    in the top quintile participated in defined-contribution plans, as
    compared to only 5 percent of families in the bottom quintile--to put
    it another way, high-income families were 14 times more likely to have
    retirement savings accounts than low-income families. \6\
    ---------------------------------------------------------------------------
        \5\  Jennifer Erin Brown, Joelle Saad-Lessler & Diane Oakley,
    Retirement in America: Out of Reach for Working Americans?, Nat'l Inst.
    on Ret. Sec. (Sept. 2018), at 8, available at https://
    www.nirsonline.org/wp-content/uploads/2018/09/SavingsCrisis-Final.pdf
    (last visited May 10, 2021).
        \6\  Monique Morrissey, The State of American Retirement Savings,
    How the shift to 401(k)'s has increased gaps in retirement preparedness
    based on income, race, ethnicity, education, and marital status, Econ.
    Pol'y Inst. (Dec. 10, 2019), at 9, 13, available at https://
    files.epi.org/pdf/136219.pdf (last visited May 10, 2021), updated by
    the author.

        Participation in defined-contribution plans is highly correlated to
    relative socioeconomic status, even among those who are considered
    middle class. Almost two-thirds (58 percent) of families in the upper-
    middle class participate in defined-contribution plans. \7\ That number
    drops to four in ten (40 percent) families in the middle class, and
    only one fourth (25 percent) of families in the lower-middle class. \8\
    This disparity in actual participation may, in part, be explained by
    the fact that 401(k) plans require workers to contribute, which is a
    greater hurdle for lower-income workers with less disposable income,
    lower investment risk tolerance, and lesser tax breaks. \9\
    ---------------------------------------------------------------------------
        \7\  Id. at 9.
        \8\  Id.
        \9\  Monique Morrissey and Natalie Sabadish, Retirement Inequality
    Chartbook, How the 401(k) revolution created a few big winners and many
    losers, Econ. Pol'y Inst. (Sept. 6, 2013), at 3, 5, available at
    https://files.epi.org/2013/epi-retirement-inequality-chartbook.pdf
    (last visited May 10, 2021).

        Of households with savings, the amount of savings varies widely
    based on economic class. While median households with savings only have
    $11,700 saved, families in the 90th percentile have $568,030 saved.
    \10\
    ---------------------------------------------------------------------------
        \10\  Kathleen Elkins, Here's How Much Money Americans Have in
    Savings at Every Income Level, Make It, CNBC (September 27, 2018)
    available at https://www.cnbc.com/2018/09/27/heres-how-much-money-
    americans-have-in-savings-at-every-income-level.html (last visited May
    11, 2021).

        Many households have no savings at all. Those with incomes in the
    bottom 20 percent of earners have zero savings and those in the second-
    bottom 20 percent of earnings have only $860 in savings. \11\
    Significantly, studies have shown that savings-based retirement plans
    not only reflect income inequality, but also amplify it. Sixty percent
    of working-age families receive 17 percent of total income but hold
    only 8 percent of retirement savings, while the top 20 percent of
    earners receive 64 percent of income but hold 79 percent of retirement
    account balances in 2019. \12\
    ---------------------------------------------------------------------------
        \11\  Id.
        \12\  Morrissey, supra note 9, at 23, updated by the author.
    ---------------------------------------------------------------------------
        Part-time workers, whose jobs are most insecure, not only do not
    save for retirement but do not see retirement as an option. \13\ Over
    half of part-time workers in a recent survey said they also will keep
    working past normal retirement age and over one in five said that they
    will never retire. \14\ Only 15 percent of full-time workers said the
    same. \15\
    ---------------------------------------------------------------------------
        \13\  Transamerica Center for Retirement Studies, Retirement
    Security: A Compendium of Findings About U.S. Workers: 20th Annual
    Transamerica Retirement Survey (December 2020), available at https://
    transamericacenter.org/docs/default-source/retirement-survey-of-
    workers/tcrs2020-sr-20th-annual-compendium-of-workers-report.pdf (last
    visited May 10, 2021).
        \14\  Id.
        \15\  Id.

        These numbers underscore the importance of Social Security. Social
    Security is the greatest source of household wealth for half of workers
    nearing retirement. Social Security represents 58 percent of net wealth
    for near retirees in the bottom half or the wealth distribution; 27
    percent for the middle class; and 7 percent for the top 10 percent.
    \16\
    ---------------------------------------------------------------------------
        \16\  Does Wall Street Always Win? GameStop, Robinhood, and Retail
    Investors: Hearing Before the U.S. Senate Committee on Banking,
    Housing, And Urban Affairs, 117th Cong. (2021). (Oral Testimony of
    Teresa Ghilarducci).

                               ii. Race/Ethnicity
        When we look at retirement disparities along race and ethnic lines,
    the picture is worse. By and large, White people have substantially
    more retirement savings and retirement plan participation than people
    of color. \17\
    ---------------------------------------------------------------------------
        \17\  Mark Miller, America's Retirement Race Gap, and Ideas for
    Closing It, N.Y. TIMES (Aug. 14, 2020), available at https://
    www.nytimes.com/2020/08/14/business/retirement-inequality-racism.html
    (last visited May 10, 2021).

        Most Black and Hispanic households have no retirement savings at
    all. \18\ Fully 61 percent of Hispanic Americans and 54 percent of
    Black Americans are at risk for having inadequate income in retirement,
    compared to 48 percent of White Americans. \19\ But significantly,
    Black and Hispanic participation in retirement savings plans has gotten
    worse over time, particularly since the Great Recession. From 2007 to
    2019, the percentage of Hispanic families with retirement savings
    dropped from 38 percent to 32 percent; for Black families, the
    percentage dropped from 47 percent to 44 percent. \20\ Meanwhile, in
    2019, 65 percent of White families had retirement savings, only
    slightly less than in 2007 (67 percent). \21\ The disparities in
    participation in 401(k) plans are similar, with 50 percent of White
    families participating in such plans in 2019, compared to 37 percent of
    Black families and 26 percent of Hispanic families. \22\
    ---------------------------------------------------------------------------
        \18\  Morrissey, supra note 6, at 14, updated by the author.
        \19\  Margarida Correia, Plans Tackle Problem of Racial Disparity
    in Savings, Pensions & Investments (Nov. 16, 2020), available at
    https://www.pionline.com/defined-contribution/plans-tackle-problem-
    racial-disparity-savings (last visited May 10, 2021).
        \20\  Morrissey, supra note 6, at 14, updated by the author.
        \21\  Id.
        \22\  Id. at 9.

        When looking at the amount of retirement savings Americans have in
    their retirement plans, disparities along racial lines are even more
    stark. In 2016, the average White family had almost $160,000 in liquid
    retirement savings (including 401(k), 403(b), and IRAs), compared to
    only about $25,000 for Black families and $29,000 for Hispanic
    families. \23\ As with participation rates, the amount of retirement
    savings held by Black and Hispanic families declined after the Great
    Recession and took over 10 years to recover, in contrast to White
    families whose savings recovered more quickly. In 2016, the median
    account balance for Black families with retirement savings was about
    $31,000, down from nearly $36,000 in 2007; the median amount for
    Hispanic families with savings in 2016 was $24,000, down from $30,000
    in 2007. \24\ The median amount for White families with savings, on the
    other hand, increased from $77,000 in 2007 to over $85,000 in 2016. The
    median account balance for White families with savings in 2019
    ($83,000) remains over twice as high as the median account balance for
    Black families with savings ($40,000) or Hispanic families with savings
    ($38,000).over twice as high as the median account balance for Black
    families with savings ($40,000) or Hispanic families with savings
    ($38,000).over twice as high as the median account balance for Black
    families with savings ($40,000) or Hispanic families with savings
    ($38,000). \25\
    ---------------------------------------------------------------------------
        \23\  Urban Inst., Nine Charts About Wealth Inequality in America
    (Updated), (last updated Oct. 5, 2017), available at https://
    apps.urban.org/features/wealth-inequality-charts/ [hereinafter Nine
    Charts About Wealth Inequality] (last visited May 10, 2021).
        \24\  Morrissey, supra note 6, at 15, updated by the author.
    Amounts are adjusted for inflation to 2019 dollars.
        \25\  Id.

        A significant reason for these disparities in savings can be traced
    to racial wage gaps. A 2019 study by the Economic Policy Institute
    found that college-educated White workers earned an average of $35.90
    per hour, compared to $30.35 for Hispanic workers and $27.81 for Black
    workers with the same level of education. \26\ Yet the race-based gaps
    in retirement wealth cannot be attributed to income differences alone,
    as at the same income levels, gaps in retirement wealth along racial
    lines remain. \27\
    ---------------------------------------------------------------------------
        \26\  Elise Gould, State of Working America Wages 2019, A story of
    slow, uneven, and unequal wage growth over the last 40 years, Econ.
    Pol'y Inst. (Feb. 20, 2020), available at https://files.epi.org/pdf/
    183498.pdf (last visited May 10, 2021).
        \27\  Nine Charts About Wealth Inequality, supra note 21; see also
    Morrissey & Sabadish, supra note 8, at 38 (describing data
    ``suggest[ing] that the growing disparity in retirement savings is not
    simply a function of income inequality, but that our retirement system
    exacerbates inequality between racial and ethnic groups'').

                                iii. Sex/Gender
        Many of the disparities we see by gender result from women being
    disproportionately low-wage workers \28\ who work in industries that do
    not provide access to employer-sponsored retirement plans. \29\
    Disparities in retirement savings between men and women also are a
    result of the persistent gender wage gap. On average, a woman is still
    paid 82 cents for every dollar a man is paid. \30\ Similarly, as of
    2016, the median household income for retirement-aged women was just
    over $47,000--83 percent of the median household income for men of the
    same age ($57,144). \31\
    ---------------------------------------------------------------------------
        \28\  National Women's Law Center, Women and the Minimum Wage,
    State by State (January 12, 2021) available at https://nwlc.org/
    resources/women-and-minimum-wage-state-state/ (last visited May 11,
    2021).
        \29\  Annie Nova, Carmer Reinicke, Why the 401(k) Won't Fix the
    U.S. Retirement Crisis, CNBC (February 12, 2021) available at https://
    www.cnbc.com/2021/02/14/why-401k-wont-fix-us-retirement-crisis.html
    (last visited May 11, 2021).
        \30\  Catherine Tymkiw, Retirement Savings by Gender, Learn what's
    behind the retirement savings gap, Investopedia (last updated Apr. 7,
    2021), available at https://www.investopedia.com/retirement-savings-by-
    gender5100948 (last visited May 10, 2021).
        \31\  Tyler Bond, Joelle Saad-Lessler, Ph.D., and Christian E.
    Weller, Ph.D., Still Shortchanged, An Update on Women's Retirement
    Preparedness, Nat'l Inst. on Ret. Sec. (May. 2020), at 1, available at
    https://www.nirsonline.org/wp-content/uploads/2020/04/Still-
    Shortchanged-Final.pdf (last visited May 10, 2021).

        The gender wage gap, however, does not tell the whole story. At
    each generational level, women are contributing a lower percentage of
    their income to their 401(k) plans than men. \32\ Recent data show
    larger gaps between annual income and 401(k) balances for women than
    for men. A T. Rowe Price Retirement Savings and Spending study found
    that women's median annual income in 2019 was $57,900 while their
    median 401(k) balance was $48,300, whereas for men, their 2019 median
    annual income was $85,500 compared to a median 401(k) balance of
    $84,600. \33\ The disparity between men and women in median 401(k)
    balances grew in 2020, with the median balance for women growing to
    $52,300 while the median balance for men grew to $90,800. \34\
    ---------------------------------------------------------------------------
        \32\  Judith Ward, CFP, Retirement Savings by Gender: What You Need
    to Know, T. Rowe Price (May 10, 2021), available at https://
    www.troweprice.com/content/dam/iinvestor/resources/insights/pdfs/
    retirement-savings-gender-gap-what-you-need-to-know.pdf.
        \33\  Id.
        \34\  Id.

        Disparities in retirement savings between men and women are
    exacerbated by the fact that women. on average, live longer than men,
    meaning women generally must stretch to make less money sustain them
    for longer periods. \35\
    ---------------------------------------------------------------------------
        \35\  Benjamin Curry and E. Napoletano, How the Gender Gap Impacts
    Women's Retirement Forbes Advisor (May 10, 2021), available at https://
    www.forbes.com/advisor/retirement/retirement-gender-income-gap/.

                        iv. Effects of Union Membership
        Because labor unions fight in large part to improve wages and
    benefits for working people, it is not surprising that union membership
    substantially improves access to and participation in retirement
    benefits that are provided through employment, especially for those in
    blue collar jobs. The U.S. Bureau of Labor Statistics reported that, in
    2019, 91 percent of union workers had access to private sector
    retirement benefits, compared to 65 percent of nonunion workers. \36\
    This difference is attributable in substantial part to union members'
    access to defined-benefit plans in lieu of defined-contribution plans.
    The same set of statistics demonstrated that 79 percent of union
    members had access to defined-benefit plans as compared to 17 percent
    of nonunion workers. \37\
    ---------------------------------------------------------------------------
        \36\  U.S. Bureau of Labor Statistics, 67 percent of private
    industry workers had access to retirement plans in 2020, TED: The
    Economics Daily, (March 1, 2021), available at https://www.bls.gov/
    opub/ted/2021/67-percent-of-private-industry-workers-had-access-to-
    retirement-plans-in-2020.htm (last visited May 11, 2021).
        \37\  Id.

        Union membership improves retirement outcomes beyond providing
    workers access to retirement plans. One study found that union
    membership also has a positive effect on retirement satisfaction by,
    for example, reducing incidences of forced retirement. \38\
    ---------------------------------------------------------------------------
        \38\  Kevin Neuman, Is There Another Union Premium? The Effect of
    Union Membership on Retirement Satisfaction, 64 Indus. & Lab. Rel.
    Rev., no. 5, 2011, at 981, 982, 998 (2011).

            Covid-19 Exacerbated Inequality in Retirement in America
        Women and people of color have faced increased difficulties in
    saving for retirement due to the Covid-19 pandemic, not the least of
    which is that many no longer have jobs that provide the income that
    allows them to save for retirement. \39\ Jobs that are held
    disproportionately by women were hit the hardest: 83 percent of
    waitresses, 72 percent of cleaners, and 58 percent of cooks lost their
    jobs in the first 6 weeks of the pandemic. \40\ The National Women's
    Law Center found that by the beginning of 2021, four out of five adults
    in the US who stopped working or stopped looking for work were women.
    \41\ In total, over 2.3 million women left the labor force from
    February 2020 to February 2021, a disproportionate number as compared
    to their percentage of the overall workforce. \42\ When women and
    people of color cannot pay for their day-to-day needs, they cannot save
    for retirement.
    ---------------------------------------------------------------------------
        \39\  Heather Long, Andrew Van Dam, Alyssa Fowers, and Leslie
    Shapiro, The covid-19 recession is the most unequal in modern U.S.
    history, Wash. Post (September 30, 2020), available at https://
    www.washingtonpost.com/graphics/2020/business/coronavirus-recession-
    equality/ (last visited May 10, 2021).
        \40\  Tim Henderson, Stateline, Pew Charitable Trusts, Single
    Mothers Hit Hard by Job Losses (May 26, 2020), available at https://
    www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2020/05/26/
    single-mothers-hit-hard-by-job-losses (last visited May 10, 2021).
        \41\  Claire Ewing-Nelson and Jasmine Tucker, Nat'l Women's Law
    Ctr., A Year Into the Pandemic, Women Are Still Short Nearly 5.1
    Million Jobs, (March 2021), available at https://nwlc.org/wp-content/
    uploads/2021/03/Feb-Jobs-Day-v2.pdf (last visited May 9, 2021).
        \42\  Id.

        I started this testimony describing a recent news article that
    states that, due to the pandemic, wealthy people are retiring early.
    \43\ Their retirement plans, funded through employer contributions and
    ample excess income put into savings, have fared well in the stock
    market. Social and personal hardships brought on by the pandemic have
    also led them to take stock in their lives. The impact of the pandemic
    for working people has been very different. Almost a third of Americans
    withdrew or borrowed money from their retirement plans in the last
    year. \44\ Over 60 percent of people who withdrew their retirement
    savings during the pandemic did so to cover basic living expenses. \45\
    Provisions in the CARES Act and the American Rescue Plan understandably
    allowed additional withdrawals from retirement savings because many
    people had no other source of income to cover expenses while jobs were
    shuttered. These workers that were able to make it through difficult
    times with the help of savings were then left with an even larger
    retirement income deficit to fill.
    ---------------------------------------------------------------------------
        \43\  See, e.g., Michael Sasso and Alexandre Tanzi, supra note 1.
        \44\  Teresa Ghilarducci, 30 percent Of Workers Dipped into
    Retirement Funds During 2020, Forbes (January 6, 2021), available at
    https://www.forbes.com/sites/teresaghilarducci/2021/01/06/60-of-
    workers-dipped-into-retirement-funds-during-2020/?sh=5409dbfc7a64 (last
    visited May 11, 2021).
        \45\  Id.

                                   Conclusion
        As these disparities make clear, retirement insecurity is highly
    correlated to whether workers have the disposable income to afford to
    save for retirement. This does not have to be the case, however.
    Policies that improve worker wages, require employer contributions (not
    just matching contributions) to defined-contribution plans, and provide
    workers with funds to cover emergencies so that they can save for
    retirement without having to draw down on their retirement savings will
    help to bolster retirement savings for working people.

        Proposals that are targeted to reduce retirement income disparities
    will also help. The Women's Retirement Protection Act, for example,
    extends spousal consent requirements to defined contribution plans so
    women do not unknowingly lose retirement income at divorce. \46\ The
    bill also allows more long-term part-time workers to participate in
    company retirement plans.
    ---------------------------------------------------------------------------
        \46\  Women's Retirement Protection Act, S. 975, 116th Cong.
    (2019).

        I testify today about disparities in retirement, but I am not a
    sociologist or economist. I am an attorney who sees these disparities
    in my work every day. I see it when pension plans review the impact of
    a robust stock market on plan investments and then turn to consider
    appeals from members with limited means who have been denied benefits.
    I see it when corporations decide to work-from-home endangering their
    janitors' jobs and retirement savings all at once. I ask, as you
    consider retirement policy, that you remember these workers and three
    things: defined-contribution plans are an important source of
    retirement income for many Americans but right now they are
    insufficient to provide lifetime income for most. Requiring employer
    contributions and otherwise increasing the value of these plans, will
    improve people's lives. Unions can and do help the most vulnerable
    workers advocate for a better more secure retirement, including
    lifetime income through defined benefit plans. Public policy should
    reflect that reality through support for legislation like the PRO Act.
    \47\ Most importantly, expanding Social Security with legislation like
    the Social Security Expansion Act, \48\ will have the biggest impact on
    retirement security for most workers in this country because these
    workers simply do not make enough money in their working years to cover
    decades of retirement. Indeed, in the latest study of U.S. workers by
    Transamerica Center for Retirement Studies, almost half of workers
    surveyed said that the No. 1 retirement priority for Congress should be
    addressing Social Security's funding shortfall. \49\
    ---------------------------------------------------------------------------
        \47\  Protecting the Right to Organize Act of 2021, S. 420, 117th
    Cong. (2021).
        \48\  Social Security Expansion Act, S. 478, 116th Cong. (2019).
        \49\  Transamerica Center for Retirement Studies, Retirement
    Security: A Compendium of Findings About U.S. Workers: 20th Annual
    Transamerica Retirement Survey, (December 2020), available at https://
    transamericacenter.org/docs/default-source/retirement-survey-of-
    workers/tcrs2020-sr-20th-annual-compendium-of-workers-report.pdf (last
    visited May, 10, 2021).

        I would like to thank the Committee for its time and attention
    today, and for its commitment to closing the gaping disparities in
    retirement savings in this country. These gaps must be closed to ensure
    retirement security for all Americans.
                                     ______

                        [summary statement of deva kyle]
        Participation in defined-contribution plans is highly correlated to
    relative socioeconomic status. Of households with savings, the amount
    of savings varies widely based on economic class. While median
    household with savings only have $11,700 saved, families in the 90th
    percentile have $568,030 saved. Many households have no savings at all.

        Part-time workers, whose jobs are most insecure, not only do not
    save for retirement but do not see retirement as an option. Over half
    of part-time workers in a recent survey said they will keep working
    past normal retirement age and over one in five said that they will
    never retire.

        When we look at retirement disparities along race and ethnic lines,
    the picture is worse. By and large, White people have substantially
    more retirement savings and retirement plan participation than people
    of color. The median account balance for White families with savings in
    2019 ($83,000) remains over twice as high as the median account balance
    for Black families with savings ($40,000) or Hispanic families with
    savings ($38,000).

        Many of the disparities by gender result from the fact that women
    are disproportionately low-wage workers and work in industries that do
    not provide access to employer-sponsored retirement plans. Disparities
    in retirement savings between men and women also are a result of the
    persistent gender wage gap.

        Because labor unions improve wages and benefits for working people
    union membership substantially improves access to and participation in
    retirement benefits that are provided through employment, especially
    for those in blue collar jobs.

        The Covid-19 pandemic only exacerbated inequality in retirement in
    America. In total, over 2.3 million women left the labor force from
    February 2020 to February 2021, a disproportionate number as compared
    to their percentage of the overall workforce. When women and people of
    color cannot pay for their day-to-day needs, they cannot save for
    retirement.

        As these disparities make clear, retirement insecurity is highly
    correlated to whether workers have the disposable income to afford to
    save for retirement. This does not have to be the case. Policies that
    expand Social Security, improve worker wages, require employer
    contributions (not just matching contributions) to defined-contribution
    plans, and provide workers with funds to cover emergencies so that they
    can save for retirement without having to draw down on their retirement
    savings will help to bolster retirement savings for working people.
                                     ______

        The Chair. Thank you.
        Mr. Gray.

    STATEMENT OF DAVE GRAY, HEAD OF WORKPLACE RETIREMENT PRODUCTS,
                    FIDELITY INVESTMENTS, BOSTON, MA

        Mr. Gray. Chair Murray, Ranking Member Burr, and Members of
    the Committee, thank you for the opportunity to testify today.
    I am even more honored, given Fidelity's significant presence
    in many of the states represented by the Committee.
        My name is Dave Gray, and I am the Head of Workplace
    Retirement Product at Fidelity Investments. Fidelity is the
    Nation's largest provider of workplace savings plans and
    individual retirement accounts. In our workplace-investing
    business, we have the privilege of serving more than 22,000
    employers with over 33 million workplace participant accounts.
        Today, I would like to share what is working in the
    retirement system, but mostly focus my time on steps that
    Congress can take to enhance it. We believe that workplace
    retirement plans have proven to be an indispensible foundation
    to the retirement system, assisting tens of millions of
    families. And the system is working well for those that can
    access and those that can optimize its features, like employer
    match and auto escalating contributions.
        However, nearly 50 percent of private sector workers have
    lacked access to a workplace plan, so we applaud Congress for
    creating the Pooled Employer Plan, or PEPs, as part of the
    SECURE Act of 2019. PEPs are an excellent step forward toward
    addressing the retirement coverage gap by making it easier for
    small businesses to access a plan.
        In response, Fidelity has created a PEP called the Fidelity
    Advantage 401(k), and our initial offer is deliberately focused
    on the needs of small businesses who do not yet offer a
    retirement plan. We are very proud to have enrolled a small
    grocery store, a women-owned publisher of children's books, and
    a securities services firm founded by two disabled veterans,
    just to name a few.
        Fidelity, along with the other 60 or so entities that have
    registered with the Department of Labor to serve as a pooled
    plan provider, could go a long way together to help address the
    coverage gap.
        Now, there are many areas in which working together, we
    believe we can enhance and strengthen the retirement security
    system. Over the past year, the COVID-19 pandemic has
    highlighted the challenges many American workers and their
    families face every day to cover immediate costs while still
    trying to save for the future.
        Last year alone, 1.6 million Fidelity customers took
    distributions from their retirement accounts under the CARES
    Act due to the financial impact of the pandemic. The
    substantial number of withdrawals demonstrates the need for
    emergency savings. Employers can play a key role in helping
    workers accumulate short-term savings. And I will tell you,
    this is top of mind to many of the employers that we serve.
    Congress can support the adoption of emergency savings programs
    by enacting legislative change, such as allowing participants
    to earn a match to their retirement plan by means of
    contributing to an emergency savings account.
        Additionally, employees are increasingly turning to their
    employers for help with tackling student debt. Seventy-nine
    percent of those with student debt tell us that it impacts
    their ability to save for retirement. Now, we applaud the
    extension of the CARES Act provision that allows employers to
    contribute up to $5,250 annually toward an employee's student
    loans, tax-free, through 2025.
        However, we believe Congress can do more by passing
    legislation that would permit an employer to make matching
    contributions in the workplace retirement plan with respect to
    student loan payments. Our research shows that this legislation
    could have the effect of doubling retirement security for those
    that are struggling with student debt, and we are seeing
    significant pent-up demand from employers that are interested
    in offering such a solution.
        Last, saving for retirement plans means factoring in
    healthcare costs. Fidelity estimates that a couple, age 65,
    retiring today will need about $300,000 to cover medical
    expenses throughout retirement, not including long-term costs.
    The long-term value of a health savings account can position a
    family for greater financial security, and we support
    legislation that would expand access to these savings vehicles
    and allow for additional contributions.
        As a leading HSA provider, our data shows that the benefits
    of an HSA also extend to low-income levels and workers as they
    tend to accumulate a balance in their HSA accounts as years go
    by. And the vast majority of Fidelity's clients precede the HSA
    account with a specific amount, meaning that HSA holders, who
    may not be able to contribute much, will still benefit from the
    employer contribution.
        In conclusion, Fidelity supports a number of bills that are
    being considered by the Senate and the House that address many
    of these issues. On behalf of Fidelity and the millions of
    Americans we serve, we appreciate the invitation to share our
    views, and we look forward to continuing to work with the
    Committee.
        Thank you.
        [The prepared statement of Dave Gray follows:]
                        prepared statement of dave gray
                                  Introduction
        Chair Murray, Ranking Member Burr, and Members of the Committee,
    thank you for the opportunity to speak with you today on retirement
    security and how we can work together to build a better future for
    working Americans. I am even more honored to testify today given
    Fidelity's significant presence in many of the states represented by
    the Committee here, including major campuses in North Carolina,
    Colorado, Kentucky, New Hampshire, and New Mexico. My name is Dave
    Gray, and I am Head of Workplace Retirement Product and Platforms for
    Fidelity Investments.

        Fidelity is the Nation's largest provider of workplace savings
    plans, including defined contribution (DC), defined benefit (DB),
    health and welfare and stock plan services to 22,000+ employers with
    33.5 million workplace participant accounts. Fidelity provides
    recordkeeping, investment management, brokerage and custodial/trustee
    services to thousands of Code section 401(k), 403(b) and other
    retirement plans.

        Employer-sponsored DC and DB retirement plans are an indispensable
    foundation to the U.S. retirement system. Retirement plans, like those
    Fidelity sponsors and administers, successfully assist tens of millions
    of families in accumulating retirement savings and will provide
    trillions of dollars in retirement income, helping our Nation's workers
    achieve a more financially secure retirement.

        Congress has enacted legislation in recent years to build upon and
    expand the private retirement system, including encouraging more
    employers to voluntarily offer a DC retirement plan, facilitating
    higher participation and savings rates with auto-enrollment and other
    auto-solutions, promoting prudent investing, streamlining plan
    administration and expense, and safeguarding participant interests.
    Fidelity supported the landmark legislation, Setting Every Community Up
    for Retirement Enhancement (SECURE) Act, that became law in late 2019
    and brought meaningful enhancements to the private retirement system,
    such as modernizing the age at which retirees must begin taking
    required minimum distributions (RMDs), providing employers new tax
    credits as incentives to begin offering their employees a retirement
    plan, and creating open multiple employer plans (open MEPs)--a move
    that is allowing small businesses a simpler, more affordable way to
    offer their workers a retirement savings plan for the first time and
    ultimately helping reduce the retirement savings plan coverage gap.

        Today, I plan to cover the ways in which Fidelity helps families
    and individuals navigate the road to retirement. We believe in a
    holistic approach to help workers achieve success, including the
    importance of starting financial education early, saving for
    emergencies and healthcare, balancing student loan payments with long-
    term savings goals, and reducing burdens on both employers and
    employees. Notably, the retirement system in the United States is
    already helping tens of millions of savers prepare for retirement and I
    will also address what is working and how we can build upon those
    successes.
                            Building a Better Future
        Workplace retirement plans play a vital role in ensuring workers
    have access to easy and affordable savings vehicles throughout their
    careers. After decades of education and experience, the system is
    working well for those who have access and can optimize its features--
    such as maximizing an employer match, defaulting into investment
    options with appropriate asset allocation, and auto-escalating
    contributions. Along with Social Security, which serves as the
    foundation of retirement income for most Americans, private retirement
    savings help families successfully plan and prepare for their long-term
    financial needs.
        For many families however, the road to retirement security can be
    rocky. At Fidelity, our customers constantly remind us that healthcare
    expenses, unforeseen emergencies, caregiving, and paying down student
    loan debt are among the more immediate needs that drive their financial
    decisions and prevent them from consistently saving for retirement. To
    address these challenges, workplace savings plans have proven to be one
    of the most effective means of providing financial help, through 1-on-1
    assistance, workshops, online tools, and methods to support financial
    literacy. We take that responsibility seriously understanding that
    financial education, starting much earlier, is the gateway to higher
    financial confidence and decision making.
                               Financial Literacy
        Research shows that only 27 percent of young adults know basic
    financial concepts such as interest rates, inflation and risk
    diversification. Simultaneously, households or individuals who are less
    financially literate have been found to be more likely to take
    ``payday'' loans, pay only the minimum balance on a credit card, take
    on high-cost mortgages, and have higher debt levels. Having a low level
    of financial literacy can make young adults less financially secure,
    less able to make financial decisions, and more vulnerable to financial
    issues. Financial tools and institutions can help, but access to these
    resources has historically been unequal. The lack of access for certain
    communities, especially low-income communities and communities of
    color, can prevent people from building wealth and achieving a number
    of financial goals including saving for retirement.

        Additionally, research shows that children begin developing
    attitudes and behaviors about money as young as age six or seven, and
    according to additional research by the FINRA Foundation, more rigorous
    financial instruction leads to positive behavioral formation and better
    outcomes such as improved credit scores and lower credit delinquency.
    \1\ Fidelity collaborates with a wide variety of both national and
    community partners to provide access to these resources for under-
    represented students in under-served communities.
    ---------------------------------------------------------------------------
        \1\  FINRA, ``State Financial Education Mandates: It's All in the
    Implementation,'' 2015. Found at: https://www.finra.org/media-center/
    news-releases/2015/finra-foundation-funded-study-documents-
    effectiveness-state-financial.

        Just as we provide our customers with guidance and financial tools
    to navigate through their life stages and decisions to reach their
    financial goals, we use a similar approach for the communities where
    our employees work and live. We connect our Fidelity associates with
    our partners to create and deliver financial education programs and
    experiences, both for school-age children to teach financial concepts
    and teachers to ensure they have the resources available to educate
    their classes. Through our programs, we have reached over 400,000
    students and 3,500 teachers to date.
                               Emergency Savings
        Over the past year, the COVID-19 pandemic has highlighted the
    challenges many American workers and their families face every day to
    cover immediate costs, while saving for the future. We saw millions of
    workers have taken an early withdrawal from their plan for an
    unexpected expense, and 58 percent of participants do not have enough
    short-term savings to cover a financial emergency. \2\ The current
    pandemic has caused 1 in 5 people to consider taking a loan or
    withdrawal from their retirement savings plan. \3\ During the pandemic,
    withdrawals increased as participants took advantage of expanded
    distribution options and favorable tax treatment for up to $100,000 of
    coronavirus-related distributions under the Coronavirus Aid, Relief,
    and Economic Security (CARES) Act of 2020. From March 2020 to the end
    of the year, 1.6 million Fidelity customers had taken a CARES Act
    distribution from their retirement account, which represents 6.3
    percent of eligible employees on our workplace savings platform. The
    majority of individuals (59 percent) took one withdrawal in 2020 and
    the overall average amount per withdrawal was $9,400 (the median amount
    per withdrawal was $2,500). The substantial number of withdrawals last
    year demonstrates the need for an emergency savings accounts.
    ---------------------------------------------------------------------------
        \2\  Based on 384.6k completed response of the Financial Wellness
    Assessment from 04/01/2019-03/31/2020.
        \3\  Fidelity Investments Market Uncertainty Study, April 2020, a
    nationwide survey of 1.6k adults 18 years of age or older with at least
    one investment account. This analysis is based on 716 working adults
    with a workplace retirement savings plan. The study was fielded from
    April 1-8, 2020 by ENGINE INSIGHTS, an independent research firm not
    affiliated with Fidelity Investments. The results of this survey may
    not be representative of all adults meeting the same criteria as those
    surveyed for this study.

        While the pandemic has put a spotlight on this problem, families
    have been struggling with savings for emergencies well before last
    year. Families need emergency savings accounts to be more prepared for
    addressing the unplanned, but unavoidable challenges of life, not only
    during a pandemic. Fidelity believes that employers can play a key role
    in helping workers accumulate short-term savings, and we have seen
    compelling innovation in this space across employers and financial
    ---------------------------------------------------------------------------
    services providers.

        Today, Fidelity enables thousands of employees to save for short-
    term goals including emergencies. Our ``Goal Booster'' program provides
    savers with a path to a liquid savings option, tracking tools and
    motivational insights to help them stay on track. While this is a good
    start to getting participants on track to cover immediate and short-
    term needs, we are exploring additional innovations that can be offered
    through the workplace and complement retirement plans--many of these
    ideas require legislative changes. For example, some employers are
    seeking an option where a participant can earn a ``match'' to their
    retirement plan by way of contributing to an emergency savings account,
    therefore facilitating long-term savings for individuals who may
    otherwise be unable to do so.
                                  Student Debt
        Additionally, employees are increasingly turning to their employers
    to help with all areas of financial wellness, including tackling
    student loan debt and managing healthcare expenses now and in
    retirement. Student loan debt is a serious problem in the country, with
    over 44 million Americans owing a combined total of $1.67 trillion in
    outstanding student debt. \4\ Student loan debt can impact individuals
    many years after they graduate college. Though typically associated
    with only millennials, student debt impacts all age groups. In fact, 34
    percent of Gen-Xers and 29 percent of baby boomers currently hold
    student debt and interest rates are actually highest among Boomers. \5\
    ---------------------------------------------------------------------------
        \4\  Nerd Wallet, 2021 Student Loan Debt Statistics.
        \5\  Fidelity Investments Student Debt Tool as of December 30,
    2020.

        At Fidelity, we see how student debt manifests as both a financial
    and emotional burden on savers. Our data shows that it is a barrier to
    moving forward with momentous life events, such as buying a home,
    getting married, or helping to pay for a child's higher education. We
    know that 79 percent of those with student debt say that student debt
    impacts their ability to save for retirement, and 69 percent report
    that they reduced their retirement deferrals by stopping contributions
    entirely or took loans or hardship withdrawals. On average,
    participants with student debt contribute 6 percent less to their
    retirement accounts than individuals without student debt. \6\
    ---------------------------------------------------------------------------
        \6\  Workplace Investing Plan Participant Student Loan 2016 Study,
    responses from 496 members (10/27/16--11/7/16).

        Fidelity applauds the steps Congress has recently taken to reduce
    the burden of paying down student debt. In particular, we supported a
    provision in the CARES Act that temporarily allowed employers to
    contribute up to $5,250 annually toward an employee's student loans tax
    free (for both the employer and employee). Last December, Congress
    authorized an extension of this provision through 2025, which gives
    employers the certainty they need to offer student debt assistance as
    ---------------------------------------------------------------------------
    an employee benefit for years to come.

        We have also advocated rule changes to allow for an employee
    repaying student loans, in lieu of saving for retirement, to also
    benefit from an employer contribution to their workplace retirement
    plan. In essence, an employer ``match'' on their student loan payment.
    This allows employees to take responsibility in reducing debt while
    resting assured that they are able to get started saving for
    retirement. A provision to enable this feature is currently being
    considered as part of the next round of retirement reform legislation
    and we would strongly encourage you to include it in any final
    legislative package.
                                   Complexity
        Finally, complexity remains a persistent barrier to plan formation
    and participation. There are a few areas where simplification for both
    employers maintaining a plan, and employees saving for retirement,
    could improve the process. Currently, there is a patchwork of different
    rules relating to 401(k), 403(b), and 457 plans, which all have
    different rules for contributions, hardship withdrawals, loans, and
    distributions. Complexity discourages participation, and harmonization
    could help ease the burden on employers and employees. Congress should
    also simplify the process by making permanent the provision in the
    CARES Act that allows participants to self-certify when applying for
    hardships and loans. Absent participant self-certification, the
    administrative burden and liability falls on the plan sponsors and
    service providers, adding another barrier and layer of complexity to
    the retirement system.
                                 What's Working
                               Automatic Features
        Even with the challenges facing Americans today, the retirement
    system in the United States is working for tens of millions of savers.
    Together with Social Security, workplace plans and individual accounts,
    families have a wide range of savings plans and planning tools to meet
    their needs. Many employers offer automatic enrollment and automatic
    escalation, tax deferred payroll deductions, and matching
    contributions. In fact, automatic features are a proven method of
    increasing participation and savings rates. At Fidelity, plans that
    utilize automatic enrollment have an 87.2 percent participation rate,
    versus a 51.9 percent participation rate among those employees at plans
    without the feature. \7\ These automatic features and tax incentives to
    save are critical to ensuring Americans are prepared for retirement.
    ---------------------------------------------------------------------------
        \7\  Based on Fidelity analysis of 23,300 corporate DC plans
    (including advisor-sold DC) and 19 million participants as of 12/31/
    2020.
    ---------------------------------------------------------------------------
                               Retirement Income
        The benefits of saving in a workplace plan are also recognized into
    retirement years. There is a growing population of individuals who
    choose to keep their savings in a previous employer's retirement plan,
    and 55 percent of retirees on Fidelity's platform keep their savings in
    a plan past the first year of retirement. \8\ This shift has created
    the need for in-plan retirement solutions to help retirees draw down
    their savings. Employers are increasingly comfortable having workers
    keep their savings within the company's savings plan when they retire
    and are interested in offering a comprehensive in-plan retirement
    income solution for those individuals.
    ---------------------------------------------------------------------------
        \8\  Fidelity Investments; stay-in-plan rates as of December 2018.
    ---------------------------------------------------------------------------
                                  Flexibility
        Furthermore, there is no one-size-fits-all solution for every
    saver, and the private marketplace has evolved to meet the needs of
    every individual. In addition to the traditional 401(k) plan, employers
    may offer a 403(b) plan, Roth options, SEP or SIMPLE plans, and now,
    open MEPs. This wide variety of workplace savings plans allows
    employers large and small to find a plan that fits their needs and the
    needs of their employees. The flexibility in the current system along
    with innovation for the future will allow companies like Fidelity to
    continue to provide services for every saver.

        Open MEPs, also called Pooled Employer Plans (PEPs), are an
    excellent step toward filling the retirement coverage gap by making it
    easier for small businesses and independent workers to access
    retirement savings plans. Nearly 50 percent of private sector workers
    in the U.S. lack access to a workplace retirement plan. \9\ Many small
    businesses do not have the resources to offer their employees a
    workplace plan due to the costs and complexity involved in
    administering a plan. The SECURE Act of 2019 permitted the formation of
    PEPs, eliminating barriers for smaller employers to band together in a
    multiple employer plan. The PEP structure allows small business owners
    to focus on running their business, rather than the complexity that
    comes with administering a plan. According to the Department of Labor,
    63 entities have registered to act as Pooled Plan Providers in the PEP
    space as of today. This growing interest could go a long way to closing
    the retirement coverage gap.
    ---------------------------------------------------------------------------
        \9\  ``Small Business Profile,'' U.S. Small Business Administration
    Office of Advocacy, 2017.

        Fidelity has created a PEP, the Fidelity Advantage 401(k), to help
    close the coverage gap and help those small employers who are looking
    to start a plan for the first time. While we know there are others in
    the industry that are choosing to offer PEPs to employers who already
    offer a plan, Fidelity's initial offering is deliberately focused on
    helping address the coverage gap by crafting a solution built for the
    needs of small businesses who do not yet offer a retirement savings
    plan today. The plan is targeted toward employers with between 5-50
    employees. We have seen significant organic demand since its launch
    earlier this year. For example, we are proud to have enrolled a small
    grocery store in California, a women-owned publisher of children's
    books in Spanish and English, and a managed security services provider
    founded by two disabled veterans. We believe entering a PEP can allow
    businesses to capitalize on the economies of scale of a larger plan,
    simplify administration, and provide their employees the coverage they
    need.
                                  Digitization
        Critical to the continued success of the retirement system is
    innovation and preparing for the future of savings. Fidelity supports
    recent regulatory efforts to expand electronic delivery (e-delivery) as
    the primary distribution method for retirement plan disclosures.
    According to a 2015 study, 84 percent of retirement plan participants
    find it acceptable to make e-delivery the default option (with the
    option to request paper at no cost to the participant). \10\ Preference
    for digital disclosures is clear; in fact, less than 1 percent of
    participants change their delivery preference to paper where plan
    sponsors use workplace emails for e-delivery under the current
    regulations. E-delivery also encourages participants to engage with
    their investments, which results in better outcomes, including higher
    deferral rates and improved retirement preparedness. The SPARK
    Institute's data indicates that savers with e-delivery contribute 72
    percent more and are three times as likely to be saving a sufficient
    amount for retirement than savers who receive paper disclosures. \11\
    ---------------------------------------------------------------------------
        \10\  See the full report at https://www.sparkinstitute.org/
    contentfiles/improving-outcomes-with-electronic-delivery-of-retirement-
    plan-documents.pdf.
        \11\  Improving Outcomes with Electronic Delivery of Retirement
    Plan Documents, SPARK Institute (2015).

        In addition to investor preference, e-delivery is more
    environmentally conscious and less costly. Reducing our use of paper
    reduces our carbon footprint. \12\ In addition, the process of
    manufacturing paper contributes to pollution, paper waste, and
    deforestation. \13\, \14\ Default e-delivery for retirement plan
    documents is supported by a number of leading union pension funds who
    noted specific costs savings for their participants, as well as being
    supported by the U.S. Chamber of Commerce and countless other groups.
    Further, e-delivery is more accessible than paper, allowing retirement
    savers with disabilities to access information in a format that meets
    their unique needs. Nearly 70 percent of disabilities are related to
    age; those experiencing vision loss later in life now have the
    assistance of new technological advances such as screen readers (e.g.,
    Voice Over on iPhones, Talk Back on Android phones, and Narrator on
    Windows 7 machines) to audibly receive the same information contained
    in a written disclosure.
    ---------------------------------------------------------------------------
        \12\  See U.S. Environmental Protection Agency, Paper Products
    (Oct. 28, 2010), available at http://www.epa.gov/climatechange/wycd/
    waste/downloads/paper-products10-28-10.pdf.
        \13\  See U.S. Environmental Protection Agency, National Emission
    Standards for Hazardous Air Pollutants for Source Category: Pulp and
    Paper Production; Effluent Limitations Guidelines, Pretreatment
    Standards, and New Source Performance Standards: Pulp, Paper, and
    Paperboard Category, 63 Fed. Reg. Vol. 18504 (Apr. 15, 1998), available
    at https://www.gpo.gov/fdsys/pkg/FR-1998-04-15/pdf/98-9613.pdf ("EPA
    Guidelines").
        \14\  U.S. Environmental Protection Agency, Causes of Climate
    Change, available at http://www.epa.gov/climatechange/science/
    causes.html.

        Moreover, because 85 percent of special requests for disclosures
    are for large print, having an electronic format for disclosure
    delivery allows participants with moderate vision impairment to easily
    enlarge the font on a computer or smart phone screen. Delivering plan
    information electronically is a faster, more efficient and effective
    way for participants to get the plan information they need. Electronic
    accessibility enables participants to receive communications in the
    digital manner they now expect. Communications can be sent and received
    instantly, without delay, and without the risk of getting lost or
    misplaced in the daily shuffle of paper mailings. With a digital-first
    approach, Fidelity supports the delivery of plan related materials in a
    ---------------------------------------------------------------------------
    manner requested by plan participants.

        Similarly, with the shift toward digitization and online access,
    Fidelity supports efforts to make permanent the ability for plan
    participants to obtain spousal consent through remote notarization and
    the modernization of processes related to retirement plan
    administration. Temporary relief is due to expire on June 30, 2021,
    although the experience of the past year has shown that remote
    notarization has broad acceptance across much of the Nation, and has
    proven to be a commonsense method of authentication while maintaining
    important protections and reliability. In fact, 33 states have enacted
    laws and dozens of other states' Governors have issued executive orders
    permitting remote notarization. Remote notarization has been successful
    and beneficial for plan participants and plan sponsors during the
    continuing pandemic. It has proven to be more secure and convenient,
    particularly given that executing interactions and transactions
    digitally is consistent with the way plan sponsors and plan
    participants prefer to conduct business. Plan participants have found
    that it provides an expedient and secure alternative to conventional
    notarization in the presence of a notary. Moreover, Fidelity is aware
    of no incidents of fraud related to remote notarizations obtained by
    participants in the thousands of plans that Fidelity services.
                            Healthcare in Retirement
        Last, savers are looking for ways to prepare for retirement
    expenses beyond the every day, and for millions of Americans that means
    preparing for increased healthcare expenses. It is estimated that a
    couple retiring today will need $300,000 to cover medical expenses
    throughout retirement, an 88 percent increase since 2002, based on the
    annual Fidelity Retiree Health Care Cost Estimate. As one of the
    leading service providers for Health Savings Accounts (HSAs), Fidelity
    is committed to helping workers and their families save for current and
    future health care expenses. As health care costs continue to rise,
    both American families and their employers agree health care is a top
    concern, particularly during retirement. Almost 90 percent of employers
    consider the rising cost of health care to be a critical concern, and
    26 percent of working Americans actually rank health care as the most
    critical issue facing us today. \15\ Employers are moving toward HSA-
    eligible health plans and today, 90 percent of large employers offer at
    least one consumer directed health plan, which helps reduce employers'
    costs, but these plans also offer individuals and families the benefit
    of an HSA.
    ---------------------------------------------------------------------------
        \15\  The 2018 EBRI/Greenwald & Associates Health and Workplace
    Benefits Survey.

        Saving through an HSA allows individuals and families to set aside
    money on a tax-advantaged basis to pay for current and future health
    expenses in retirement. HSAs are also becoming more popular for U.S.
    workers across all income levels. More than 50 percent of HSA holders
    with household incomes between $20,000 and $50,000 per year are
    enrolled in an HSA-eligible health plan and enrolled in an HSA. \16\
    HSA holders in the lower income bracket benefit disproportionately by
    participating in an HSA through the employer contribution. While the
    employer contribution funding amount varies by plan, the vast majority
    of Fidelity's plan sponsor clients pre-seed the HSA account with a
    specific amount rather than matching on a 1:1 basis. This means that
    HSA holders who may not be able to contribute much to their account,
    will still reap the full benefits of the employer contribution. The
    long-term value of an HSA can position a family for greater financial
    security, and Fidelity supports legislation that would expand access to
    these savings vehicles and allow for additional contributions so that
    families can save for the long-term.
    ---------------------------------------------------------------------------
        \16\  Based on Fidelity record kept health and welfare data for 21
    workplace investing clients as of May 2018.
    ---------------------------------------------------------------------------
                                   Conclusion
        Finally, I would like to express Fidelity's support for the latest
    retirement legislation under consideration, the Securing a Strong
    Retirement Act, or SECURE 2.0 as it has been dubbed. Several of the
    reforms are also included in the comprehensive bipartisan legislation
    from Senators Cardin and Portman, the Retirement Security and Savings
    Act, and we look forward to working with Members of Congress to advance
    these important initiatives. These bills build upon the strong
    foundation of their predecessor legislation and include many provisions
    that would address the challenges raised above.

        Notably, SECURE 2.0 takes an important step to help individuals who
    are paying down student debt by allowing employers to make matching
    contributions to a 401(k) plan while their employees make student loan
    repayments. The legislation also includes a meaningful enhancement to
    open MEPs and would allow 403(b) plans to participate in MEPs and
    pooled employer plans (PEPs). We believe open MEPs and PEPs will go a
    long way to closing the coverage gap for millions of Americans who do
    not yet have access to a workplace retirement plan.

        We also support the provisions to modernize retirement plan
    disclosures, including directing the Department of Labor, Treasury, and
    Pension Benefits Guarantee Corporation to study ways to consolidate,
    simplify and standardize the disclosures. Eliminating the requirement
    to send unnecessary plan disclosures to employees who are not enrolled
    in the plan is a helpful step in this direction. While we do have
    concerns about certain aspects of the electronic delivery provision, we
    look forward to working further with policymakers so that we can ensure
    participant demand for electronic delivery is met, and individuals are
    receiving up-to-date information conveniently in a cost-effective and
    environmentally conscious manner.

        On behalf of Fidelity and the millions of Americans we serve, we
    appreciate the invitation to share our views and contribute to this
    important dialog to build a better future through retirement security.
    We forward to continuing to work with the Committee to further American
    workers' retirement security now and for the future.
                                     ______

        The Chair. Thank you very much to all of our witnesses this
    morning.
        We will now begin a round of 5-minute questions of our
    witnesses, and I, again, ask my colleagues to keep track of the
    clock and stay within those 5 minutes.
        Data released earlier this year by the Bureau of Labor
    Statistics found that only 39 percent of part-time, private
    sector workers have access to retirement benefits, and
    according to the BLS, nearly two-thirds of part-time workers
    are women.
        We took a big first step in the SECURE Act by increasing
    access to retirement plans for long-term, part-time workers,
    but I think we can do a lot better. That is why I am pushing
    for legislation, like the Women's Retirement Protection Act,
    which would further expand access to retirement plans for part-
    time workers and address other challenges that undermine
    women's financial security.
        I want to hear from each of you this morning. How can we
    improve access to retirement benefits for part-time workers,
    many of whom are women, and encourage participation when those
    benefits are offered? Ms. Lucas, let's start with you.
        Ms. Lucas. Thank you, Senator Murray. We looked at the
    recently passed legislation for making or requiring coverage of
    part-time employees at the Employee Benefit Research Institute
    and, while we found that it was beneficial in increasing the
    amount of people that will have enough savings for retirement,
    we really--when we looked at it in combination with other
    initiatives, we saw a much more robust picture. We looked at it
    when--we looked at people that were in open MEPs, were
    automatically enrolled, and required coverage of part-time
    employees with auto portability.
        Looking at this more holistic picture of not only getting
    people into the plans, including part-time employees, but
    keeping that money in the system, we saw a much greater
    increase in the amount of people that would have retirement
    security. In fact, we found that for people age 35 to 39, who
    work for small employers, their reduction in savings shortfall
    was 26 percent if you combine these features.
        We believe that it is not just getting people into the
    plans that is at issue here, but more holistically, keeping
    that money in the system because part-time employees are likely
    to have low balances, and those are the balances that are
    likely to be cashed out, even once they are in the system, when
    they change jobs.
        The Chair. Mr. Akabas.
        Mr. Akabas. Senator, we talked about the coverage gap a lot
    today, and I think the most effective, and perhaps the only
    solution that can really get all or most of these part-time
    workers covered, is a national standard, and I think that has
    two steps.
        The first is that private businesses are unlikely to
    voluntarily cover these workers because of the administrative
    costs of maintaining many small accounts, including for former
    employees. But, on the other hand, simply mandating all of them
    would put undue burden on many of these small businesses and
    lack consumer protections.
        I think that there is two steps here. The first is to make
    it as seamless and costless as possible for small businesses to
    offer these plans. Steps were taken to do that in the SECURE
    Act. There are additional provisions that could make that even
    stronger and remove further responsibility from them, including
    on the fiduciary side, and transfer that to other entities.
        Then, the second is that once that is done and we have
    options like PEPs and state plans out there, we can have a
    national standard that requires all employers above a certain
    size to enroll their workers. And, when we have that in place,
    it could preempt all the different requirements that are
    occurring at the state level and just have one consistent
    national standard.
        The Chair. Okay. Ms. Kyle.
        Ms. Kyle. I agree with the other witnesses here. I also
    think it is important to recognize that Social Security is the
    best and most equal retirement system our Country has.
    Improving Social Security will go a long way to improving
    retirement security for women and part-time workers.
        Second, I think solutions that focus on providing money to
    individuals to save for retirement security in portable plans
    are much more important than solutions that provide other kinds
    of incentives, like tax deductions, which mostly benefit, as we
    know, the wealthiest people in more secure employment.
        I would encourage Congress to enact legislation that
    mandates employer contributions to retirement savings plans and
    that provide employees with funds so that they can save more.
        The Chair. Thank you. Mr. Gray.
        Mr. Gray. Madam Chair, thank you for the question. We are
    very supportive of accelerating the participation requirements,
    like we have seen in the SECURE Act and SECURE Act 2.0, that
    would ensure that workers that are part-time workers get
    covered by workplace retirement plans. I think that is
    foundational to creating retirement security.
        I would also emphasize, PEPs, pooled employer plans, I
    think this is--we are very early in this. This is new. But,
    from what we are seeing, we are seeing tremendous interest. And
    I think one of the keys to addressing the question you raised
    is to ensure that when those individuals go to work, their
    employer can offer them a plan. And, what we see in PEPs is the
    ability for small business owners to have the economies of
    scale that large plans have, and to offload the administrative
    work to reduce the barrier to offering a plan, allow them to
    focus on their business, and allow us to focus on delivering a
    retirement solution to their employees.
        Beyond that, I certainly would agree, as well, that it
    certainly goes beyond the workplace retirement plans. We should
    look at things, such as emergency savings and the like, which I
    know we will probably discuss in a few of the questions.
        The Chair. Thank you.
        Senator Burr.
        Senator Burr. Thank you, Madam Chair.
        I want to thank all four of you because all four of you
    have actually presented solutions to real problems. And I will
    not speak for the Chair, but sometimes we get testimony and we
    are sitting there searching for the value out of it, other than
    an opportunity to spend 5 minutes in front of a Congressional
    Committee. And I think all four of you have done a wonderful
    job at pointing us in directions.
        Mr. Gray, Fidelity has a product that allows small business
    to take advantage of the economies of scale and pool together.
    You alluded to it, and you talked about the interest. Can you
    gauge that interest? Can you convey to us how much interest is
    out there?
        Mr. Gray. Yes. I would say that we are seeing extremely
    strong or significantly strong organic demand without really
    any marketing or promotion on our part. Just small businesses
    reaching out to us, calling us, asking for a solution.
        I will tell you that, in the past, many of these small
    businesses were businesses that we really could not serve in a
    cost-effective way for them and their employees. Instead, now,
    with the PEP, we are able to provide that solution for them. We
    expect this to grow very significantly, and we are very
    committed to making this solution work to get after the
    coverage gap.
        Senator Burr. Are there other barriers or red tape that
    government should look at reducing or streamlining to encourage
    more employers to adopt a retirement plan for their employees?
        Mr. Gray. Yes. I think there is a couple potential
    solutions to that. I think one, which we have seen in some of
    the pending legislation, which is an extension of tax credits
    to small employers to incent them to establish the plan.
        I think, as well, making clear the fiduciary
    responsibilities, as other testimony has provided. In a
    solution that Fidelity is providing, we are taking fiduciary
    responsibility for that retirement plan, trying to make it as
    easy as possible for the employers. They simply need to make
    the selection, fund the payroll, and we will take the fiduciary
    responsibility from there. And I think that is really the gold
    standard approach for a pooled employer plan.
        Senator Burr. Ms. Lucas, you talked about in your testimony
    financial literacy, and financial literacy is something that,
    while we aim to advance it and to bring increased access to
    retirement advice for all Americans, we understand the average
    American will not attain the level of knowledge and proficiency
    a retirement expert would have.
        I remember in my early days in the House 27 years ago, I
    used to put out a book. It was called Life 101, and it was
    given to every high school graduate because many of those high
    school graduates did not go to college where they got sort of
    that advanced level. And it had things in it like how to set up
    a bank account and some information on life insurance. I was
    told by the Ethics Committee in the House that had to be
    excluded from the book because that was not the responsibility
    of a Member of Congress to share with constituents.
        I approach this question with you from that aspect, that
    government is not necessarily the right one to make the
    decisions. But, what can we do to enhance the financial
    literacy and the retirement advice that these folks are getting
    over and above what is available today?
        Ms. Lucas. Well, in our retirement confidence survey we
    find that people are--there is a bit of a disconnect even in
    terms of the amount of financial skill people think that they
    have. The majority of people in the retirement confidence
    survey are actually pretty confident about retirement. And,
    then, we look at numbers like we have talked about today, which
    shows that may be overconfidence.
        On the other hand, we--I remember distinctly early in my
    career when I--and this was decades ago, when I was talking to
    a plan sponsor who said, we spend millions and millions of
    dollars educating the same 20 percent of people. The other 80
    percent do not--they are not listening to us.
        That is why I think things like auto features are so
    important, not only within the retirement system--and we have
    demonstrated that they work--but, to Mr. Gray's point, other
    aspects, as well. Not only perhaps emergency savings, but
    student loan debt.
        Using what works, what we know works, which is the defined
    contribution system, to help people almost in spite of
    themselves to harness the things that we know are dominating
    their behavior, such as inertia, and allowing them to get into
    an emergency savings vehicle, a student loan debt repayment
    vehicle, or a 401(k), depending on their circumstances,
    automatically. Not asking them to become financially literate
    when they have a day job and other things that they need to be
    focusing on, other than becoming a financial professional.
        Senator Burr. Thank you. Thank you, Madam Chair.
        The Chair. Senator Casey.
        Senator Casey. Chair Murray, thank you for this hearing. I
    want to thank you and the Ranking Member for making it possible
    for us to focus on such a critically important issue to the
    American people.
        I will start with Ms. Kyle. I know that she has done a lot
    of work not only in this area generally, but in particular, her
    work in the House, and I am grateful for the public service she
    did there.
        I think I am stating something that is maybe self-evident,
    but probably not said enough, that one of the most important
    elements of any kind of economic security for the middle class
    is retirement security. But, we do not spend enough time on
    this issue.
        Many Americans will ask, Do I have enough money to save for
    retirement? Can I retire comfortably? All those questions are
    on the minds of workers and, for too many of them, the answer
    to those questions is no.
        We are told that in 2018, just a little more than half, 52
    percent, of private sector workers participated in a retirement
    plan.
        Ms. Kyle, you said--you noted in your testimony, when it
    comes to Black Americans and Latino Americans, it is 54 and 61
    are at risk of not having, not having enough money in
    retirement. So, one of my priorities, and I know it is a huge
    priority for so many of us, is making it easier for working and
    middle class families to have a secure retirement. By
    definition, that requires that we work with folks on both sides
    of the aisle to ensure that Americans can earn a living wage
    and that they have something left over to put away for
    retirement.
        I especially appreciate, Ms. Kyle, the fact that you made
    the connection about today and tomorrow, meaning the connection
    between wages and retirement, which is apparent and evident.
    But, it also is not an issue--not a connection we make, that
    people's wages and their income today will determine what they
    have tomorrow.
        I guess I would ask you, can you discuss some of the best
    tools available today to give working families an opportunity
    to save? So, that will be question one, the tools available.
        Question two would be if you could shed some light on the
    gaps that exist with respect to access to those tools.
        Then, third, how they can be addressed. And I know you have
    provided some of this in your testimony, but I think repetition
    is helpful.
        Ms. Kyle. Absolutely. And you are exactly right. The
    retirement crisis in this Country is the flipside of the wage
    crisis, right? I think that when we think about providing more
    retirement security to workers, it is essential to ensure fair
    pay so that people can actually afford to save.
        There are a few things that can be done, though, beyond
    looking solely at ensuring fair pay. You can assure that all
    employers, large and small, either provide retirement plans
    directly, or participate in pooled plans with required employer
    contributions so that it does not rely solely on the wages of
    an individual worker, and with automatic enrollment and
    portability so that plans can follow people as they switch
    jobs. Because, as we know we are no longer in the 1950's or
    1960's where people get a job when they are 20 years old and
    then retire there. People switch jobs, and a lot of times, if
    their plans do not go with them, they are a step back in
    providing retirement security.
        Congress can also provide starter tax credits. That will go
    a long way into providing retirement security by going directly
    into savers' retirement accounts. Both emergency savings
    accounts and retirement accounts with direct tax credits would
    help people who cannot afford to put away money from their
    wages.
        I think the best thing that Congress can do is also to
    limit efforts that stymie union participation. The evidence is
    really clear that for working people, benefits provided through
    unions are the primary way that they can save for their future.
        Senator Casey. Well, it is very helpful. I know we are
    almost out of time. I will yield back my time, maybe have some
    questions for the record for other members of the panel.
        But, Chair Murray, thank you very much.
        The Chair. Thank you.
        We will go to Senator Moran.
        Senator Moran. Madam Chair, thank you very much. Let me ask
    a couple of questions. Maybe the first one for Mr. Gray.
        Mr. Gray, you are a plan provider. You are aware of the
    types of temporary relief that regulators took to alleviate
    burdens during the pandemic, prompted by the shutdown and
    lockdowns and social distancing. I know the IRS granted
    temporary relief to the notarization requirements for a spousal
    consent, for example. Do you think that making these kinds of
    things permanent, some or all of those temporary things that
    were provided, or other temporary relief that I may not know
    about, would that be helpful continuing into the future? Are
    there ways that doing so would reduce the material costs
    associated with small businesses offering these kinds of plans,
    retirement plans?
        Mr. Gray. Senator, thank you for the question. And I will
    start specifically to your question around e-notarization in
    the temporary relief. Yes, we at Fidelity, and our clients,
    would certainly like to see that relief become permanent. We
    think it has been a very effective way for notarization process
    to happen in distributions that is both respective of
    individuals' concerns with the pandemic and health crisis, as
    well as in many ways far more secure. That e-notarization is
    videotaped. And, in addition, there are challenge questions
    presented in order to validate or verify the identity of the
    individuals for e-notarization. Knowing that we are living in a
    digital age, we think it makes sense that the relief should
    continue for e-notarization for purposes of retirement plan
    withdrawals.
        In addition to that, I think great strides have been made
    by this body and by regulators with regards to electronic
    delivery of plan notices. We would also want to make sure that
    continues and is expanded as necessary. We find e-delivering
    notices to reduce cost burden, and also help individuals that
    may have disabilities that need accessibility. And, we think it
    actually better engages with individuals in interacting with
    their retirement plan.
        Thank you, Senator.
        Senator Moran. Thank you, Mr. Gray.
        Let me ask any of the witnesses. One of the things with the
    pandemic that is highlighted is the lack of savings for an
    emergency. Something happens in one's life or their family's
    life, and sometimes perhaps retirement accounts become a place
    that can provide some safety, a safety net, but the consequence
    of that is diminishing the value of the retirement account upon
    retirement.
        Let me ask if there are things that employers could or
    should be doing to help individuals save not just for
    retirement, but for emergencies that may arise from today until
    their date of retirement in order to better preserve their
    retirement accounts for purposes of retirement. Anybody have
    suggestions for me of things that I or me and my colleagues
    might pursue?
        Ms. Lucas. I can start with that question. We did see that
    with the CARES Act, the defined contribution system, which,
    again, is one place where people do tend to have money, was
    used as a de facto emergency savings vehicle because that was
    where the money was. And, fortunately, the--not a lot of people
    did end up taking coronavirus-related distributions, but those
    that did, they were in areas, industries, where they really
    were in dire need, and they did need emergency savings. So,
    thank goodness at least they had the 401(k) plan for that.
        But, we need to think about how can we leverage the
    existing system to help with emergency savings because it is
    such a robust system. And having something like a sidecar
    savings account attached to the existing defined contribution
    system is something that employers have expressed a lot of
    interest in. They--according to our financial well-being survey
    of employers, 26 percent said that they would like to offer a
    sidecar savings account in the next 1 to 2 years. And any
    policies that could help to facilitate that, and including
    allowing employers to match to those accounts, I think would be
    very welcome, especially since, if they are a sidecar savings
    account, they are not--people are then not taking money from
    the corpus of their retirement plan. It is a separate account
    that is attached to the 401(k) plan, but it is specifically for
    emergencies.
        That is important from a mental accounting perspective.
    Behavioral finance shows that when people think--when they see
    a big pile of money and they identify that as an emergency--
    source of emergency savings, they will likely take more money
    than they need. But, if they are limited to a pool that is
    actually designated for emergencies as an emergency savings
    account, they are likely to take--constrain the amount of money
    they take during emergencies, and that would be the value of
    the sidecar savings.
        Senator Moran. That makes sense to me, Ms. Lucas. Thank
    you.
        Mr. Akabas. Senator, if I could just----
        Senator Moran. Anyone else.
        Mr. Akabas. Yes. If I could just quickly add to what Ms.
    Lucas is saying. I think another barrier that a lot of
    employers are facing to offering these types of plans is the
    lack of ability to automatically enroll workers today. And
    there is legislation from the last Congress that would clear
    out regulatory barriers that currently make it unclear for
    employers that want to use this, and that can make a huge
    difference. Because today we are seeing enrollment in these
    plans that are offered at fairly low levels, and that is what
    we saw in retirement accounts before automatic enrollment
    became the norm.
        If we can have legislation that would clear those barriers.
    There is legislation being rewritten right now that was
    introduced in the last Congress by several bipartisan Senators
    that could have that effect, and I think it could open the
    doors for employers that want to experiment with these types of
    accounts, whether it is a sidecar account that is actually
    attached to the retirement account, or a stand-alone emergency
    savings account that you could automatically enroll workers
    into.
        Senator Moran. Thank you very much. Thanks for highlighting
    that.
        The Chair. Thank you.
        Senator Kaine.
        Senator Kaine. Thank you, Chair Murray and Ranking Member
    Burr, and to our witnesses. Very powerful testimony.
        I want to begin with just re-emphasizing Ms. Kyle's
    testimony about racial disparities that are on page four and
    five of her written testimony. Just top line, the percentage of
    Hispanic families with retirement savings in 2019 was 32
    percent; Black families, 44 percent; White families, 65
    percent.
        Then, if you look at the amount of savings, it is even
    starker. Average White family in 2016 had about $160,000 in
    liquid retirement savings; Black families, $25,000 in liquid
    retirement savings; and Hispanic families, $29,000. Ms. Kyle's
    testimony points out that a good bit of this is because of wage
    gaps, but you also really have to grapple with the effect of
    wealth gaps.
        We commemorated 400 years of African presence in Virginia
    in 2019, and as we were doing that commemoration, it sort of
    made me look at history this way. Divide the 400 years since
    Africans came to the English colonies into eight half-
    centuries. For five of the eight half-centuries, Africans were
    held as property. They could not own and accumulate property.
    They were held as somebody else's property. Enslaved, and even
    freed African Americans under the Dred Scott ruling were ruled
    to be never able to be citizens of the United States. That is
    five-eighths of the history of African Americans in the United
    States.
        For the next 100 years, two-eighths of the history, slavery
    was abolished. But, because civil rights laws had not been
    passed, legally, African Americans were treated different in
    every area of life, including housing, which is one of the
    principal ways that people get wealth.
        It was only in the 1960's, so only in the last half-
    century, one-eighth of American history, that African Americans
    were granted full legal equality, that is not the same as
    social or economic equality.
        Surprise, if African Americans had basically been locked
    out of the norms of property accumulation, buying a house where
    they wanted to, passing that house onto other family members,
    it is really difficult to accumulate wealth like other folks.
    You can say a very similar thing about Hispanic families.
        This is one of the reasons, these statistics, that I have
    signed on as a cosponsor to Senator Booker's bill to set up a
    commission to look at the idea of reparations. I think how to
    do it is very complicated, and I am not smart enough to figure
    it out. But, I also feel like you cannot look at statistics
    like these and the history we have had and say, well, there is
    just nothing we can do about it. Because we did corporately, as
    a Country, and the institutions and laws, did a whole lot of
    things to create this and these disparities, and, so, the
    notion that, well, we just cannot do anything about it, or it
    is just the way it is, I mean, I--we have to figure out a way
    to do something about it.
        I am really glad, Ms. Kyle, that you made that--you put
    that data in such a stark way in your testimony.
        Auto enrollment. I want to ask some questions about auto--
    potential for auto re-enrollment. So, one of the things that we
    have learned over the years is that small tweaks to processes
    can make a big difference in retirement savings. Some people
    opt out of retirement early in their careers when they are
    young, healthy invincibles, and then they do not go back and
    maybe rethink that.
        Do we have any evidence whether or not people who opt out
    early are likely to reconsider the decision later in
    employment? And could some potential for auto enrollment every
    5 years or so, with the additional element that you can then
    opt out if you choose to, might that help us get more people to
    participate in retirement savings? Maybe Ms. Lucas, I will come
    to you on that.
        Ms. Lucas. Yes. Thank you. There is evidence that obviously
    inertia is a powerful force. It can be harnessed by automatic
    enrollment to get people into the plan and they will not opt
    out, and we see that--to your point about different races, it
    does not matter whether you are White, Black, Hispanic, woman,
    man, all incomes--people, when they are automatically enrolled,
    stay in plans at very high levels.
        For those that do opt out, re-enrollment is a very good
    solution because inertia will remain a factor. I remember I saw
    a focus group years ago of people that had been automatically
    enrolled into their plan and they were asked how they liked the
    experience of being automatically enrolled. One woman said, I
    have been working here for 10 years and, gee, time really
    flies. I meant to enroll in my 401(k) plan and then never got
    around to it.
        I think re-enrollment is definitely a consideration because
    we will continue to see inertia of people that opted out and
    may ultimately have wanted to come back in but never got around
    to it.
        Senator Kaine. Thank you. I have other questions I will
    submit for the record, but thank you to the witnesses.
        The Chair. Senator Tuberville.
        Senator Tuberville. Thank you, Madam Chair. Thank you for
    being here today.
        I know you hit a little bit on this a few minutes ago. In
    1935, we started Social Security. This is really the only
    retirement that a lot of people have. And, for some unforeseen
    reason, in 1983, this group up here decided we would tax social
    security, and sounds like we are getting ready to do another
    tax on social security. We cannot find enough money in the
    Federal Government to run this Hill up here, so we need to take
    from the people that has paid into retirement.
        Any of you want to answer this? How do we make it better?
    How do we make Social Security better? Because we just--all of
    you in your opening statements pretty much said nobody has
    retirement, just a few; and the ones that have it, the
    corporations have wasted and the taxpayers are having to pay
    the money to pay them off.
        How do we make Social Security better for everybody?
        Mr. Akabas. Senator, you are absolutely right. The Social
    Security system is meant to be the foundation of retirement
    security, the rock of certainty that Americans have in
    retirement. It has really become a major source of uncertainty
    that they have because of the status of the trust fund. We are
    only a little over a decade away from when the trust fund will
    exhaust its reserves, and I think it is incumbent upon Congress
    to take action to make sure that outcome does not occur, and
    the sooner, the better.
        We at BPC have a report that we put out with the commission
    that I mentioned earlier that comprehensively addresses Social
    Security. It does call for benefit adjustments, especially for
    folks that can afford it at the higher end. It actually raises
    benefits for those who are most vulnerable at the bottom end,
    and then calls for some modest additional revenue increases to
    make sure that the trust fund is funded over time.
        I would certainly encourage you to take a look at the plan,
    and I would be glad to discuss it further with you and your
    staff.
        Senator Tuberville. Thank you. Thank you. And it looks like
    we are nearing bankruptcy in Social Security in 10, 12 years
    down the road. That is my understanding. Hopefully not because
    people are still paying into it and they are going to be
    counting on it. I cannot imagine living off that small sum, but
    it is something.
        In retirement, too, is Medicare. People want to have some
    kind of healthcare, which is most valuable when you get to the
    point of retirement and you need Medicare. And back in
    President Obama's days when we started Obamacare, they took
    $780 billion out of our Medicare and put in Obamacare and it is
    gone.
        Where do you foresee Medicare going? I do not know if that
    is in your realm, or any of your realms, if you would answer
    that for me.
        Mr. Akabas. Well, Senator, it is not my main focus, but I
    do know that the trust fund for the Part A, which covers
    hospital insurance for that program, as well, is actually in
    even worse shape at the moment than the Social Security Trust
    Fund that we just mentioned. It is projected in the last
    projections----
        Senator Tuberville. That makes me feel good.
        Mr. Akabas [continuing]. To deplete in 2026. So, it really
    is an urgent issue that Congress needs to address. There are
    lots of proposals out there that would adjust the payment rates
    or the method of delivering services, as well as potentially
    the revenues that come into the program. Those are--there are
    lots of options on the table, but it has not been a priority on
    Congress' agenda recently. I think it needs to be in the coming
    years because of how soon that trust fund is also going to
    deplete.
        Senator Tuberville. Yes. A few years ago, we had, I think,
    some military funds being--getting ready to be invested in the
    Chinese companies.
        Ms. Lucas, did the Trump administration do the right thing
    by pulling that back, of do not invest in China with retirement
    funds?
        Ms. Lucas. Well, we see that the typical worker is in a
    target-date fund when they are automatically enrolled and, the
    point of the target-date funds are to be well diversified. I
    think any policy that impedes diversification is a
    consideration. And, to the extent that we have policies that
    are interfering with diversification, I would agree that they
    are an issue.
        Senator Tuberville. Yes. Well, thank you.
        Just another comment about Millennials. I have two that
    are--I try to get to put into funds and they will come right
    back to me, say, Dad, at age 35, you took yours out to buy a
    new home--and they are right--to make a down payment. And that
    is what is happening. You will have a lot of these young people
    that will cash out at an early age, and then 20 years later,
    they are looking around and going what did I do?
        I do not know what we can do about that, but retirement
    is--with this age group coming up, as we are, the baby boomers,
    it is--we are in a tough situation. A lot of people are, a lot
    of my buddies and friends are.
        But, thank you for you all being here today. It is very
    eye-opening. I would like to get with you on the Social
    Security part, too.
        Thank you. Thank you, Madam Chair.
        The Chair. Thank you.
        Senator Smith.
        Senator Smith. Thank you, Madam Chair, and thank you also
    to Ranking Member Burr and to all of our panelists.
        I come at this from the core idea that a safe, secure
    retirement should be available to every American. And the sort
    of pillars of that historically in our Country have been Social
    Security, savings, and pensions. So, I want to dive in a little
    bit on this. I heard a comment, I think, about sort of bailing
    out the unions with the pension reform that we did in the
    American Rescue Plan. I just want to get to that.
        Ms. Kyle, I am going to direct my question to you here. So,
    the first weekend that I was a United States Senator, I went to
    Duluth, Minnesota and I had a chance to visit with some
    Teamsters, who were very worried about what was going to happen
    to their pensions. They were part of the Central States Pension
    Plan. They paid in. They had done everything right. They had
    saved. They had negotiated through their union contracts a
    pension. And, now, come to find, that pension might not be
    there for them.
        Now, gratefully, thankfully, and with a lot of bipartisan
    work, I and many others focused on this and we were able to get
    the Butch Lewis Act passed.
        Ms. Kyle, could you start just by saying--I mean, I have
    heard from Minnesotans, but I would like to hear from your
    perspective what this has meant to protecting the pensions for
    the workers.
        Ms. Kyle. Absolutely. Once fully implemented, the American
    Rescue Plan Act will be life-changing for generations of
    workers. I do not think I can overstate the impact it will have
    on people's lives.
        In the last 6 years, I have personally heard from thousands
    of workers and retirees who were facing 50, 60, 70 percent cuts
    in their income and retirement due to impending insolvency of
    their pension plans. And these were essential workers, bakers,
    truckers, those who worked their entire career doing difficult
    jobs, and now were in a place where they could no longer work
    and were looking to make good on their deferred wages that were
    in the form of promised benefits, and they were worried that
    was all going to slip away.
        With the American Rescue Plan, those promised participant
    benefits are now going to be kept, and that is huge. They will
    no longer miss mortgage payments or roll the dice on missed
    life-saving medications.
        Senator Smith. Yes. I will never forget Vicky, the woman
    who I talked to in Duluth, who said to me, Tina, I do not have
    a plan B. If these pensions are cut that I paid into--I did
    everything right, and if they are not there, I do not have a
    plan B.
        But, a lot of times, we do not pay enough attention to what
    this also means for the businesses that also paid in, who did
    what they had agreed to do through the contracts that they had.
    Could you just address briefly what this means for those
    businesses, many of them small, family owned businesses?
        Ms. Kyle. Absolutely. In this, the multi-employer funding
    crisis, there were no bad actors. The contributing employers
    were giving in what they were supposed to, to their plans, and
    many of them saw their competitors potentially leave their
    multi-employer pension plans, and they were going to be left
    holding the bag. And one asset of--or, excuse me, feature of
    the multi-employer system is that when employers start to
    leave, there is a chance for something called mass withdrawal,
    which can result in the employer having to pay exorbitant
    amounts in order to cover the liabilities of the plan.
        We saw a number of employers who were going to be left with
    what could be a significant liability for employees across the
    multi-employer system. And, so, on the most part--for the most
    part during the process of looking to find a solution for
    multi-employer pension plans, the employers and the workers and
    the retirees worked together in the importance of finding a
    solution here.
        Senator Smith. Just as I spoke with workers who were so
    concerned about what this was going to mean for their
    retirement, I spoke to family businesses that were worried
    about how they were going to be able to pass that business on
    to the next generation or potentially sell it, because that is
    how they were going to monetize their life's work, unable to
    because of this.
        I just have a couple seconds left. But, was this in any way
    a bailout of unions?
        Ms. Kyle. No, it was not. These plans are run by a board of
    trustees that is made up of union representatives and
    employers, and that board of trustees is a group of fiduciaries
    who are then responsible for running the plans.
        Senator Smith. Thank you very much. Thank you, Ms. Kyle.
    Thank you, Madam Chair.
        Ms. Kyle. Thank you.
        The Chair. Thank you.
        Senator Braun.
        Senator Braun. Thank you, Madam Chair.
        My question is for Mr. Akabas, and I think Senator
    Tuberville has already touched on a little bit.
        I would like to know--we know actuarially and we have known
    for a long time what is happening to Social Security. I am just
    as concerned about Medicare. That is a tougher issue because of
    the rising costs underlying it. Both drivers of our annual
    structural deficit.
        When it comes to Social Security, I think that the
    variables are so simple in terms of what we need to choose
    from--means testing, raising the age of retirement, raising
    revenues, or maybe even cutting benefits. All of that would be
    something everyone has to contend with if they are in other
    areas of government, No. 1. And in any business, there are
    tough decisions.
        Those four, and if you have anything else in mind, what are
    we going to do and when do we need to do it so we probably do
    not confront, like we are going to confront with Medicare, a
    precipice, a cliff, which is now a little over 5 years when we
    have to do something?
        Mr. Akabas. Senator, you are totally right. We--and when we
    should do it? We should have done it yesterday. I mean, we are
    getting close to the point of insolvency of the trust fund
    where there will be no reserves left, other than the revenue
    that is coming into the program, which can only fund somewhere
    between 75 and 80 percent of benefits at that point. That would
    be unthinkable to get to that point where retirees are seeing a
    20 or 25 percent cut in their benefits.
        All of the options that you listed I think do need to be on
    the table. That is what we did in the commission that we hosted
    at the Bipartisan Policy Center. It was 2 years of serious
    deliberations that group had because these are tough decisions
    that impact real lives.
        But, we can get to a point where we protect the most
    vulnerable retirees; in fact, increase their retirement
    security, and then make modest changes that are phased in
    gradually over time, like adjusting the retirement age to
    account for the fact that, on average, Americans are and will
    continue to live longer lives.
        Now, when we do that, I think we need to acknowledge that
    there are certain groups of Americans who have not seen those
    increases in life expectancy, particularly people of color. And
    in order to account for that, we can make companion changes to
    the program that make sure to offset those reductions in their
    benefits that would otherwise occur from increasing the
    retirement age for the whole population.
        But, we should not forestall necessary changes for the
    broad system just because there are some who would be adversely
    hurt. We should make sure that we target other policies to
    protect those people so that we can make the system solvent
    again for everybody.
        Senator Braun. What about means testing and what about--I
    think currently it is 7.65 percent shared by the--not shared,
    each employer and employee, raising revenues? And then what
    about tailoring reducing benefits or the other three out there,
    as well? Retirement age, I think, would be the easiest one to
    tweak.
        Mr. Akabas. Yes, so, on benefits, what this commission did,
    one of the proposals was to make the benefit formula more
    progressive, and that means raising benefits modestly at the
    bottom end, but curbing benefits, curbing the growth of
    benefits particularly, for those at the upper end, and
    including for things like spousal benefits. Because right now,
    particularly well-off spouses, who did not work a full career,
    can get 50 percent of their spouse's benefit. So, if we curtail
    that particularly for spouses at the high end who really do not
    need those additional benefits, we can make available more
    resources for the population as a whole.
        Then revenues was a modest component of the package, as
    well. The commission increased that 6.2 percent payroll tax on
    each side that goes to Social Security right now, gradually up
    to 6.7 percent on each side. So, not a significant tax
    increase, but a modest one to help fund the system overall.
        Senator Braun. Thank you. I yield back the rest of my time.
        The Chair. Senator Hassan.
        Senator Hassan. Thank you, Madam Chair and Ranking Member
    Burr. Thank you to all of our witnesses for being here today.
        Every worker should be able to save enough to cover their
    expenses during their retirement years, but we are here today
    because we know that's not always the case. So, I look forward
    to working with my colleagues to improve and expand access to
    retirement savings for all Americans.
        Mr. Gray, I want to start with a question to you. Following
    a request that the Chair and House Education and Labor chair
    Bobby Scott and I made, the Government Accountability Office
    released a report highlighting the threat that cybersecurity
    attacks--cyberattacks pose to retirement plans. The report
    confirmed that cyber threats put private, defined contribution
    retirement plans, like 401(k)'s, which are held by more than
    100 million Americans, at risk and recommends that the
    Department of Labor take action to address this issue.
        Mr. Gray, can you share how Fidelity works to combat the
    risks of cybersecurity in its client retirement plans? And what
    would you recommend that Congress could do to address these
    risks?
        Mr. Gray. Senator, thank you for the question. Certainly,
    Fidelity views cybersecurity as one of the most paramount
    things that we can do, which is really all about protecting our
    customer data and their trust. I would say Fidelity employs
    some of the most sophisticated technologies and best practices
    that is really designed to protect the sensitive information
    and accounts of our customers. And this is a significant spend
    for us. We view this as really one of our highest priorities,
    and our viewpoint is we will do whatever it takes to ensure
    that security.
        To give you a few examples of kind of how we go about doing
    this, we are cyber--our cybersecurities program is ISO-
    certified, which is really one of the highest standards that
    providers can use, or financial services can use, to validate
    the strength of their cybersecurity program.
        We actually employ 800 individuals on our cybersecurity
    team that come from a range of backgrounds and credentials,
    including law enforcement and intelligence agencies. We have
    built strong partnerships, as well, and strategic partnerships
    with the FBI, Secret Service, and others to help protect our
    customer accounts.
        We employ with our clients a number of active measures to
    help protect their accounts:
        A two-factor authentication, for example.
        Voice biometric, so if a Fidelity customer calls, we can
    authenticate them by their voice.
        We also have the ability to track the voice of bad actors
    who may be calling, trying to get access to retirement
    accounts.
        We use biometric authentication, and we work directly with
    our customers, as well, to make sure that they are aware of any
    cyber threats that may be faced by their participants and their
    plans and to help them strengthen their cyber standards.
        This is a proactive approach that we take, and we are very
    supportive of the recommendations that were made by the
    Department of Labor recently, and we worked very actively with
    the Department in the formulation of those recommendations.
        Senator Hassan. Well, thank you for that, and I would look
    forward to further consultation about other ways Congress can
    move forward on helping all of our retirement plans be cyber
    secure.
        I want to turn to a different issue for all of the
    witnesses. As has been discussed here today, women often
    struggle to save enough for retirement, lagging behind their
    male counterparts due to a number of factors, including lower
    earnings, spending time away from the workplace to meet
    caregiving responsibilities, as well. Many of those issues have
    been exacerbated by the pandemic, with nearly three million
    women temporarily leaving the workforce.
        To each of you, and I will ask you to be brief, how do you
    think Congress can help address the retirement gap for women
    especially as we recover from COVID-19? And I will start with
    you, Ms. Kyle.
        Ms. Kyle. Thank you. We talked about some of the solutions
    here a little earlier, and I think that a--first, a focus on
    Social Security is really essential because that is the primary
    retirement vehicle for most Americans, including most women.
        I think a recognition that women are disproportionately in
    low-wage jobs and often have gaps in employment for childcare
    is essential. And, so proposals that provide paid childcare
    and--excuse me, paid family leave are really essential.
        I also think it is important to have portable retirement
    benefits so that when women do leave the workforce, they are
    able to take their benefits with them.
        Senator Hassan. Yes, thank you. And, Madam Chair, I am
    almost out of time. Can I ask the others to comment briefly?
        The Chair. Yes.
        Senator Hassan. Thank you.
        Ms. Lucas.
        Ms. Lucas. Thank you. According to the retirement
    confidence survey, the women that are very affected by having
    low amounts of assets in retirement actually are divorced or
    unmarried women. According to the retirement confidence survey,
    38 percent of divorced women have less than $1,000 saved for
    retirement, and 42 percent of never-married women.
        To your point about women who have been displaced from the
    workforce, we have a system already in place called catch-up
    contributions, and that could be something that could be
    leveraged for women who need to catch up because they have been
    displaced from the workforce in their 401(k) plans.
        Senator Hassan. Thank you.
        Mr. Akabas.
        Mr. Akabas. Thank you. I would agree with the other
    witnesses. I think paid family leave is a big factor here, as
    well as just the access gap that we have been talking about all
    morning.
        Things like automatic enrollment that can make sure to get
    these workers into plans.
        Then, finally, I would mention on Social Security, one
    other provision of this package that I mentioned from BPC was
    enhancing the survivor benefit. Because often, women are the
    ones who are the surviving spouse. Right now, they only get to
    keep the greater of their benefit or their spouse's benefit.
    But, unfortunately, we know that household expenses usually do
    not get cut in half when one spouse passes away. And, so,
    enhancing that benefit for survivors would be really important.
        Senator Hassan. Great. Thank you.
        Mr. Gray.
        Mr. Gray. Yes. I will just share a brief statistic. Of
    female workers, 75 percent of them told us that they would be
    likely to enroll in emergency savings accounts if incentives
    were offered. And I think this Congress can act to make it easy
    for employers to offer incentives, like in a match, an
    emergency savings account, I think that would go a long way.
        Senator Hassan. Thank you. And thank you for your
    indulgence, Madam Chair.
        The Chair. Thank you.
        Senator Rosen.
        Senator Rosen. Thank you, Madam Chair. I appreciate it.
    Thank you, Ranking Member Burr.
        Of course, thank you all the witnesses for being here
    today, for your work in this area. It is critically important
    because we do know there are disparities in our retirement
    system. And we have known that since before the pandemic, of
    course, retirement savings crisis in communities of color,
    including for Black and Latino Americans.
        There is a number of contributing factors, including lower
    lifetime earnings, lower rates of investment, lower rates of
    home ownership, which means that there is not one magic
    solution, but it is important that we bring this up at front
    and center when we are examining so many inequities that the
    pandemic made worse, like healthcare and education.
        Ms. Kyle, can you talk about how this past year's economic
    downturn affected inequities in retirement savings for
    underrepresented communities? And, is there action that you
    think we here in Congress could take to address these
    disparities? How can we help maximize the ability for these
    groups to catch up?
        Ms. Kyle. Yes, absolutely. The pandemic worsened many of
    the inequalities that we see in retirement savings for people
    of color and low-wage workers. And, I think that efforts toward
    emergency savings are really essential in order to ensure that
    people of color are able to pull money in when they need it and
    not pull out of their retirement accounts, which they often do
    not have.
        I will also reiterate Senator Kaine brought up the fact
    that many of the inequalities and disparities we see among
    Black and Brown people is related to the overall racial wealth
    gap. And, so, policies that help close that racial wealth gap,
    I think, will have a huge impact on retirement savings, as
    well.
        Senator Rosen. Thank you. I appreciate that. And I want to
    build on what Senator Hassan said about this, too, catching up,
    building on inequities. Because one thing that I hope that
    comes out of this pandemic is a broader understanding of family
    caregiving. Many workers, disproportionately women, have to
    leave the workforce mid-career in order to take care of their
    children or aging relatives.
        I actually experienced that myself when I left work to care
    for my parents and in-laws toward the end of their lives in
    different health journeys, and far too many people have to
    really make that impossible decision between staying in the
    workforce and leaving to care for family members. And, of
    course, like I said, Senator Hassan talked about that is for--
    that takes a backseat. Saving for retirement takes a backseat
    to some of those things. So, women, I just want to reiterate,
    we know they have to be able to catch up, and we will continue
    to work with you on that.
        Speaking of catching up, so many women, a lot of folks,
    they work in small businesses. And, so, I know we are here
    today with some large employers, but small businesses, how can
    we help them help their employees to save? They do not have
    large H.R. departments. They may struggle to offer a wide range
    of products or even give them at all. And just, we need to be
    able to enable our small businesses to give those resources.
        Mr. Gray, could you talk about any possible policy changes
    that you think Congress might enhance that could help small
    businesses, those businesses with 500 employees and under, and
    even our micro businesses with maybe 50, 10 employees. How do
    they help their employees save for retirement?
        Mr. Gray. Senator, thank you for the question. I think
    small businesses and making sure that we close the coverage
    gap, incent those small businesses to offer a plan, and also
    incent them to offer automatic enrollment is really critical to
    addressing the points that you have raised.
        When you look at automatic enrollment, automatic enrollment
    is used very heavily among large employers. But, small
    businesses, like businesses with 50 employees and less,
    typically only about 10 to 12 percent of those employers will
    automatically enroll. I look at clients or businesses with
    2,500 employees or greater, that number starts to become more
    like 60 or 70 percent using automatic enrollment.
        I think that it is critical that Congress find a way to
    incent those small businesses to be able to automatically
    enroll, and part of the challenge has simply been a matter of
    cost for those businesses; and when, upon automatically
    enrolling, the employer then, the small business owner, now has
    the cost of a match. So, if steps can be taken on that, I think
    that would go a long way.
        I will also quickly comment on pooled employer plans again.
    I think that is an excellent opportunity because it allows
    those businesses to offload the administrative duties, focus on
    their business and their employees, and trust Fidelity or
    others to administer the plan for them.
        Mr. Akabas. Senator, if I could just note, adding on what
    Mr. Gray----
        Senator Rosen. Yes.
        Mr. Akabas [continuing]. Said on that automatic enrollment
    piece.
        There is legislation that was introduced in the last
    Congress by Senators Young, Booker, and Jones and Cotton that
    would address this issue with a safe harbor for automatic
    enrollment to give small employers more flexibility in terms of
    how much they can afford to contribute to the retirement plans,
    and still incentivizing them to make that employer match, but
    also recognizing that some cannot and still encouraging them to
    use automatic enrollment. So, I encourage you to take a look at
    that, and I would be happy to discuss it with you further.
        Senator Rosen. Thank you. I appreciate that. I also think
    for our small businesses, those administrative costs, having
    that software, all of those things, they may not have a robust
    IT department or know how to do that. So, being able to pool
    and partner with larger groups or companies I think will be key
    to success.
        Thank you, Madam Chair.
        The Chair. Thank you. Senator Burr, do you have any
    additional questions?
        Senator Burr. Madam Chair, I would just end with how I
    started. I want to thank all four witnesses for their
    willingness to be here today, for the knowledge that you have
    been to bestow in us, and more importantly, for the suggestions
    that you have provided to us as to ways that we can enhance
    retirement savings in this Country. I thank all four of you.
        Thank you, Madam Chair.
        The Chair. Thank you.
        I do have one additional comment and question. The shift
    from traditional, defined benefit plans, like pensions, to
    defined contribution plans, like 401(k) plans, means savings
    for retirement is more complicated for participants. Workers
    have to act as their own financial advisor, their own
    investment manager, their own actuary, which is a daunting task
    when you are raising children or focused on your own career, or
    especially when you are struggling to make ends meet at home.
        But, even when people are able to plan ahead, we know from
    the latest retirement confidence survey released by EBRI, only
    half of workers have tried to calculate what they will need for
    retirement--that is a number that has essentially not changed
    since 1999--despite initiatives to improve financial planning.
    And, even when people do plan ahead, their plans to retire can
    be upended by forces unseeable, like a pandemic.
        Ms. Lucas, I wanted to just ask you to comment. What can we
    do to help the families trying to chart a path to financial
    security in retirement?
        Ms. Lucas. I think there's two things that we see about
    people who are actually living in retirement. There are two
    groups that are--have almost the identical amount of assets,
    and it is not that much. But, one is what we call struggling
    retirees that have unmanageable debt, and their retirement is
    very constrained and difficult.
        The other, again, very similar in all aspects except they
    do not have the unmanageable debt, we call them the just-
    getting-by. And that sounds negative, but they actually are
    able to piece together a pretty secure retirement because they
    are not struggling with debt.
        The other group is what we call the long-term secure
    retirees, and those are people that have some source of
    guaranteed income. Whether it is a defined benefit plan, an
    annuity, retiree medical, they have some greater sense of
    security because they are not completely relying on their own
    nest egg, and those people feel less constrained about
    spending. They feel more confident about spending, and they--
    the retirement they describe is much more comfortable overall.
        The Chair. Thank you. Did you want to----
        Mr. Akabas. Senator, I would just add on the financial
    literacy or capability point that you raised that I think that
    financial literacy in general is important, but we should not
    overstate necessarily the ability of teaching a high schooler
    what they should be doing 7 years down the road to save for
    their retirement 50 years down the road.
        I think a much more effective place to go is what we call
    just-in-time intervention. So, when those decision points are
    being made, when people are enrolling in the plans, when they
    are making decisions about their retirement income, for drawing
    down their retirement accounts or for annuities, how can we
    help them with the information that they need and the structure
    that they need to make those decisions.
        Social Security claiming is another really important one
    where people often make those decisions without a whole lot of
    knowledge about the benefits, decisions that they are making
    that will impact them for the rest of their life. If they claim
    at age 62, they will get a significantly reduced benefit for
    their entire lifetime. And, so, what types of information and
    nudges can we provide people at those ages so that they make
    more informed decisions for their own retirement security.
        The Chair. I agree that financial literacy is a lifetime
    issue, but we certainly have a lot of young kids today who have
    not--do not even have the basics. As my colleague, Senator
    Burr, referred to, needing to know how to balance a checkbook;
    or basic things, what happens when you charge a bunch of stuff
    on your iPhone and have to pay the bill later. Small things.
    But, again, I do think it is a lifetime learning. Just in time
    is also of utmost importance.
        That will end our hearing today, and I want to thank all of
    my colleagues, all of our witnesses--Ms. Lucas, Mr. Akabas, Ms.
    Kyle, Mr. Gray. Thank you for joining us today for this really
    important discussion about how we can help shore up our
    Nation's retirement security and make sure our families are
    prepared for the future.
        For any Senators who wish to ask additional questions,
    questions for the record will be due in 10 business days, on
    Thursday, May 27, at 5 p.m. The hearing record will also remain
    open until then for Members who wish to submit additional
    materials for the record.
        The Committee will next meet on Tuesday, May 18 at 10 a.m.
    in Dirksen 106 for a hearing on paid family leave.
        With that, the Committee stands adjourned. Thank you.

        [Whereupon, the hearing was adjourned at 11:43 a.m.]

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