[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
                                
                                
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                              ___________

                    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

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                                 ______
                                 
                   [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.
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    \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\
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    \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.
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    \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.
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    \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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