[Senate Hearing 118-321]
[From the U.S. Government Publishing Office]




         
                                                       S. Hrg. 118-321

                      TAKING A SERIOUS LOOK AT THE 
                     RETIREMENT CRISIS IN AMERICA: 
                        WHAT CAN WE DO TO EXPAND 
                     DEFINED BENEFIT PENSION PLANS 
                              FOR WORKERS? 
=======================================================================





                                HEARING

                              [before the]

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               ----------                              

                           FEBRUARY 28, 2024

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          Committee on Health, Education, Labor, and Pensions
          
          
          
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                                                       S. Hrg. 118-321

                      TAKING A SERIOUS LOOK AT THE 
                     RETIREMENT CRISIS IN AMERICA: 
                        WHAT CAN WE DO TO EXPAND 
                     DEFINED BENEFIT PENSION PLANS 
                              FOR WORKERS? 
=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING THE RETIREMENT CRISIS IN AMERICA, FOCUSING ON EXPANDING 
               DEFINED BENEFIT PENSION PLANS FOR WORKERS

                               __________

                           FEBRUARY 28, 2024

                               __________

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



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                 U.S. GOVERNMENT PUBLISHING OFFICE 
                 
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                 BERNIE SANDERS (I), Vermont, Chairman
PATTY MURRAY, Washington             BILL CASSIDY, M.D., Louisiana, 
ROBERT P. CASEY, JR., Pennsylvania       Ranking Member
TAMMY BALDWIN, Wisconsin             RAND PAUL, Kentucky
CHRISTOPHER S. MURPHY, Connecticut   SUSAN M. COLLINS, Maine
TIM KAINE, Virginia                  LISA MURKOWSKI, Alaska
MAGGIE HASSAN, New Hampshire         MIKE BRAUN, Indiana
TINA SMITH, Minnesota                ROGER MARSHALL, M.D., Kansas
BEN RAY LUJAN, New Mexico            MITT ROMNEY, Utah
JOHN HICKENLOOPER, Colorado          TOMMY TUBERVILLE, Alabama
ED MARKEY, Massachusetts             MARKWAYNE MULLIN, Oklahoma
                                     TED BUDD, North Carolina

                Warren Gunnels, Majority Staff Director
              Bill Dauster, Majority Deputy Staff Director
                Amanda Lincoln, Minority Staff Director
           Danielle Janowski, Minority Deputy Staff Director  
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
                            C O N T E N T S

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                               STATEMENTS

                      WEDNESDAY, FEBRUARY 28, 2024

                                                                   Page

                           Committee Members

Sanders, Hon. Bernie, Chairman, Committee on Health, Education, 
  Labor, and Pensions, Opening statement.........................     1
Cassidy, Hon. Bill, Ranking Member, U.S. Senator from the State 
  of Louisiana, Opening statement................................     3

                               Witnesses

Schambers, Sara, UAW Member, Local 182, Ford Livonia 
  Transmission, Livonia, MI......................................     6
    Prepared statement...........................................     8
    Summary statement............................................    15
Ghilarducci, Teresa, Irene and Bernard L. Schwartz Professor of 
  Economics and Policy Analysis, The New School for Social 
  Research, New York City, NY....................................    15
    Prepared statement...........................................    17
    Summary statement............................................    33
Doonan, Dan, Executive Director, National Institute on Retirement 
  Security, Washington, DC.......................................    33
    Prepared statement...........................................    36
    Summary statement............................................    52
Greszler, Rachel, Senior Research Fellow, The Heritage 
  Foundation, Washington, DC.....................................    52
    Prepared statement...........................................    55
    Summary statement............................................    75
Stevenson, Eric, President, Nationwide Retirement Solutions, 
  Nationwide Mutual Insurance Company, Columbus, OH..............    75
    Prepared statement...........................................    77
    Summary statement............................................    84

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.
Sanders, Hon. Bernie:
    AARP, Statement for the Record...............................    99
    Better Markets, Statement for the Record.....................   106
    Letters from the National United Committee To Protect 
      Pensions...................................................   141
    Economic Policy Institute, Statement for the Record..........   145
Cassidy, Hon. Bill:
    Insurer Retirement Institute, Statement for the Record.......   156
    American Retirement Association, Statement for the Record....   163
    American Council of Life Insurers, Statement for the Record..   167
    The Erisa Industry Committee, Statement for the Record.......   171
    American Benefits Council Proposal for Enhancing Retirement 
      Security by Strengthening the Single-Employer Defined 
      Benefit Plan System........................................   179
Ghilarducci, Teresa:
    The Last Thing Americans Need, Newsweek Article..............   194
    Worry When Gov't Pushes Their Retirement Plan, Newsmax 
      Article....................................................   195
    ``Working longer won't solve the retirement crisis - seniors 
      need a `Gray New Deal' to retire with dignity, this 
      economist says.'' MarketWatch Interview....................   196
    Work, Retire, Repeat.........................................   199

                        QUESTIONS FOR THE RECORD

Response by Teresa Ghilarducci, and Eric Stevenson, to questions 
  of:
    Senator Hickenlooper.........................................   478
Response by Teresa Ghilarducci to questions of:
    Senator Markey...............................................   479
    
 
                      TAKING A SERIOUS LOOK AT THE 
                     RETIREMENT CRISIS IN AMERICA: 
                        WHAT CAN WE DO TO EXPAND 
                     DEFINED BENEFIT PENSION PLANS 
                              FOR WORKERS? 

                              ----------                              


                      Wednesday, February 28, 2024

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
430, Dirksen Senate Office Building, Hon. Bernard Sanders, 
Chairman of the Committee, presiding.

    Present: Senators Sanders [presiding], Casey, Baldwin, 
Kaine, Hassan, Hickenlooper, Cassidy, Braun, Marshall, 
Tuberville, and Budd.

                  OPENING STATEMENT OF SENATOR SANDERS

    The Chair. The Committee on Health, Education, Labor, and 
Pensions will come to order. The purpose of this hearing is--
the issue we are going to discuss is of enormous consequence. 
But unfortunately, I don't think it is getting the attention 
that it deserves.

    I want to thank all of the witnesses for being here and I 
look forward to a good and serious discussion. Let me start off 
by saying that as a Nation, we have more income and wealth 
inequality today than we ever had in the history of America.

    While the billionaire class becomes wealthier, our social 
safety net for the most vulnerable in our Country remains far 
behind other wealthy nations. It's a disaster, and if we do not 
get our act together, it's only going to get worse. We have the 
highest rate of childhood poverty of almost any major nation.

    Our childcare system is now dysfunctional. More than 
600,000 fellow Americans are homeless and over 85 million are 
uninsured or underinsured. But let's be clear, it's not just 
the children and the poor who in the richest country on earth 
are hurting. Our nation's senior citizens are struggling as 
well.

    The truth is that we now have a retirement crisis in 
America that demands our immediate attention, which brings us 
to the subject of today's hearing. In the United States today, 
almost 45 percent of older Americans between the ages of 55 and 
64 have no savings at all and no idea how they will retire with 
any shred of dignity or respect. 45 percent of workers between 
55 and 64, zero retirement savings.

    As frightening as the retirement crisis is for older 
workers, it is even a bigger concern for the millions of senior 
citizens who are no longer able to work, who have exhausted all 
of their savings, and who have no pensions at all.

    Incredibly, and this really is quite incredible, one out of 
every four senior citizens in America are trying to live on an 
income of less than $15,000 a year. Think about that. While 
over half of our Nation's seniors are trying to survive on an 
income of less than $30,000 a year.

    Just put yourself in the place of that person. How do you 
pay the rent? How do you pay for health care? Prescription 
drugs? How do you put food on the table on just $15,000 or even 
$30,000 a year? And the truth of the matter is that many 
cannot. That should not be happening in our Country.

    According to the OECD, the Organization for Economic Co-
operation and Development, we now have the dubious distinction 
of not only having one of the highest rates of childhood 
poverty in the industrialized world for our children, we also 
have one of the highest rates of senior poverty compared to 
other wealthy nations as well. In Denmark, only 3 percent of 
seniors live in poverty.

    In France, 4.4. The United Kingdom, 15.5. But in America, 
over 23 percent of seniors are living in poverty. I would hope 
that we would agree that is simply unacceptable and that has 
got to change. 50 years ago, it was not uncommon for 
corporations to provide workers with a defined benefit pension 
plan that guaranteed a monthly income in retirement.

    Back then, many corporations made a promise to their 
workers, if they worked at the same company for a reasonable 
period of time, they would be rewarded with a monthly check 
that would enable them to live comfortably in retirement.

    Not a radical idea. That is what it was then. The longer 
you worked at the same company, the bigger your retirement 
check would be, and the employer would bear in those days all 
of the responsibility to fund the pensions of their workforce.

    Sadly, tragically, those days are mostly behind us. As a 
result of a relentless 40 year war on the working class waged 
by corporate America, traditional pension plans have become an 
endangered species on their way to extinction, and the result 
for workers has been tragic. In 1983, 31 percent of American 
workers were at risk of not being able to maintain their 
standard of living in old age.

    In 2020, that number rose to 51 percent. In other words, we 
are moving in exactly the wrong direction. All right, that's 
the problem. What do we do to address that crisis? First, at a 
time when far too many seniors are living in poverty and many 
have nothing in the bank for retirement, we must expand Social 
Security, not cut Social Security as many of my colleagues in 
Congress would have us do.

    Congress--and we must make Social Security solvent for the 
next 75 years so it will be there for our kids and our 
grandchildren. Legislation that I have introduced, along with 
nine co-sponsors, accomplishes those goals.

    According to the Social Security Administration, the 
legislation that I have introduced would make Social Security 
solvent for 75 years and increase benefits by $2,400 a year for 
seniors who need them. How do you do that?

    My goodness. How do you do that? Well, at a time of massive 
income and wealth inequality, we have the radical idea that 
maybe the people on top should start paying their fair share of 
taxes.

    Today, a billionaire pays the same amount of money into 
Social Security as somebody who makes $168,000 a year as a 
result of the cap on the Social Security payroll tax cut. You 
make $1 billion a year, you make $168,000 a year, you pay the 
same amount. Anybody in America think that makes sense? I 
don't.

    Legislation we have proposed would lift the cap on Social 
Security starting at $200,000. You do that, taxable income, 
Social Security is solvent for the next 75 years, increased 
benefits by $2,400 per person. But that's not all that we have 
to do. In my view, every corporation in America should be 
required to provide a retirement plan for their workers.

    If corporations choose not to offer a retirement plan, they 
must give workers the option of contributing to a Federal 
pension plan similar guess what, to what Members of Congress 
have. How is that? Good for Congress, good for the American 
people.

    Today, Federal employees and Members of Congress have a 
certain percentage of their salaries deducted from their 
paychecks and put into the First Program that provides a 
pension based on salary and years of service.

    Bottom line, if it is good for Members of Congress, our 
staff, it is good for the American people. So, it is where we 
are. We got a crisis. I think we have some commonsense 
solutions, and I look forward to working with Members of this 
Committee to address them. Senator Cassidy, the mic is yours.

                  OPENING STATEMENT OF SENATOR CASSIDY

    Senator Cassidy. Thank you, Chair Sanders. A little odd, 
the focus today seems to be promoting the defined benefits 
system, prescribing an agenda, frankly, that is outdated and a 
little disconnected.

    In 1974, Congress passed the Employment Retirement Income 
Security Act, the ERISA Act, in response to tens of thousands 
of Americans losing their retirement security because their 
employers defined benefit system failed, exemplified by the 
collapse of Studebaker Automobile Company and about 1,800 other 
pension plans terminating over a 4-year period.

    Imagine the impact upon those hundreds of thousands of 
workers who were employed by them. Since ERISA, the defined 
benefits system has been largely replaced by the defined 
contribution which has flourished. As of 2021, 146 million 
Americans collectively own $9.5 trillion in retirement assets.

    Now, the advantage of the defined contribution system, why 
many have flocked to it, is that workers own their own 
retirement system. No matter what happens to the worker's 
current or previous employer, their retirement funds are secure 
and very few people now retire after 50 years at a company and 
get a golden watch. Most will move between employers. This 
allows them to do so while maintaining their retirement fund.

    Importantly, Congress just passed Secure Act 2.0 on a 
bipartisan basis, making improvements to our Nation's 
retirement system. We had the option to take the one such as 
the Chair is advocating for, and on a bipartisan basis, chose 
not to. Instead, based the solution primarily on the success of 
the defined contribution system.

    Secure 2.0 was so popular it passed out of all four 
Committees of jurisdiction with unanimous votes and on the 
House floor, can you imagine this, by a vote of 414 to 5. The 
Chair speaks of needing to find a solution to a crisis, but we 
have that solution. By the way, there are still provisions of 
Secure act 2.0 that have yet to be implemented, including those 
helping low income individuals.

    For example, the enhanced savers match, a tax credit going 
right into low income Americans' retirement accounts, which 
goes into effect in 2027. The Chair has referenced statistics 
pointing to a retirement crisis, but many of these are from 
2021, which pre-date the passage of Secure 2.0, the 
improvements it has made, and the improvements that it will 
make, especially those targeting lower income Americans.

    Now, by the way, there is a place for defined benefit 
systems. With reforms, it can be successful. In 2006, we passed 
these reforms, which resulted in some of those funds now being 
overfunded, even weathering the 2009 financial crisis. However, 
these reforms have not been implemented in the largely 
unionized, utilized--union utilized multiemployer defined 
benefit space.

    Many of these multiemployer defined benefit plans have 
struggled for years when in 2021, they told Congress they 
needed a bailout. Many of the plans were badly mismanaged. 
Democrats passed a $90 billion bailout of the multiemployer 
defined benefit system on a party line vote without strings on 
the tax dollars to prevent--strings that would say you have to 
make these reforms to prevent future failures.

    Now, this lack of reform system is that which some wishes 
to expand. Unfortunately, the large labor unions successfully 
lobbied to make sure the bailout did not come with any 
meaningful reforms protecting workers and preventing future 
failure.

    Simple reforms like requiring certain funding levels, 
disclosures for defined benefit plans, requiring unions to 
provide beneficiaries with a clear report of their defined 
benefit program's financial state.

    Now we are seeing the results of the failure to enact these 
provisions. The Central States Pension Fund received a $127 
million overpayment in their bailout because they included 
thousands of deceased participants in their bailout 
application. Let me give credit where credit is due.

    Teamster President Shawn O'Brien told this Committee the 
money should be repaid. However, the Central State Pension Fund 
now tells the Committee it would be impossible for them to 
repay the money that they were improperly paid. Workers covered 
by the Central State should be alarmed about the financial 
state of their retirement plan if returning money they weren't 
supposed to receive, would you stabilize the fund now.

    Frankly, it is infuriating to hear that the union's pension 
plan could be on the verge of collapse only a few years after 
they received tens of billions of dollars to bail.

    If the Chair truly wishes to expand the use of defined 
benefit plans, I am so happy to discuss reforms similar to the 
ones that have been very successful in the individual employer 
space, and pass them, to stabilize the entire defined benefit 
system.

    But we will have to overcome staunch union opposition to 
any reform that provides greater oversight and protection for 
their workers. Together, though, I think we could do it. To be 
clear, Republicans do not support putting the thumb on the 
scale to prefer either defined benefit or defined contribution.

    We support what works. Most businesses with individual 
employer defined benefit plans wish to continue to offer and 
expand their programs.

    If it is working, don't fix it. We are seeing the good work 
of companies who are importing the best of defined benefit 
system into the defined contribution, including many innovative 
lifetime income products. I agree with the Chair that lifetime 
income is desired by many Americans.

    Let's make it easier for the defined contribution to 
include them. There are things we can do on a bipartisan basis, 
which is why it was disappointing that rather working together 
to hold a bipartisan hearing, the majority planned this hearing 
on a partisan basis with no input from the minority on scope or 
legislative focus. We will need something bipartisan to pass 
with 60 votes.

    We can do it. Earlier this year, Senator Kaine and I 
introduced two bipartisan bills. The Helping Young Americans 
Save Retirement Act makes it easier for younger workers between 
the ages of 18 and 20 to save for retirement by removing 
barriers currently making it harder to join an employer's 
retirement plan.

    The Auto Enroll Act of 2023 assist workers who previously 
declined to participate or contributed little to the employer's 
pension plan. Many workers earlier in their career make less 
money. They want the money in their paycheck to pay for bills 
as opposed to contributing to retirement. But when their wages 
grow, we find they forget to opt back in to start contributing 
to their retirement.

    This legislation allows the business to periodically auto 
enroll employees back into their plans with the option to opt 
out, but that way they don't accidentally miss out on crucial 
years preparing for retirement. I hope the Chair will indulge 
with a markup of these bipartisan pieces of legislation.

    In closing, many other Members of this Committee had 
wonderful ideas that were included in the Secure 2.0. It will 
be great to explore the current--effectiveness of these 
provisions and discuss any other creative ideas that enhance 
the system we have. Thank you and I yield.

    The Chair. Thank you, Senator Cassidy. We have five 
excellent, knowledgeable witnesses. We are going to begin with 
Sarah Schambers.

    Ms. Schambers is a fourth generation Ford autoworker and 
has been a UAW member for 17 years. She spent her first 6 years 
as a full time--temporary employee at a Ford subsidiary in 
Plymouth, Michigan.

    In 2012, to secure permanent status and support her family, 
Sarah was forced to move from Michigan to Ford's Louisville 
assembly plant in Kentucky. She now works at Ford's Livonia 
transmission plant in Michigan as a member of the UAW Local 
182.

    Ms. Schambers, thanks very much for being with us.

   STATEMENT OF SARA SCHAMBERS, UAW MEMBER, LOCAL 182, FORD 
               LIVONIA TRANSMISSION, LIVONIA, MI

    Ms. Schambers. Thank you, and good morning. As Senator 
Sanders said, my name is Sarah Schambers. I am a proud fourth 
generation auto worker.

    I follow to my great grandfathers', my grandparents', and 
my mother's footsteps. I build cars for a living, and I am 
proud of the work that I have done. But the difference between 
my generation and past generations is they had a pension. I do 
not. I don't have health care when I retire, and I do not have 
retirement security.

    I have been an autoworker for 17 years. Six of those years 
I worked at Ford as a full time temporary employee until 2012. 
That was a big moment for me, because for generations, getting 
a job at Ford meant stability and security. It meant being able 
to plan for your yourself and your children. It meant being 
able to buy a house and see a future for yourself.

    But for those of us that hired in after the financial 
crisis, that has not been our truth. Instead, we have been 
fighting to get back the American dream and try to turn these 
jobs back into careers, just like they were when my parents and 
grandparents who built this country and the American auto 
industry.

    Two of my grandparents who retired from the big three had 
very different paths. My grandfather gave three decades to Ford 
Motor Company, and in return, he got to retire at age 55 with 
the pension and health care. He was afforded the dignity to 
have a life after Ford Motor Company. He was able to have a 
life with his kids, his grandchildren, and his great 
grandchildren, be a part of his community and not just work 
until he died.

    My grandmother, she had a different path. She was hit with 
Lou Gehrig's disease. She had to retire early for her illness. 
But she didn't have to choose between doctors, rent, or food. 
She knew she had health care and a pension to rely on as she 
retired and struggled through her health.

    For me, in sickness or in health, I don't know what my 
future holds. It causes fear and anxiety in the working people 
that don't know how long they are going to be able to last in a 
job. It makes people say, maybe I won't buy that house, maybe I 
won't put down roots in this community, or maybe I won't stay 
at this company.

    I didn't become a fourth generation autoworker because I 
loved building cars. I didn't become a fourth generation 
autoworker because I loved the low starting pay, or the lack of 
a retirement security that we now know. I come from a family of 
auto workers because for years it was a career, one that you 
would put work in and get something out of it.

    In a lot of ways, for generations, Ford was the American 
dream. It meant if I pitched in, if I worked hard, I would be 
able to have a life after Ford Motor Company. But without a 
pension, without health care, we have people leaving these 
companies after 30 years with nothing more than a have a nice 
day and I hope the stock market doesn't crash. That is 
unacceptable for America.

    As you know, the UAW won major victories in our 6 week 
strike. I am proud of the accomplishments that we have made 
after 15 years of falling behind after the financial crisis, 
but we still fall short of what generations of autoworkers had. 
We still fell short of what the American dream should be.

    The companies were adamant that they couldn't afford to add 
to our pension liability. They said that Wall Street would look 
down on them, and that giving back our pensions could affect 
their stock prices and possibly lead to lower credit ratings. 
Nowadays, a stock price is more important than 150,000 
autoworkers. That is a shame.

    Our next big three contracts expire in 2028, and we are 
ready to fight like hell for retirement security, for pensions 
and health care when I retire. There is an old saying, we will 
strike if provoked.

    Well, I think that Wall Street calling the shots and 
telling the big three that autoworkers can't have retirement 
security, that is what I call being provoked. There is another 
old saying, which side are you on?

    I want to close by asking you, our U.S. Senators who 
represent us, which side are you on, the American workers who 
elect you or corporate greed in Wall Street who say a dignified 
retirement is too much for the American people to ask for. 
Thank you for your time.

    [The prepared statement of Ms. Schambers follows.]
                  prepared statement of sara schambers

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                                 ______
                                 
                 [summary statement of sara schambers]
    Sara Schambers is carrying on the legacy of four generations of 
autoworkers at Ford. She is the first generation without a pension.

    For the previous generations, a pension offered a dignified life 
after retirement or a safety net for when the times got tough, or their 
health declined.

    The work at Ford used to be a good, stable job. But, following the 
financial crisis, autoworkers have only known instability. Today, 
without a pension, we must fend for ourselves in retirement and hope 
that our investments pan out.

    Last year, the UAW's Stand Up strike won a 10 percent defined 
employer contribution at Ford, General Motors, and Stellantis--but not 
a pension. The companies claimed that Wall Street would not look 
favorably on an increase in their pension liability.

    In 2028 when the Big Three contracts expire, the UAW will fight for 
real retirement security--a pension and post-retirement health care. 
For that fight, we need Congress on our side.
                                 ______
                                 
    The Chair. Thank you very much, Ms. Schambers. Our next 
witness will be Teresa Ghilarducci, who is a Professor of 
Economics at the New School in New York City.

    She has frequently published in economic journals and has 
authored several books on how we can ensure retirement security 
for all American workers. Thanks very much for being with us.

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

    [Technical problems.]

    Ms. Ghilarducci. Sorry. Because of an inadequate pension 
system in the United States, our elder poverty rate exceeds all 
of our peers. We are the highest at 23 percent. In contrast, 
the poverty risk for Dutch elders is a very low 3 percent.

    The U.S. retirement system gets C's and D's on 
international benchmarks, and the Dutch system gets an A. You 
might hear about the average retirement wealth being quite high 
and actually growing, but for the typical American, the median 
retirement wealth has gone down for the bottom 90 percent 
because averages don't tell the story, distribution does.

    If Elon Musk walked on the witness stand today, he would be 
the richest on average witnesses of all time in the HELP 
Committee. But the typical retirement wealth for us would not 
go up. For the typical American approaching retirement, and my 
study looks at the elder households and their typical 
retirement wealth, the Social Security wealth is the most 
important.

    The stream of Social Security benefits, a defined benefit 
system, for those in the bottom half of the wealth 
distribution, is worth about $188,000, but they have zero 
retirement wealth and zero home equity.

    For the typical household in the next 40 percent, the 
middle class, their retirement wealth is only about $20,000, 
and they have, we have about $129,000 in home equity. It is 
only the top 10 percent who over the past 30 years have had 
rapid increase in their retirement health--retirement wealth, 
their health as well, and their home equity exceeds four times 
that of the middle class.

    This all adds up--into a lack of retirement readiness, and 
that lack of retirement readiness has materialized even though 
Congress has given lots of tax breaks for retirement savings. 
There are a lot of other proposed savings, policies like home 
owning incentives.

    There have been soaring tax breaks for savings, and there's 
been lots of substantial investments into financial advice and 
all sorts of retirement products. The U.S. retirement system 
has not flourished. It lacks three fundamental elements of a 
well-designed pension system.

    A well designed pension system only needs three things. It 
needs to help all Americans accumulate enough money into their 
retirement accounts. It needs to help all Americans invest well 
into their retirement accounts. It needs to have a good way for 
Americans to de-accumulate their retirement accounts and 
lifetime benefits.

    What is to be done? Well, Senators here have tried to 
protect the defined benefit system. Senators Cassidy and Kaine 
would mandate that ERISA plans let people into these plans 
earlier, at 18 not at 21. Your auto enroll act would help 
reinvigorate these auto enrollment provisions to help more 
participation.

    You may hear about auto IRAs. These are automatic 
individual retirement accounts. They are at the state level and 
at the Federal level. They are good baby steps for more access, 
but IRAs permit leakages and they do not pool investments. And 
because people access their individual retirement accounts for 
emergency savings, homeownership, and other life events, they 
should be called individual emergency savings accounts.

    They are not retirement accounts. But we can extend wealth 
building opportunities to all Americans. And one bipartisan, 
powerful proposal already exists. Senator Hickenlooper, along 
with Senator Tillis, Republican, Democrat, and also a Democrat 
and Republican in the House of Representatives, Terry Sewell 
and Lloyd Smucker, would expand retirement accounts to all 
public sector workers who don't have one. They do not crowd out 
existing accounts.

    It follows a successful thrift savings plan, again, the 
savings plan for the staff Members of Congress and for Members 
of Congress. It would feature automatic enrollment. It would 
feature portability, a good investment offer option, and 
sensible de-accumulation.

    It meets that three-prong test, and there is also a 5 
percent match, which helps mitigate the top heaviness of our 
current match. It is endorsed by experts all across the 
political spectrum, the AARP, The Charles Schwab.

    Last week I was on a radio talk show, and the 25 year old 
NPR host asked me why professor is retirement in America 
becoming a luxury? My students asked me every semester, why do 
so many people in America who are old, why are they poor or why 
do they have to work?

    I congratulate Committee Members from both parties for 
recognizing the urgency, the disaster, and the crisis, and for 
your caring and your wisdom to solve it. I heard you all say 
that you need a bold bipartisan reform. Thank you.

    [The prepared statement of Ms. Ghilarducci follows.]
                prepared statement of teresa ghilarducci
                
                
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

               [summary statement of teresa ghilarducci]
    Because of insufficient retirement wealth the U.S. elder poverty 
rate--by international standards has the highest--the highest, among 
rich nations at 23 percent, in contrast, the poverty risk for Dutch 
elders (the Netherlands is known for its top-ranking pension system) is 
only 3.1 percent. Ghilarducci uses Federal Reserve and University of 
Michigan data to show individuals nearing retirement age in the bottom 
half of the wealth distribution possess $188,300 in Social Security 
wealth, have no wealth in retirement accounts, and have a median home 
equity amount of zero. For the next highest 40 percent, the median 
Social Security stands at $300,500, $200,000 in retirement accounts and 
$128,500 in home equity. The top 10 percent of households hold $311,800 
in Social Security, $764,700 in retirement accounts, and $305,000 in 
home equity.

    Despite various pro-savings policies, home-owning incentives, 
revisions to the tax code, and initiatives like ERISA, as well as 
substantial investments in financial advice and retail financial 
products, the U.S. retirement system lacks three fundamental elements 
of a well-designed pension system: universal access, portability and 
consistent contributions, good investment options, and lifetime 
benefits.

    Suggested solutions include protecting and expanding existing 
Defined Benefit (DB) plans, as some employers are reverting to DB plans 
after encountering high turnover rates. Senators Kaine and Cassidy's 
bill mandates ERISA plans to offer access to workers 18 and over 
instead of 21 and older. Kaine's Auto Reenroll Act of 2023 revitalizes 
the auto-enroll trigger every 3 years, encouraging more participation.

    Auto IRAs are baby steps to more access; but they fail to pool 
investments and permit leakages. ``Individual Retirement Accounts'' 
(IRAs), would more accurately be termed Individual Liquid Accounts 
(ILAs). While liquidity for emergency savings, homeownership, and 
funding various life events, is good tapping into retirement savings at 
young ages leaves inadequate funds for retirement.

    A comprehensive and bold retirement system plan can extend wealth-
building to all American workers. Initiatives such as Universal Savings 
Accounts (USA) by Senator Tom Harkin and proposals for a Guaranteed 
Retirement Account (GRA) adhere to principles found in the world's best 
pension systems: universal access, portability, steady and adequate 
contributions, professional asset management, lifetime payouts, fair 
tax subsidies, and efficient administration.

    The Retirement Savings for Americans Act (RSAA) of 2023, sponsored 
by Senators John Hickenlooper and Thom Tillis, along with 
Representatives Terri Sewell and Lloyd Smucker, would offer retirement 
plans to private-sector workers lacking such provisions. Modeled after 
the successful Federal Thrift Savings Plan (TSP), the RSAA features 
automatic enrollment, portability, low fees, and favorable returns. The 
RSAA mitigates the top-heaviness in retirement tax breaks, where the 
top 20 percent of taxpayers currently receive over 60 percent of the 
$267 billion spent by the Federal Government. The RSAA proposes a match 
of up to 5 percent for workers in the bottom half of the earnings 
distribution saving 5 percent for retirement.

    Endorsed by organizations and experts across the political 
spectrum, the RSAA boasts bipartisan, bicameral sponsorship.

    Drawing examples from other nations where funded pension systems 
operate to provide adequate benefits and universal access, Ghilarducci 
emphasizes the need for comprehensive reforms to ensure retirement 
security for all Americans.
                                 ______
                                 
    The Chair. Thank you very much. Our next witness will be 
Dan Doonan, who is the Executive Director of the National 
Institute on Retirement Security. He has more than 20 years of 
experience working on retirement issues. Mr. Doonan, thanks a 
lot for being with us.

STATEMENT OF DAN DOONAN, EXECUTIVE DIRECTOR, NATIONAL INSTITUTE 
             ON RETIREMENT SECURITY, WASHINGTON, DC

    Mr. Doonan. Thank you. Chairman Sanders, Ranking Member 
Cassidy, and Members of the Senate Health Committee, I 
appreciate the opportunity to testify on the state of 
retirement in the United States and the role of defined benefit 
pensions and delivering retirement security.

    I am Dan Doonan, Executive Director of NIRS, and we are a 
nonpartisan, nonprofit think tank in Washington, DC. and we 
have a broad membership base, financial services companies, 
plan sponsors, labor unions and nonprofits, including AARP. 
Congress has made progress to address America's retirement 
crisis.

    The Secure Act and Secure Act 2.0 were steps in the right 
direction. However, much work remains to ensure that Americans 
can be self-sufficient in retirement. The key points I would 
like to make today are, first, Americans do face an alarming 
retirement savings shortfall. Second, the move away from 
pensions is a major culprit in the Nation's retirement crisis.

    401(k) plans are an important part of the retirement 
equation. They were just not designed to replace pensions. And 
third, today's pension designs and management can be beneficial 
for employers, workers, and the economy more broadly.

    Pensions are the most economically efficient way to deliver 
retirement income, and they offer workforce advantages to 
employers. Pensions paid out more than $600 billion in 2020, 
supporting $1.3 trillion in economic activity. And pensions, of 
course, are user friendly for workers and face little leakage.

    In the past, the biggest challenge has been for employers. 
The costs have been unstable. But today, there are more 
sophisticated tools and benefit designs that have addressed 
this challenge. I believe that if companies give pensions a 
fresh look, they will discover that win-win solutions are 
possible.

    Diving a little deeper into the gravity of the U.S. 
retirement problem, the data clearly shows most Americans will 
not have enough money for a financially secure retirement, and 
they are worried about it.

    Our Generation X research found that the bottom half of Gen 
X earners only had a few thousand dollars saved for retirement, 
and the median household, not individuals, but household, has 
only $40,000 in retirement savings.

    Also, retirement savings for Gen X are highly concentrated 
amongst the highest earners. More broadly, the National 
Retirement Risk Index finds that half of U.S. households will 
not be able to maintain their standard of living when they 
retire. Americans understand the scope of this crisis.

    79 percent of Americans agree there is a retirement crisis, 
with 55 percent concerned that they cannot achieve financial 
security in retirement. Looking ahead, the burden of preparing 
for retirement increases as we live longer, face large risks 
without risk pooling, and deal with rising costs.

    Research shows that the Nation's individual savings based 
system is not well suited for workers. It is important to note 
401(k)'s were never meant to replace pensions. They were meant 
to be a supplemental vehicle.

    Conventional wisdom suggests that 401(k)'s cost less, but I 
think what I hear when that is said, it means we are putting 
less money into a less efficient system and--as costs rise and 
hoping for the best.

    Post retirement brings the biggest challenges and 
inefficiencies. Our news research asks how much retirement 
income could $100,000 nest egg generate annually for someone at 
age 65? The responses were jarring. Only 8 percent of workers 
provided an accurate response. Most wildly overestimated the 
level of income they could count on.

    Third, many assume that pensions have similar benefit 
designs, and nothing could be further from the truth. Two 
public plans provide an example and are very transparent in 
their operations, the Wisconsin Retirement System and the South 
Dakota Retirement System.

    My written comments provide a chart showing the remarkable 
cost stability of these systems throughout volatile times. 
Fourth, the ground is shifting with respect to the employers 
offering pensions. We have heard about the interest of UAW to 
return to pensions, and we have all read the news about IBM 
moving back to pensions, which actually produces substantial 
cash savings for IBM as well.

    Finally, my written testimony details policy issues that 
could help facilitate a pension renaissance. These key issues 
are about enabling companies to employ fiscally cautious 
funding strategies that reduce cost volatility over time, 
without a major disincentive to err on the safe side.

    In conclusion, thank you for holding this important hearing 
and the opportunity to testify. I will be happy to respond to 
questions.

    [The prepared statement of Mr. Doonan follows.]
                    prepared statement of dan doonan


    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                   [summary statement of dan doonan]
    Congress has made progress to address America's retirement crisis. 
The SECURE Act and SECURE 2.0 were steps in the right direction. 
However, much work remains to ensure that Americans can be self-
sufficient in retirement.

    Research finds that Americans face an alarming retirement savings 
shortfall. Generation X is fast approaching retirement and will be the 
first generation to retire largely without a pension. The bottom half 
of GenX earners have only a few thousand dollars saved for retirement, 
and the median household has only $40,000 in retirement savings. 
Retirement savings for GenX are highly concentrated among the highest 
earners.

    Americans are deeply worried about retirement. Seventy-nine percent 
of Americans agree there is a retirement crisis, and 55 percent are 
concerned they cannot achieve financial security in retirement. Looking 
ahead, the burden of preparing for retirement is increasing as 
Americans live longer, face large risks without risk pooling, and deal 
with rising costs.

    The move away from pensions is a major culprit in the Nation's 
retirement crisis. While 401(k) plans are an important part of the 
retirement equation, they just were not designed to replace pensions.

    Today's pension designs and management can be beneficial for 
employers, workers, and the economy. Pensions are the most economically 
efficient way to deliver retirement income, and they offer workforce 
advantages to employers. Pensions paid out more than $600 billion in 
benefits in 2020, supporting $1.3 trillion in economic activity. Also, 
pensions are user-friendly for workers.

    In the past, the biggest challenge for employers has been unstable 
costs. But today, there are sophisticated tools and benefit designs 
that have addressed this challenge. If companies give pensions a fresh 
look, they will discover that win-win solutions are possible.

    The ground is shifting with respect to employers offering pensions. 
Last year, the UAW's negotiations with The Big Three Automakers called 
for a restoration of pension benefits. While only increases to 401(k)'s 
were part of the final deal, the UAW has signaled it will continue to 
advocate for pensions. Also, IBM recently announced it would reopen its 
pension plan and end its 401(k) matching contributions, which produces 
substantial cash savings for IBM.

    There are policies that could be enacted to help facilitate a 
``pension renaissance.'' These key issues are about enabling companies 
to employ fiscally cautious funding strategies that reduce cost 
volatility, without major disincentives to err on the safe side.
                                 ______
                                 
    The Chair. Thank you very much, Mr. Doonan. Senator 
Cassidy, you want to introduce your witness?

    Senator Cassidy. Yes, please. My pleasure to introduce 
Rachel Greszler, a Senior Research Fellow at the Heritage 
Foundation's Row Institute, whose work focuses on retirement 
labor policies that promote economic growth, individual 
freedom, and--well-being.

    Before joining Heritage, Mr. Greszler was a Senior 
Economist for the United States Congressional Joint Economic 
Committee.

    She holds a B.A. in Economics from the University of Mary 
Washington, as well as a master's degree in Public Policy and 
Economics from Georgetown. Welcome, Ms. Greszler. We appreciate 
you being here and look forward to your testimony.

   STATEMENT OF RACHEL GRESZLER, SENIOR RESEARCH FELLOW, THE 
              HERITAGE FOUNDATION, WASHINGTON, DC

    Ms. Greszler. Thank you for the opportunity to be here this 
morning. In my testimony, I would like to look at the current 
state of American's retirement security and also discuss the 
failure of certain defined benefit pensions.

    Older Americans' financial well-being is strong by historic 
standards. The share of older Americans with no retirement 
savings fell to 12 percent in 2022. Even after excessive 
inflation has eaten away at the value of American savings, 
retirees' real incomes are up over 30 percent over the past 35 
years.

    Importantly, the lowest earners have the highest 
replacement rates in retirement. Households in the bottom 20 
percent average 123 percent of their pre-retirement incomes, 
whereas households at the top average 75 percent.

    Older Americans report greater financial well-being than 
any other age group, and over the past 10 years, the percentage 
of people over 65 who say that they are just getting by or 
having a hard time getting by fell by half. As retirement 
savings have shifted from defined benefit to defined 
contribution plans, assets have surged.

    At $41.5 trillion, Americans' inflation adjusted retirement 
assets have increased 330 percent over the last 35 years. 
Defined benefit and defined contribution plans can provide 
secure retirement, but when not managed properly, defined 
benefit plans can end up like Ponzi schemes.

    That is what has happened with Social Security and multi-
employer or union pensions. Past and current Congresses have 
failed to properly manage Social Security and failed to require 
sound funding rules for union pensions.

    Now, neither can come close to providing retirees what they 
have promised. Social security will be insolvent in 9 years and 
will implement 23 percent across the board benefit cuts. That 
is a $5,300 per year cut for the average retiree.

    Now, a program that was supposed to prevent older--younger 
generations from having to bear the burden of older 
generations, has instead amassed a $22.4 trillion unfunded 
obligation.

    That amounts to a $172,000 for every household in America. 
Simply maintaining current benefits would require the average 
household to pay at least $3,000 more per year in taxes. That 
money would be far better off in a personal account.

    My analysis shows that if a younger worker today were 
allowed to put their Social Security taxes into a personal 
account, they would have three times as much in retirement 
after purchasing an annuity.

    Policymakers must reform Social Security before it becomes 
an even worse deal for younger workers. By shifting toward a 
universal benefit and making other common sense changes, 
policymakers can improve the program, increase economic growth, 
and enable greater personal savings.

    Private union pension plans are an even worse disaster than 
Social Security. Multiemployer pension funding has $823 billion 
in unfunded obligations as of 2021 and $0.41 on the dollar in 
promised benefits. This underfunding is systemic. 96 percent of 
participants are in a plan that is less than 60 percent funded.

    This happened because unions took advantage of preferential 
rules that allowed them to increase benefits without requiring 
higher contributions to fund those benefits. Yet, instead of 
fixing the broken multiemployer system, Congress passed the 
worst possible type of bailout, one that picks winners and 
losers, does absolutely nothing to fix the root problems, and 
which encourages more recklessness.

    While roughly 15 percent of union plans are now privy to 
taxpayer bailouts, about 10 million workers are in plans that 
won't receive bailouts and it will still become insolvent. To 
prevent union workers and retirees from receiving less than 
half of their promised benefits, and to prevent taxpayers from 
having to pay another $700 billion in bailouts, Congress must 
shore up the PBGC and apply the same funding rules to union 
pensions as it does to nonunion pensions.

    Social Security and union pensions are anything but secure. 
The last thing that Americans need is for lawmakers to try to 
put more of their retirement savings into accounts that they 
neither own nor control, and which are managed by groups of 
people who have repeatedly put their own personal incentives 
above workers' and retirees' well-being.

    To help improve the financial security of all Americans, 
including younger workers who face the greatest financial 
struggles today, policymakers should enact universal savings 
accounts so that it is simpler and easier for Americans to save 
for all types of expected and unexpected life events. Thank 
you.

    [The prepared statement of Ms. Greszler follows.]
                 prepared statement of rachel greszler


    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 [summary statement of rachel greszler]
    My name is Rachel Greszler. I am a senior research fellow at The 
Heritage Foundation. The views I express in this testimony are my own 
and should not be construed as representing any official position of 
The Heritage Foundation.

    In my testimony today, I would like to make three main points:

    First, older Americans; financial well-being is strong by historic 
standards, and older generations are significantly better off 
financially than younger generations. The shift from defined benefit 
pension plans to defined contribution benefit plans has been 
accompanied by increases in workers' retirement savings participation 
and in retirees' incomes. Current trends do not indicate either that 
younger Americans are unprepared for retirement or that it makes sense 
for them, as a whole, to increase their savings and forgo current 
consumption in exchange for higher future consumption. Policymakers 
should make it simpler and easier for Americans to save for all types 
of expected and unexpected life events throughout their lifetimes.

    Second, Social Security is in crisis as the program will be 
insolvent in just 9 years, and every single retiree will be subject to 
23 percent benefit cuts, averaging $5,300 per retiree. Social Security 
has veered far beyond its original vision and consequently provides a 
raw deal for younger generations. Maintaining the program or increasing 
benefits will require enormous tax increases that will reduce economic 
growth and leave households with significantly lower incomes. Every 
year that policymakers delay action means trillions of dollars more in 
either benefit cuts or tax increases. Policymakers should act 
immediately to preserve Social Security for those who need it most and 
to improve the program for current workers and future generations.

    Third, defined benefit multiemployer and state and local pension 
funds are in disastrous shape. Taxpayers have already been forced to 
bail out select private multiemployer or union pension plans, and 
Congress did absolutely nothing to address the problems remaining for 
the overwhelming majority of union pension plans that are on track to 
provide roughly half of what they promised to provide for workers and 
retirees. Without congressional action, retirees and taxpayers are at 
risk of more than $700 billion in additional pension losses or taxpayer 
costs. Comparisons should never be made between defined benefit plans 
that would be bankrupt without taxpayer funds and defined contribution 
plans that have not received taxpayer bailouts.
                                 ______
                                 
    The Chair. Thank you very much.

    Senator Cassidy. First, Ms. Greszler, you almost nailed 
your 5 minutes. Let me just compliment you. Now I have the 
pleasure to introduce Mr. Eric Stevenson, the President of 
Retirement Solutions at Nationwide.

    Bringing more than 17 years of experience, having joined 
Nationwide in 2006, he holds his bachelor of Business and 
Finance from the University of Oklahoma and master's of 
Business Administration degree from Northwestern University.

    He is responsible for overseeing Nationwide's retirement 
plans operation, and for delivering workplace solutions for 
plan sponsors and participants. Mr. Stevenson, welcome back to 
the U.S. Senate and thank you for being here.

 STATEMENT OF ERIC STEVENSON, PRESIDENT, NATIONWIDE RETIREMENT 
  SOLUTIONS, NATIONWIDE MUTUAL INSURANCE COMPANY, COLUMBUS, OH

    Mr. Stevenson. Well, good morning. And, Chairman Sanders, 
Ranking Member Cassidy, and Members of the Committee, thank you 
for convening today's hearing to discuss the Nation's 
retirement system and how we can better meet the needs of 
America's workers and retirees. As was mentioned, my name is 
Eric Stevenson.

    I am President of Nationwide Retirement Solutions and 
Nationwide Mutual Insurance Company, a fortune 100 company 
based in Columbus, Ohio. We provide a full range of insurance 
and financial services products.

    Nationwide administers 26,000 retirement plans, protecting 
nearly $200 billion in participant assets and helping to secure 
financial futures for over 2.5 million participants, with a top 
provider of Governmental 457 retirement plans, with 7,600 plans 
serving 1.84 million workers. We also help--we also focus on 
helping small business employers--employees where the average 
plan size is 40 employees or less for nearly 25,000 401(k) 
plans in that space.

    When Nationwide began the retirement solutions business 
back in 1973, it was a very different landscape than we see 
today. Employers offering pensions took on the risk and the 
burden of managing that asset on behalf of their employees, 
most of whom would work for that employer for their entire 
career before retiring with their benefits.

    By 1975, there were two defined contribution plans for 
every one defined benefit plan in the market. The burden of 
managing retirement assets began to shift onto the shoulders of 
the retirement saver, and away from the employer, the plan 
sponsor.

    While neither of these solutions on their own is perfect, 
traditional DBs kept employees tied with their employer through 
vesting requirements and service based benefit calculations. DC 
plans expected average employees to have the knowledge and the 
confidence to manage their own investment choices with little 
support.

    But both systems had significant upsides. Traditional DBs 
offer the security of a predictable and reliable income stream 
throughout retirement, often including some survivor benefits 
too. DC were portable and could be moved with the worker from 
job to job as they search for higher pay and new opportunities.

    Now in 2024, we have the ability to take the best of both 
systems and move past their less desirable features. The 
successful passage of Secure Act of 2019 and Secure Act of 2022 
created opportunities to innovate and improve the plans and 
offerings that didn't previously exist.

    Today's DC plans come with a host of education, support, 
and financial planning tools. There are tax incentives to 
encourage small businesses to offer plans to employees, and to 
make employer contributions to their savings. Student loan 
matching helps young savers start early, auto enroll features 
get more and more workers saving for retirement.

    Most importantly, plans can now easily integrate protected 
retirement income into employer sponsored plans. Workers with 
access to these products can select to invest in them, knowing 
what their guaranteed income will be upon retirement.

    Nationwide has dedicated significant resources to build out 
a comprehensive suite of products in our platform to 
specifically meet these needs. Encouraging plan sponsors to 
offer at least one protected retirement income solution in 
their plans will go a long way in making sure that people have 
guaranteed income when they retire.

    2024 represents 4.4 million Americans are going to turn 65, 
the largest number in our history. That is 12,000 people are 
turning 65 a day.

    With that kind of trend, I am especially energized to be 
here today with all of you seeking the same goal of a secure 
retirement for America's workers, and I look forward to your 
questions as we look for ways to solve this crisis.

    [The prepared statement of Mr. Stevenson follows.]
                  prepared statement of eric stevenson
    Good morning. I would like to thank Chairman Sanders, Ranking 
Member Cassidy, and all Members of the Senate Health, Education, Labor, 
and Pensions Committee for holding this hearing on American retirement 
security and for the invitation to testify.

    My name is Eric Stevenson. As president of Nationwide's retirement 
plans business, I manage the team responsible for Nationwide's 
retirement plans operation. We protect nearly $200B in participant 
assets for over 2.7 million participants. I am passionate about 
fostering a culture that embraces collaboration to bring value to 
Nationwide's customers that meets and exceeds the unique retirement 
readiness needs of plan sponsors and participants. I have nearly 18 
years of experience in the industry, starting at Nationwide in 2007 as 
Vice President of Marketing, then leading Sales and Distribution for 
Nationwide's retirement plans business and now serving as the business 
president since July 2019. I earned my Bachelor of Business 
Administration in Finance from the University of Oklahoma and my Master 
of Business Administration degree from Northwestern University Kellogg 
Graduate School of Management. I am also dedicated to public service, 
serving in a 7-year term confirmed by the Oklahoma Senate for the OU 
Board of Regents.
    Nationwide is a mutual insurer and a Fortune 100 company based in 
Columbus, Ohio, and is one of the largest and strongest diversified 
insurance and financial services organizations in the United States. 
Nationwide is rated A+ by Standard & Poor's. An industry leader in 
driving customer-focused innovation, Nationwide provides a full range 
of insurance and financial services products including auto, business, 
homeowners, farm, and life insurance; public and private sector 
retirement plans, annuities and mutual funds; excess and surplus, 
specialty and surety; pet, motorcycle and boat insurance.

    In 1973, Nationwide Retirement Solutions, Inc. was founded to focus 
on the needs of governmental employees, and we have been a major 
innovator in this market ever since. As one of the first companies to 
focus on public sector 457 plan workers, Nationwide has over 50 years 
of experience with this unique workforce. Today, Nationwide is the 
largest retirement plan provider serving the public sector with over 
7,500 government sector retirement plans, ranging from small county and 
city plans to mega-size state plans. In addition to the public sector, 
Nationwide also administers over 15,000 retirement plans in the private 
sector defined contribution and not-for-profit marketplace, many of 
which representing small businesses with 100 employees or less.

    Protecting nearly $200 billion in participant assets, Nationwide is 
the 9th largest provider of retirement plans in the U.S. by number of 
plans administered (about 26,000) and 12th by number of participants, 
with about 2.58 million. We are the top provider of governmental 
retirement plans (457 plans) by number of plans and focus on meeting 
the needs of smaller plans. We manage 6,826 plans with less than $10 
million in assets and 147 plans with more than $100 million in assets .

    Nationwide greatly appreciates the efforts of the Committee to 
continually improve our Nation's retirement system in a bipartisan 
manner. We commend the Chairman and Ranking Member for their leadership 
in this regard.
           Reaching a Peak: More Workers Than Ever Turning 65
    While retirement security is always a relevant topic, it is 
particularly important today as more American workers will turn 65 in 
2024 than at any point in history. This is a momentous milestone for 
the Boomer generation and especially for those who will celebrate 
reaching the traditional retirement age this year, which is roughly 
12,000 people every day.

    After focusing for so long on saving for retirement, they are now 
facing uncertainty about generating steady retirement income and 
drawing down their savings. A recent Nationwide Retirement Institute 
survey polled 1,000 people between the ages of 60-65, split almost 
evenly between those who are still working and those already retired. 
The results revealed that many people who have yet to retire have 
expectations for their futures that differ from the realities 
experienced by many current retirees. The survey found one-third of 
current retirees in this age range are considering returning to work, 
with half (50 percent) citing the fear of running out of money or 
currently running out of money as their top reason for doing so.

    For decades, we have educated Americans on the importance of saving 
for retirement. That is still an absolute need, but the opportunity for 
the future is to help them plan for decumulation and income they won't 
outlive. Our survey found clear correlation between guaranteed 
retirement income and confidence in retirement.

    We found that 60-65-year-olds with a pension are more confident 
about their financial futures. Current workers who have pensions are 
more likely to say they're on track to retire when planned, compared to 
those who don't have pensions at work (78 percent versus 59 percent). 
When these workers do retire, that pension income results in a greater 
sense of financial comfort (74 percent versus 63 percent of retirees 
without pensions) and fewer concerns about outliving their money (64 
percent versus 74 percent).

    In a separate survey we conducted in 2023 of older workers 
participating in a 401(k) plan at work, 73 percent indicated that they 
wish their plan offered a pension-like income option.

    Unfortunately, fewer Americans have access to pensions these days. 
That's why it's so critical for the financial services industry and 
policymakers to work together to create more opportunities for American 
workers to convert their savings into streams of income they can't 
outlive.

    The SECURE Act of 2019 and SECURE 2.0 Act of 2023 were huge steps 
forward in this effort, creating opportunities for employers to offer 
in-plan protected retirement solutions. We've launched an entire suite 
of these products and are seeing strong traction in adoption among plan 
sponsors and participants.

    As we think about the next iteration of retirement legislation, 
finding more opportunities to help retirement savers address the 
decumulation challenge should be a top priority.
                    Retirement Security Starts Early
    At Nationwide, we aim to support Americans throughout their entire 
financial wellness journey, culminating in a secure and dignified 
retirement. We find it helpful to think about this journey in three key 
phases:

          Beginning Planning

          Saving for Retirement

          Living in Retirement

    The Committee's ongoing work to improve our retirement system has 
benefited all three phases of American workers' journeys to financial 
wellness. The recent successes of both the SECURE Act of 2019 and the 
SECURE 2.0 Act of 2023 have increased access, encouraged higher savings 
rates, and increased innovative in-plan guarantee options for 
retirement savers.
                      Phase 1: Beginning Planning
    The Beginning Planning stage of the financial wellness journey 
requires that workers have both an opportunity to save for retirement 
and the financial means to fund that savings opportunity. While anyone 
with income may open an Individual Retirement Account (IRA), the 
benefits of saving in an employer-sponsored plan are significant, 
including better pricing on products, lower fees, and higher 
contribution limits. The previous few years, including the pandemic, 
have shown just how important it is to have both short-term and long-
term savings and what role employers can play in providing access to 
those benefits. Much of the work done in both SECURE and SECURE 2.0 
provided opportunities to help advance coverage for employees, 
especially those that work for employers with 100 or fewer employees. 
There was also work done to make saving easier and more accessible to 
retirement savers, like student loan payment matching and enhancements 
to emergency savings.
                           Access is Critical
    Many of the changes brought about by SECURE 2.0 are not immediately 
obvious but provide significant impacts. The work by Senators 
Hickenlooper and Collins, for example, to simplify trustee and filing 
requirements for Pooled Employer Plans (PEPs) and Groups of Plans 
remove significant bureaucratic hurdles for small employers wanting to 
provide retirement benefits to their employees. Senator Hassan also was 
a leader in this area, making PEPs accessible to charities and public 
educational institutions and more widely available to small businesses. 
And Senator Collins reformed and improved the rules for SIMPLE plans, 
increasing contributions for all employees and permitting more 
flexibility in moving from a SIMPLE plan to a 401(k) plan. When working 
with small businesses, it is important to understand that often the 
business owner is the manager, human resources, and benefits team all 
rolled into one. Removing red tape and making processes easier, faster, 
and less expensive goes a long way toward addressing the gap in 
coverage for employees of those small businesses.

    Another area of access that has been significantly improved is 
long-time, part-time workers and other workers that change locations 
frequently, like military spouses. Among many provisions, Senator 
Murray's work in SECURE 2.0 to bring the long-term part-time worker 
requirement down from 3 years to 2 years will positively impact more 
seasonal and part-time employees by providing access to employer plans 
sooner. Senators Hassan and Collins also made progress in this area for 
military spouses by providing a tax credit to small employers that 
hire, make eligible, and provide immediate vesting to military spouses. 
These are two important groups that previously had limited, if any, 
access to employer sponsored plans.

    As each of these provisions of SECURE 2.0 is implemented, we will 
see more and more employers adopting retirement plans for their 
employees.

    Gaps remain in the system, however, and Nationwide supports efforts 
to close those gaps. Requiring employer-sponsored plans to allow 18-21-
year-old employees to participate in the plan is another way to ensure 
access and encourage early saving. Ranking Member Cassidy and Senator 
Kaine's Helping Young Americans Save for Retirement Act would do just 
that. Nationwide supports this effort and applauds the sponsors for 
their attention to creating more access and more early savings.

    Research and practical experience have shown access to a workplace 
retirement plan is a key component to a successful retirement. 
Nationwide supports the efforts of Members of this Committee and those 
of your House counterparts--like Ways and Means Ranking Member Neal--to 
enable access to workplace retirement savings options for all American 
workers. We look forward to continuing to work on a bipartisan basis to 
find solutions to the coverage gap and to help every working American 
build toward a secure retirement.
     Competing Priorities: Emergency Savings and Student Loan Debt
    As a recordkeeper for our plan sponsors, we often get feedback on 
the reasons that employees provide about why they choose not to 
participate in the employer's plan. One of the most common reasons we 
heard was a fear of not having access to those funds in the event of an 
emergency. Working with Senators Lankford and Bennet, we supported the 
$1,000 withdrawal provision in SECURE 2.0 because we believe that it 
will remove that fear and encourage more middle-and lower-income 
workers to begin saving earlier. We also worked closely with Senators 
Young, Booker, and Murray on the pension linked savings account in 
SECURE 2.0 because we believe that employers and employees should have 
options when it comes to emergency savings.

    Student loan debt is another frequently cited hurdle to workers 
saving for retirement. However, the passage of SECURE 2.0 now allows 
for employers to make matching contributions into a retirement account 
when employees make qualifying payments to that debt, alleviating some 
of that burden for early savers.

    It's no secret that many Americans are struggling with student loan 
debt. And while you could assume it's only younger people who are 
concerned, older generations are also feeling burdened with these 
payments. A 2023 survey by the Nationwide Retirement Institute found 
that even seasoned employees experienced significant financial 
pressures due to the resumption of student loan payments on October 1, 
2023. Over 1 in 10 (12 percent) employees ages 45+ currently have 
student loan debt and most of these individuals (61 percent) agree the 
reinstatement of student loan payments has negatively impacted their 
financial stability and long-term planning. Another two-thirds (66 
percent) agree repayments will significantly affect their ability to 
save for retirement.

    Our 2023 survey revealed that employees ages 45+ with student loan 
debt have or are considering taking several steps to manage 
repayments--with some being more detrimental to their long-term 
financial strategy than others:

          29 percent are planning to adjust their retirement 
        plan contributions in order to keep up with their student loan 
        payments.

          18 percent have already adjusted their retirement 
        plan contributions.

          49 percent are reconsidering the feasibility of their 
        retirement goals in light of their student loan debt.

    Due to the impact of student loan repayments on their long-term 
strategy, 85 percent of employees ages 45+ with student loan debt would 
be interested if their employer offered a match to their loan 
repayments for retirement savings. Offering a student loan match will 
be an immediate winner for employers with employees seeing it as such a 
valuable tool for them as they address their financial needs of today 
and tomorrow.

    Although the retirement industry can't solve the broader societal 
challenges created by student loan debt, we do believe that the 
existing retirement system can be utilized to alleviate some of the 
immediate pressure and long-term financial impact on workers. In recent 
years, we have increasingly seen employers take a greater interest in 
providing for the overall financial health of their employees. At 
Nationwide, we believe that both the student loan employer match 
provision and emergency savings provisions will become popular 
employer-provided benefits, as they help employers both respond to 
workers' concerns over current financial burdens and help ensure a 
better retirement savings outcome for their workers.
                     Phase 2: Saving for Retirement
    The Saving for Retirement phase of the financial wellness journey 
emphasizes taking advantage of tax-deferred savings opportunities to 
the extent possible for an individual and ensuring that any amounts 
saved are invested efficiently, such as through the avoidance of 
excessive fees. Every dollar saved must be maximized to give workers 
the best chance at reaching their retirement savings goals. Here, it is 
not only important that individuals save as much as possible, but also 
that plan sponsors and financial professionals provide appropriate 
products and solutions that put those savings to work for the benefit 
of the saver. Creating and cultivating beneficial behaviors early is a 
crucial part of this process.
           Success of Auto-enroll and Need for Auto-Re-enroll
    As Chairman Sanders noted in the announcement of this hearing, we 
know that ``workers are 15 times more likely to save for retirement if 
they do so via payroll deduction and 20 times more likely to save if 
access to a workplace retirement plan is automatic.'' The success of 
auto-enroll programs has been exceptional and at Nationwide we see the 
benefits of this on a regular basis, both as a recordkeeper and as a 
plan sponsor.

    Automation and defaults work. The more we can integrate these 
features into standard plan design, the more we can help Americans 
save. At Nationwide we administer plans in the smaller-mid market 
401(k) where the SECURE 2.0 provision around auto-enroll for new plans 
will have a huge impact. We also administer plans in the government/
public sector where state legislative action is generally required to 
permit auto-enroll and auto-escalate features. One of our large state 
plans successfully lobbied to gain auto-enroll for their state 
employees in 2019, and they have seen tremendous results:

          Participants are automatically enrolled at the plan 
        minimum of $15/pay.

          The average deferral is $42/month, well above the 
        minimum.

          The opt-out rate is holding steady at 6 percent, 
        meaning 94 percent participation.

          14,000 new participants have been added to the plan 
        since the launch of auto-enroll.

          These new participants have saved roughly $11M for 
        their retirement.

    In the private sector, we have seen significantly increased 
outcomes for retirement savers enrolled through auto-enroll programs. 
In 2007, Nationwide implemented auto-enroll and auto-escalate features 
in the Nationwide Retirement Savings Plan (401(k)) for our associates. 
We have seen enormous success. Prior to auto-enrollment and auto-
escalation, the participation rate across all associates was at 74 
percent, and following the first year of auto-enrollment the 
participation rate jumped 20 percent to 94 percent. With further design 
refinements over time, including changes to auto-escalation amounts, 
now just over 98 percent of all Nationwide associates participate in 
the plan at an average deferral rate of 9.27 percent of income. For 
comparison, peer companies with similar plan features average 92 
percent participation at a deferral rate of 5.2 percent of income. This 
is a success story not just for Nationwide, but for every individual 
associate that is saving for their future and taking advantage of the 
employer match. These features have established default optimal 
behavior, helping even those associates who would otherwise 
procrastinate or put off planning to save substantially for their 
retirement over time with no effort required on their part.

    The reason to support auto-enrollment and auto-re-enrollment is 
that saving earlier in one's career can significantly impact the total 
savings accumulated by retirement age. In 2018, Nationwide conducted a 
study looking at the impact of beginning retirement saving earlier in 
one's career. On average, employees start saving for retirement at age 
31.5. If those employees consistently save until they reach Social 
Security's normal retirement age, they'd have about 35 years of asset 
accumulation and potential investment earnings at retirement. However, 
if they started saving for retirement 8 years sooner, they could have 
significantly more available for retirement income. If you take a 
specific example where an employee is paid twice a month and 
contributes $50 per pay to an account that earns 6 percent annualized 
return on investment and the employee starts at age 23, they'd have 
$88,572 more than if they started at age 31. At $100 per pay, the 
difference would be $177,143.60.

    The importance of getting into a retirement savings habit early on 
in one's career cannot be overstated. For many Americans, their 
retirement plan is the single largest asset and investment vehicle they 
have.

    We strongly support Ranking Member Cassidy and Senator Kaine's Auto 
Re-enroll Act of 2023. Ensuring that employers can automatically re-
enroll eligible employees into the retirement plan, at least once every 
3 years, will enhance the retirement savings for those employees. As 
positions and wages change, employees are more likely to remain in the 
plan and take advantage of benefits like employer matches, student loan 
matches, and other benefits that increase retirement savings.
                  In-Plan Protected Retirement Options
    The shift from Defined Benefit (DB) to Defined Contribution (DC) as 
the primary retirement savings vehicle has placed a lot more 
responsibility on the American worker, while taking away this idea that 
a pension--income in retirement--is provided. Nationwide is optimistic 
that the provisions enacted as part of SECURE and SECURE 2.0 to make 
in-plan guarantees more available within defined contribution plans is 
the first and critical step to offer American workers protected 
retirement solutions to provide a ``pension-like'' income stream in 
their DC plans.

    The ability for retirement savers to save into and rely on in-plan 
protected retirement products is a high priority. We've heard from 
savers, employers, and other providers that more attention needs to be 
paid to the plan for living from one's savings before employees reach 
retirement age. In response to that need, Nationwide has worked to 
offer an expansive suite of in-plan protected income options. These are 
products that fit within an employer plan and provide access to a 
variety of guaranteed income options once the saver has reached 
retirement.

    Over the past 3 years, Nationwide has demonstrated significant 
growth by partnering with other firms to expand the reach of these 
protected retirement options so that they are available on Nationwide's 
platforms as well as other plan providers. As of January 2024, 
Nationwide has helped nearly 7,000 employer-sponsored plans to add a 
guaranteed income solution inside their retirement plan for their 
participants. While this progress is notable, it's not enough. 
Nationwide is supporting the industry coming together to provide and 
adopt these solutions for all employer sponsored retirement plans. We 
believe that the option should be available to all employees to have a 
portion of their hard-earned retirement savings guaranteed to cover 
essential living expenses in retirement.

    We encourage the Members of this Committee to support the Lifetime 
Income for Employees Act (LIFE Act) which expands the ability for 
annuitized products to be offered as qualified default investment 
alternatives (QDIAs) within employer plans.
              Collective Investment Trusts in 403(b) Plans
    Collective investment trusts (``CITs'') are an investment option 
that often have lower costs than mutual funds. Although CITs may be 
used in 401(k) and certain other retirement plans, U.S. Securities laws 
currently prevents 403(b)(7) custodial accounts, which are often used 
by nonprofit, healthcare, and higher education employers, from 
investing in CITs.

    The nonprofit and higher education worlds employ over 12.5 million 
people saving for their retirement, and those savers should have the 
same access to proven and low-cost vehicles within their institutional 
plans that their private-sector taxable counterparts enjoy. Nationwide 
therefore supports Retirement Fairness for Charities and Educational 
Institutions Act of 2023 that would permit 403(b)(7) custodial accounts 
to invest in CITs (in addition to the stock of regulated investment 
companies, which is permitted under current law). We are pleased to 
partner with our friends at National Association of Government Defined 
Contribution Administrators (NAGDCA) in supporting this important 
provision and encourage the Senate to take up this bill.
    Caregiver Assistance Through Tax Credits and Additional Catchups
    Throughout many people's working lives there are times when one may 
need to step away from employment to act as a primary caregiver to a 
family member, young or old. It is vital for the health of the 
caregiver's retirement savings that time away from work be recognized. 
The Credit for Caring Act, introduced by Senators Collins, Hassan, and 
their cosponsors would provide caregivers with a tax credit that 
offsets some of the cost of providing care.

    Another example of caring for caregivers is the Expanding Access to 
Retirement Savings for Caregivers Act, introduced by Representatives 
Tenney and Pappas. This bill provides catchup contributions to 
caregivers before age 50, providing 1 year of additional catchup 
contributions for each year the caregiver was out of employment due to 
their role.

    Nationwide supports these innovative and important considerations 
for workers that must take time away to provide care for a family 
member.
              Electronic Delivery, Safer and More Engaging
    As account interaction and communications have moved into the 
digital age, more and more plan participants are electing to receive 
plan documents electronically. Recent innovations in electronic 
delivery of these documents have given us the opportunity to provide 
critical financial planning tools and education for participants. At 
Nationwide, and across the industry, we have seen significantly higher 
engagement and better financial savings behaviors from plan 
participants who utilize electronic delivery and visit their accounts 
online. Through these methods of communication, they are able to make 
use of the tools and education available to them, providing them with 
the information that they both want and need in a timely manner.

    Electronic delivery also allows us to better communicate to unique 
populations, such as non-English speakers, people with visual 
impairments, or individuals that move frequently and have regular 
physical address changes. Each of these things, which with paper 
delivery create significant hurdles, is not an issue when utilizing the 
tools available with electronic delivery.

    As mentioned earlier, more people than ever are turning 65 each day 
in 2024. With age can come limiting factors particularly with eyesight. 
Receiving electronic statements and accessing account information 
online has benefits, not only due to information and account balances 
being current, but that font size can be increased or zoomed in on to 
make materials easier to read. The benefits of engaging with electronic 
delivery are clear, and at Nationwide we support efforts to make 
electronic delivery the default for retirement savers.
                              Portability
    The reality of the workplace and employees in 2024 is that most 
individuals no longer remain with an employer for the entirety, or even 
majority, of their working life. The importance of portability of 
retirement benefits is one that cannot be overstated. While many in the 
Boomer generation, those reaching retirement or in early retirement 
now, remained with a single employer for most of their career, the 
generations following them have not continued that trend.

    The Defined Contribution system is built in such a way that changes 
in employers, careers, and even time away from the workforce do not 
pose significant challenges. The ease with which employees can rollover 
vested retirement savings into an IRA or a new employer's plan is a 
necessary and vital feature of the system. Changes in SECURE and SECURE 
2.0 also made finding lost plans easier and raised thresholds for cash-
outs, helping retirement savers to keep more of their money in long-
term savings when they move from one employer to another. Research 
tells us that the average worker will change jobs 5 to 7 times 
throughout their career, with the majority of those changes occurring 
when they are younger and when their savings may be smaller. Finding 
ways to keep individuals connected to their savings is one crucial way 
to help them accumulate and grow those savings further.
                             Savers Credit
    The tax deferral of retirement savings has and continues to be a 
significant incentive for workers saving for retirement. However, lower 
income workers have not always felt the immediate benefits of that 
deferral. The Savers Credit was designed to offer that incentive to 
retirement savers, but for those that did not have tax liability the 
credit did not actually help. It is vital that all participants reap 
the benefits of saving for retirement, so something needed to change.

    As part of SECURE 2.0, the Savers Credit will soon be refundable in 
the form of a match directly into the saver's retirement account. 
Nationwide applauds Chairman Wyden and his cosponsors for including 
this important provision in the new law. Retirement savers that meet 
particular income thresholds, both as single individuals or married 
couples, will see direct deposits from the Federal Government into 
their retirement account, whether that is an employer-sponsored plan or 
an IRA.
                     Phase 3: Living in Retirement
    The goal of the third and final phase of the financial wellness 
journey, Living in Retirement, is for savers to experience a 
financially secure retirement for the remainder of their lives. 
Although the planning, preparation, and saving that occurred during the 
first two phases are critical to achieving a financially secure 
retirement, it is equally important that savers be equipped to make 
wise decisions and have the appropriate products and tools available in 
their retirement years to make their savings last.
                          Income In Retirement
    As mentioned in the section above (In-Plan Protected Retirement 
Options), Nationwide is working hard to build and distribute a variety 
of options to retirement plan participants so that they can plan and 
save with confidence. Knowing that one is saving into a product that 
will ultimately produce a predictable, reliable stream of income in 
retirement takes a significant burden off of many workers as they deal 
with the financial needs of today and tomorrow.

    Not all workers currently have access to a protected retirement 
solution in their employer plan. Some employers do not yet offer this 
type of feature, some workers have a career that doesn't come with 
employer-sponsored benefits, but they can save in an IRA or similar 
type of account. These future-retirees can still access protected 
retirement products in the form of a qualified or nonqualified annuity 
which can be structured to meet a variety of income needs in 
retirement.
                            Social Security
    Social Security is a vital part of planning for and living well in 
retirement. While every working American can log-in to view their my 
Social Security account, few do with regularity. To address this 
potential short-fall in planning, Ranking Member Cassidy, Senators 
Kaine, Collins, and Coons have introduced a bill updating Social 
Security Administration (SSA) standards. First, SSA would be tasked 
with updating the language used to describe different benefits 
elections schedules; changing ``early eligibility age'', ``full 
retirement age'', and ``delayed retirement age'' to ``minimum benefit 
age'', ``standard benefit age'', and ``maximum benefit age.'' We agree 
that this distinction will better communicate the choice being made by 
recipients of Social Security benefits during retirement. The bill also 
requires that paper statements be mailed to workers at various 
intervals, providing the opportunity to view estimated benefits, make 
corrections to wage history, and keep Social Security in mind as they 
plan for their future retirement.

    Most recordkeepers, like Nationwide, provide employer-sponsored 
plans with the ability to include outside benefits, like Social 
Security or other pension benefits in an online dashboard for planning 
purposes. Having a full picture of one's retirement savings and 
benefits is a critical piece of planning for a successful retirement.
                               Conclusion
    Once more, thank you Chairman Sanders, Ranking Member Cassidy, and 
all Members of this Committee for holding this important hearing and 
for extending an invitation to Nationwide to testify. Although the 
journey to retirement security is one that lasts nearly a lifetime, 
many opportunities exist today to improve our current retirement system 
and make that journey less arduous for savers.

    We commend each of you for your ongoing, bipartisan work to improve 
every phase of Americans' financial wellness journey, culminating in a 
secure and dignified retirement. We look forward to continuing to work 
with you and supporting your efforts to make achieving a financially 
secure retirement an attainable goal for all Americans.
                                 ______
                                 
                 [summary statement of eric stevenson]
                            Reaching a Peak
    More American workers will turn 65 in 2024 than at any point in 
history. As these individuals reach the traditional retirement age, too 
many find themselves financially under-prepared. A recent survey by 
nationwide Retirement Institute found that as many as one-third of 
retirees between the ages of 60-65 are considering returning to work, 
with half (50 percent) citing the fear of running out of money or 
currently running out of money as their top reason for doing so.
                           What We Have Done
    The successful passage of the SECURE Act of 2019 and SECURE 2.0 Act 
of 2023 opened many doors and removed many obstacles for retirement 
savers and for employers wanting to offer plans to their employees, 
particularly small business employers.

    Increasing access to workplace retirement plans comes in many 
forms, from reforming operations of pooled employer plans (PEPs), 
multiple employer plans (MEPs), and groups of plans, to increasing tax 
credits for employers offering plans. All these seemingly small changes 
have the ability to make a big impact by making offering plans easier 
for employers of all sizes.

    Addressing competing financial priorities for workers by offering 
access to various emergency savings options and providing employers the 
ability to match student loan payments has expanded individual 
employees' ability to fit retirement saving into their financial lives. 
We know that there are different priorities at different stages of 
life, so adjusting the retirement savings landscape to make room for 
those important issues has been very impactful.

    The success of auto features in the retirement space cannot be 
overstated. The inclusion of auto-enroll in the private sector has 
proven to be one of the most singularly significant improvements for 
individual retirement savings outcomes. Nationwide continues to work 
with plan sponsors to add auto-enroll and auto-escalate features to 
existing plans, and we applaud the requirement for all new plans to 
include auto-enrollment from 2024 on.

    Nationwide is proud to be a leader in the in-plan protected 
retirement space. We believe that all employers should offer an in-plan 
protected retirement solution, giving their employees all the 
opportunity to save for retirement with a guaranteed income stream.
                             What We Can Do
    There are still more bipartisan opportunities to fine tune the 
defined contribution system, and Nationwide looks forward to working 
with this Committee to enact those bills into law. Improvements to the 
administration of Social Security, continued focus on broader access to 
employer-sponsored plans, tax credits for caregivers, and auto-re-
enrollment are a strong lead to what can be done next.

    Thank you for your tireless efforts to improve the lives of 
America's workers as they save for and live in retirement.
                                 ______
                                 
    The Chair. Thank you very much. We will begin with the 
questioning. At hearings like this, experts throttle on 
numbers, and I look at the world a little bit differently than 
some of our conservative economists in terms of what is 
happening to working families.

    But at the end of the day, you have got millions and 
millions of people who have worked their whole lives that are 
entering retirement and they are scared to death. And I think 
Ms. Schambers, your testimony was extremely moving, because I 
think you are not just speaking about your own life, not even 
about the UAW and union members, you are talking about millions 
and millions of people.

    Talk a little bit, not only for your own experience, from 
your friends, your family, what it is like to have worked, in 
your case, 17 years for one of the major corporations in 
America and as I understand it right now, you have no 
retirement program, no pension program. On a on an emotional 
basis, on a personal basis, what is that like?

    Ms. Schambers. Yes, we have a 401(k) and we got a raise in 
our 401k. And it is great. It is a good steppingstone, and it 
is a good foot forward. But when I retire, my 401(k) is based 
off, and the rest of America now that is in my generation, is 
based off of what the stock market is doing.

    I have seen several times in my lifetime where the stock 
markets went down, and we have lost a lot of money in our 
401(k). I am not at retirement age, but when I look at my 
401(k) and the amount of money that was bleeding out of it with 
the--COVID, it makes me very uneasy.

    It kind of feels like--especially working at Ford, I had a 
goalpost when I first hired in, and then it was, well, you are 
a temporary employee full time until further notice. So, then 
now----

    The Chair. Explain to Members what being a ``temporary''--
you were a temporary employee for 6 years, right?

    Ms. Schambers. Yep.

    The Chair. It is a long term. What does it mean?

    Ms. Schambers. I was considered full time, so I worked 40, 
50, 60 hours a week, but I was locked in at $14 an hour until 
2013. And I was expected to do everything a full time employee 
did, but I didn't get any of the benefits. And I actually, when 
I hired in, I questioned what parts of the contract I fell 
under, and they said, it depends on what we are talking about.

    There was never any full like, here is your book. This is 
your rules and regulations. It is like, we are not going to 
cover you under that.

    The Chair. Okay. Thank you. Thank you very much. Ms. 
Ghilarducci, we are in one sense the wealthiest country in the 
history of the world, right, yes? A lot of billionaires out 
there doing very, very well. How does, in your judgment, the 
American retirement plan, the status of older Americans compare 
to people around other wealthy nations?

    Ms. Ghilarducci. Yes----

    The Chair. Microphone.

    Ms. Ghilarducci. My data really looks at that question. So, 
I compare what people were like when they were approaching 
retirement 30 years ago, and then take the same snapshot of the 
generation that looks like them right now.

    As I said in my written testimony today, 50 percent will 
not be able to meet their retirement standards and most of them 
won't be able to meet poverty standard. Compare that to other 
countries with all different kinds of systems, the 
Scandinavians, the Germans, the French, even the Italians, just 
look at our peers and we fall way behind.

    I was looking at the elderly poverty rates. Kazakhstan does 
better than us. So, there is a couple of designs----

    The Chair. I heard from some of the economists here today 
that they are doing just great. Things are getting better.

    Ms. Ghilarducci. Yes, so that was my little lesson on 
averages versus medians. Because the rich have done so well, 
they have brought up those averages that people who talk about 
average retirement wealth can point to. It has gone up.

    But that is because the top 10 percent got the benefit of 
retirement tax cuts. They got the benefit of the run up in the 
market. They didn't take money out to buy their houses.

    The Chair. Okay. Last question--thank you very much, sorry. 
Mr. Doonan, right now billionaire pays Social Security taxes on 
$168,000. That is about it. Massive amounts of untaxed money 
there despite massive income and wealth inequality. Does that 
make sense to you?

    Mr. Doonan. Thank you----

    The Chair. Microphone.

    Mr. Doonan. Thank you for the question. I would note that 
one of the reasons Social Security's financing fell off track 
is we used to capture 90 percent of total income, and that was 
sort of expected to continue. But with rising inequality, I 
think we are down to about 82 or 81.

    When these projections were done in the early 80's, I feel 
like they did a pretty nice job. We had 40 years of level 
costs. But there are some areas where the projections just 
didn't come true.

    The Chair. Senator Cassidy.

    Senator Cassidy. I will defer to Senator Tuberville.

    Senator Tuberville. Thank you. Mr. Chairman, thank you for 
having this. This is interesting. And we all know that as Mr. 
Stevenson said, a lot of us are retiring. I retired a few years 
ago and then my wife told me, get me a damn job, so here I am 
today.

    I for 40 years paid max in Social Security, max, and, 
probably paid close to $1 million in Social Security. And I 
think I get about $3,000 a month, maybe. And by the way, Social 
Security, for those of you don't know, this group up here in 
1983 voted to tax Social Security and then a few years later, 
tax it again. It is all a scam.

    This is all a scam. I mean, we got people that is getting 
ready to retire that is going to try to live off $2,000 to 
$3,000. Impossible. It is impossible. Because what happens, it 
comes up here, we spend it. We are $35 trillion in debt.

    We don't have any money. We are dead broke, and then 
taxpayers have $2 trillion in credit card debt. We are in huge 
trouble. In this body, we had better start figuring that out, 
because we are going to have a run on this city here soon, and 
there is going to be about 150 million people coming up here 
and saying, where is our damn money that we paid in.

    I could have put my Social Security money, 40 years--in the 
market. It would probably be worth $8 to 10 million today. But 
the Federal Government wasted it. So, I will get off my high 
horse there, but it is good we have this because we get, I get 
a pension check from education.

    I was part of a union. It is not going to help people. 
People going to work--continue to work longer and longer. Am I 
right, Ms. Greszler? Can you say something about Social 
Security, and it being taxed, for some reason? We are taxing 
people for the second time on Social Security that they put 
into an account.

    Ms. Greszler. Yes. And I would like to point out when 
Social Security was first founded, those who established it, it 
was started out as a 2 percent tax and they said, this will 
never take more than 6 percent of your income. Today it takes 
12.4 percent. And depending on whether you go with CBO or 
Social Security trustees, it needs to take between 15.8 and 
17.5 percent.

    We are talking about thousands of dollars more per year. It 
also was actually only originally recommended that the tax be 
up to $66,000, the equivalent in today's dollars of earnings. 
But over time, it has expanded massively, and the money has 
been spent every year. So, whereas everybody thinks this money 
has been set aside for me, no.

    For the past 13 years, every dollar that has gone out of 
workers' paychecks has gone immediately to pay promised 
benefits. And that is what happens when you have a system that 
enables those in charge of it to spend the money in the 
immediate term and leave the buck to the next generation that 
is coming along.

    Because Social Security has grown so much, it has actually 
to the detriment of lower income workers in particular, who 
have to pay such a large share of their tax, their paycheck to 
Social Security. They have little left to save for retirement. 
And then lower income, and African American workers, have the 
lowest life expectancies, so they are the most likely to get 
nothing back in return.

    One out of four African American men will die between the 
ages of 45 and 64, after having paid into this system for 
decades tens if not hundreds of thousands of dollars and they 
might get nothing back.

    Senator Tuberville. What is the solution?

    Ms. Greszler. I think we ultimately have to shift toward a 
universal benefits system. That is what true social insurance 
is. It does not make sense that we are paying the biggest 
benefits to the highest income earners.

    Gradually, over time, I think we need to bend down the 
benefits for the middle and upper income earners, actually 
increase them for the lower income earners. Look at things like 
indexation life retirement age to life expectancy, more 
accurate inflation index.

    I think that workers need an option to have their money in 
something that actually earns a positive rate of return, and 
that can't just immediately be spent by Congress.

    Senator Tuberville. I have a 28 and 29 year old, two boys. 
Got a job working hard, paying Social Security. They ask me all 
the time, dad, will I ever see any of that money? Will they see 
it?

    Ms. Greszler. I think they will see some of it. That is the 
exact same thing I hear whenever I ask a group of younger 
workers, and none of them raises their hand. So, I think that 
there will be something there, but it is not going to be what 
has been promised.

    Senator Tuberville. Mr. Steven, you got anything to add to 
that?

    Mr. Doonan. Thank you, Senator. What I would add is, when 
we talk about Social Security, we talk about pensions, the two 
things that they both have in common is that guaranteed income.

    What you are going to get, generally speaking, at the end 
of it. And what I referenced in terms of protected retirement, 
we have developed now solutions that get at both of those in a 
very efficient way and they also address the issue around 
market volatility because we have step ups and likens.

    It is a very efficient way to deliver that to millions of 
Americans that we have been talking--and that is all because of 
what you all did around Secure Act 1.0 and 2.0. They have put 
us in a position to do that.

    That is why I am really encouraging us to have every funded 
401(k) plan, 457 plan, 403B plan at least one of those 
solutions, so that the American workers can choose if they want 
to know what they are going to get in retirement, we can 
deliver that for them.

    Senator Tuberville. Young people of all ages ask me, why 
can't we put our money in our own 401(k) instead of putting it 
in Social Security? Is there an answer to that?

    Mr. Doonan. I think--what I love is that they are asking 
the right question. Savings in any way is a good thing, and I 
think there is a place for Social Security, there is a place 
for pensions, and there is certainly a place for what we are 
doing with 401(k) plans.

    The Chair. Senator Hassan.

    Senator Hassan. Thank you very much, Mr. Chairman, and 
thanks to you and the Ranking Member, for having this hearing. 
And thanks to all of our witnesses for being here today.

    Mr. Stevenson, I want to start with a question for you. We 
can increase Americans' retirement savings by supporting small 
businesses that offer retirement plans to their employees.

    That is why my colleague on this Committee, Senator Budd, 
and I are working to develop a bipartisan bill to improve the 
existing retirement plans startup tax credit. This bill would 
ensure that the smallest businesses receive tax cuts that fully 
cover the cost of starting a retirement plan.

    Mr. Stevenson, how can expanding retirement related tax 
incentives for small businesses help increase access to 
retirement security for their workers? And how can Congress 
continue to support small businesses in their efforts to 
provide retirement plans?

    Mr. Stevenson. Yes. The credits for small businesses are 
really important. Everything that we can do to encourage a 
small business to start a 401(k) plan is hugely successful.

    What I would add is, as a former small business owner 
myself, one of the things when you start a small business that 
you are struggling with is just there is so many things that 
you are wrestling with and sometimes getting to that part--you 
are just trying to make sure you can make payroll.

    Making it easy, making it just really automatic for people 
to set up those 401(k) plans is super important as well.

    Senator Hassan. Thank you. Another question for you, Mr. 
Stevenson. Since 2019, Congress has twice passed into law 
bipartisan legislation to increase access to retirement savings 
options, particularly for military spouses, part time workers, 
and student loan borrowers.

    However, 57 million Americans still do not have access to a 
workplace retirement plan. Mr. Stevenson, how can Congress 
continue to build on this bipartisan momentum to increase 
access to retirement options?

    Mr. Stevenson. Yes. Again, Secure Act 1.0 and 2.0, it is 
just huge in terms of momentum and what they have done to 
create more access.

    I think we are on the right track. What we need to do now 
and hold us accountable in terms of on this side of the table, 
is we have got to make sure that people are taking advantage of 
those benefits that you have already provided. That they are 
utilizing those--there is a lot out there.

    2.0 just passed and we are working on that, but that is 
the--I think you have just--you are on the right track. We have 
done so much, and we have just got to keep pushing on that 
path.

    Senator Hassan. Well, and it will be helpful for us to 
understand as 2.0 is getting implemented, what challenges we 
are seeing and what other changes we can make to just make it 
easier and easier for Americans to save earlier and earlier in 
their careers.

    Ms. Schambers, I want to turn to you, and I want to thank 
you very much for your testimony. It is really meaningful. It 
is really important. I also wanted to talk specifically about 
the impact that working--that motherhood has on working women 
and on their capacity to save for retirement.

    According to a recent Department of Labor report, mothers 
lose an average of nearly $240,000 in income over their 
lifetime as a result of the time that they spend caring for 
their kids. This lost income in turn reduces a mother's 
retirement savings by nearly $60,000.

    We obviously have to do more to help moms and help 
caregivers so that they can retire with dignity. As I 
understand it, Ms. Schambers, you have two children. Is that 
right? How has your experience been trying to both care for 
your kids and save for retirement?

    Ms. Schambers. Thank you for the question because it is 
really important with having children to be able to say, I know 
when I can leave my career and I know that I can still provide.

    When the cost of living goes up, so does babysitting. So 
does daycare. So does everything else in this world. And until 
this recent strike, our wages were way behind, right. And on 
top of that, when school is out or daycares out, you have to 
take time off work in order to stay home with your children.

    Any of the 401(k) that I am putting into, whether I am off 
for a day or 6 weeks with my children, I am not putting into my 
401(k) daily. On top of that, it is maxed at 40 hours. So, if I 
work 60 hours, I am only putting--I am only allowed to, or the 
company only matches up to 40 hours of what I work. If I don't 
work that 40 hours, I am already behind.

    Senator Hassan. Got it. Yes, yes. Thank you very much. And 
again, thank you very much for your testimony. Thanks, Mr. 
Chair.

    The Chair. Thank you.

    Senator Cassidy.

    Senator Cassidy. Yes. Thank you. Hey, thank you all for 
being here. I think we share a concern. How do we improve 
retirement not for Elon Musk, but for kind of the folks who are 
at the low end.

    Mr. Ghilarducci, you and--sir, can I ask your indulgence? 
He just showed up. Can we restart and let me defer to him? Oh, 
Okay. Never mind. So, but really, the two of you, Ms. Greszler 
and Ms. Ghilarducci, are saying different things.

    You made the point that it is the lowest portion that is 
just having the hardest time. But you mentioned, Ms. Greszler 
that your statistic, I wrote it down, 50 percent of those just 
getting by has decreased by one half percent, and that income 
is 123 percent of pre-retirement income.

    Can you respond, and then I will ask you to respond.

    Ms. Greszler. Yes, I would love to because we have heard 
some widely different statistics here. The difference is 
looking at survey based data which just asks individuals what 
their income is versus administrative data, such as IRS tax 
records, what people have actually reported on their taxes.

    Economists will tell you that the IRS data is the most 
accurate for multiple reasons. First of all, you are less 
accurate to lie on your taxes, but also the way that the survey 
data is asked, things like, defined contribution plan that you 
might not take a regular amount out every month will not show 
up.

    There has been studies done that showed the median female 
in retirement looks like she has 45 percent less income than 
she actually does based on that survey data when you compare it 
to the actual IRS tax records.

    You will see in page three of my testimony here, there is a 
study that is using those IRS panel data and 123 percent 
replacement at the median, 93 percent replacement. So, most 
people on their tax records appear to have significant income 
in retirement security.

    Senator Cassidy. Ms. Ghilarducci, can you briefly respond 
to that?

    Ms. Ghilarducci. That study is old. The CPS has been 
corrected for that. I use a much more comprehensive study from 
the University of Michigan that looks at what happens when 
people live their lives after they have filed all their taxes, 
went through their life course, and right on the verge of 
retirement, how much they have.

    That has been double checked with IRS data, with 
administrative records. And I stand by my written testimony, 
the bottom half have barely anything. The middle, $200,000. The 
top have almost $1 million.

    Senator Cassidy. Ms. Greszler, any last words, real 
quickly?

    Ms. Greszler. I mean, the data are available on the 
internet. You can look them up--better research----

    Senator Cassidy. Yes. Let me go, Mr. Doonan, great talking 
to your group yesterday. Thank you for your hospitality. Now, 
you mentioned the defined benefit, and now some employers are 
going back to it.

    You mentioned IBM, but I think of IBM as having relatively 
stable employment. But when I look here it says that the 
average number of jobs someone holds in a 6-year period from 18 
to 24 is 5.7, an average of 4.5 from 25 to 34, and 2.9 from 35 
to 44.

    It does seem like our current job market people move a lot, 
and the defined contribution allows you to take that with you, 
as opposed to what I have to vest for 5 years before I qualify, 
which is what we do in the Federal Government. If you are not 
here for 5 years, you don't vest. So, that does seem to be a 
major advantage of a defined contribution as opposed to a 
defined benefit.

    Mr. Doonan. Thank you. And I think younger workers have 
always been more prone to move around and switch jobs, and sort 
of find that----

    Senator Cassidy. But this shows even, but if you will, kind 
of in the 30's workers are moving around--2.9 times.

    Mr. Doonan. Yes, yes. And I also think there is a bit of a 
chicken and egg thing, right. Private employers moved away from 
incentivizing careers, and we see less people having longer 
careers. In contrast, the public sector has maintained that 
stable workforce incentivizing careers.

    It is not uncommon to walk into a school and see a teacher 
who is--put in 20 years in that school. So I think to the 
extent that there actually are changes because I think there 
has always been turnover the incentives have changed 
dramatically.

    Senator Cassidy. In your mind that if we had a defined 
benefit, people would be more likely to stay with their job?

    Mr. Doonan. Yes.

    Senator Cassidy. Now, I will say that whenever I read of a 
large number of like Meta is laying off a bunch of people, is 
often not the worker's choice, it is the employers choice, just 
to point that out. Mr. Stevenson, I think Ms. Schambers is kind 
of pointing out to the anxiety of an investor who is dependent 
upon her retirement about the kind of, the stock market moving 
up and down.

    It is one thing if you have a cushion, but it is another--
in your experience, and it is another of kind of, oh my gosh, I 
am 10 years away. You mentioned, the terms you used, step up 
and lock in.

    Now, I am guessing that just from what I am hearing from, 
is that would be a way to deal with the anxiety of that small 
investor. Can you elaborate?

    Mr. Doonan. Yes. Absolutely. That is--you have got it 
exactly right. And again, it is really taking the best of what 
the pension world had to offer and bringing that into defined 
contribution plans.

    Yes, we have developed, and the number of my peers have 
developed solutions that address that issue 100 percent. And 
what I love about these is we still know that 60 percent of 
Americans don't have an advisor, right.

    That probably goes without saying. So, but what we are 
describing is making these available inside of 457 plans or 
401(k) plans, you get them at an institutional level, and you 
get the oversight that comes from a major corporation or small 
corporation or an expert manager----

    Senator Cassidy. You got to wrap up because he is tapping 
the thing, but I think you have made your point. And, Mr. 
Chair, can I ask unanimous consent to enter into the record 
statements from the following groups, the American Benefits 
Council, the ERISA Industry Committee, the American Council of 
Life Insurers, the Insurer Retirement Institute, IRA, and the 
American Retirement Association.

    The Chair. Without objection.

    [The following information can be found on page 156 in 
Additional Material:]

    The Chair. Senator Casey.

    Senator Casey. Thank you, Mr. Chairman. Thanks for the 
hearing. Wanted to thank in particular our witnesses for your 
testimony and the expertise you bring to the hearing.

    I don't think there is anyone in this room that doesn't 
understand the scope of this problem, and especially after the 
testimony, of how important it is to have enough savings for 
all of life's needs, no matter where a person lives, no matter 
what their circumstances.

    That, of course, includes retirement. We know that secure 
retirement--reliable pensions have been phased out by major 
corporations over time that, in my judgment, are increasingly 
cutting costs on the backs of workers.

    This has contributed to some devastating data with regard 
to retirement savings and the gaps therein. Professor 
Ghilarducci, I wanted to start with you about your--the 
findings that you cite in your testimony about, and I want to 
make sure I have this right, half of Americans nearing 
retirement, ages 51 to 64, have no wealth in retirement 
accounts. Is that true?

    Ms. Ghilarducci. That is true.

    Senator Casey. Also, that same group, meaning ages 51 to 
64, have no home equity. Half don't.

    Ms. Ghilarducci. That is true too. And that is because our 
debt creating institutions have overwhelmed our wealth creating 
institutions for most American workers. Student loans, HELOCs, 
no down payments for your house, credit card debt, babysitting 
money.

    The ability to take money out of your retirement account. 
That is the account of first resort. It should be the account 
of no resort until you retire. So, our wealth institutions have 
not worked for most Americans.

    Senator Casey. I wanted to talk to you about a bill that I 
have introduced to confront part of the problem. It is called 
the 401 Kids Savings Account Act to help at least begin to 
reverse these trends.

    This bill automatically creates savings accounts at birth 
for all children, all children in the country, with Federal 
support for low and moderate income families, and then starting 
when that child reaches the age of 18, funds can be used for 
higher education, can be used to start a small business, or 
first home or retirement.

    Starting to save at birth also means families can put the 
market to work for them, leading to compound savings and 
greater assets later in life. To illustrate this in one 
particular example, the Aspen Institute found that starting 
savings at birth rather than at age 32, when a typical family 
start saving for retirement, results in an additional $473,000 
for retirement.

    That is what our 401 Kids plan can achieve. I wanted to ask 
you about that and also ask Mr. Stevenson or others about the 
importance of building savings starting at birth.

    Ms. Ghilarducci. Yes. I can quote Einstein who said the 
power of compound interest was one of the most powerful forces 
on Earth. And it works the other way. Debt, if you compound 
debt and you have debt when you start off, it can compound the 
other way. So, it is a really good plan. We should start with 
wealth and accumulate it.

    Senator Casey. Mr. Stevenson.

    Mr. Stevenson. Senator, what I would add is, we encourage 
savings at any rate, at any level. What I would add is if we 
auto enrolled everyone at age 21 when they graduated from 
college, we wouldn't have a crisis either. We would make huge 
progress. Just getting people started at 21 versus 31, captures 
a vast majority of the number that you quoted.

    Senator Casey. Mr. Doonan, and I am getting close to 
running out of time. But, Mr. Doonan, what is your sense of 
this in terms of the importance of starting savings at birth?

    Mr. Doonan. I think when you look at a retirement system it 
is too common to start at age 40. You have the short timeframe. 
You don't have the opportunity for investment returns to 
support the cost of retirement.

    Starting earlier obviously makes the math work much better. 
I think it could help with some equity issues possibly help--
relieve some financial pressure stress, that sort of thing too. 
Thank you.

    Senator Casey. Thanks very much. Thank you, Mr. Chairman.

    The Chair. Thank you.

    Senator Braun.

    Senator Braun. I want to ask Ms. Ghilarducci and Greszler 
this question. Does it ever make sense to borrow money, to 
consume, to spend? Start over with Miss----

    Ms. Ghilarducci. Yes, sure. There is good debt.

    Senator Braun. Not to--I am saying to spend it. To consume 
it as opposed to invest in it. There is a big difference there. 
So, go back to that question, does it ever make sense to borrow 
money to spend it in the present for something that is other 
than an investment?

    Ms. Ghilarducci. Rarely.

    Senator Braun. Rarely. What about you?

    Ms. Greszler. Only if it is going to produce--return over 
time. Essentially like an----

    Senator Braun. That is an investment--yes, you just flipped 
it to an investment, so. I would like to propose this piece of 
information. When we came out of WWII, we had the highest debt 
in the history of our Country.

    But that was the greatest generation. They grew up in the 
depression. They fought WWII. We somehow ended up paying off 
all that debt, building the interstate highway system. Begs the 
question, how much of what ails us today when we even display 
it through our own Federal Government, that we are a society 
that wants to live in the present to where you are not 
investing for the future.

    Here I will point out in the institution that wants to be 
the backstop for some of this stuff we are talking about, it 
would be wonderful if we could do it. It was 5 years ago when I 
got here, we were borrowing $1 trillion a year. Now it is $1 
trillion every 6 months.

    Not to mention, somebody, I think you did earlier, Social 
Security goes broke in 9 years. Medicare in about four or five 
and we don't fix even that. So, aren't we kind of missing the 
main issue that maybe as a country, as a society, we have lost 
sight of actually what builds for a good future?

    My point would be that you need to become savers and 
investors inherently, rather than consumers and spenders, which 
we become as a society, and through Government. Ms. 
Ghilarducci, comment on that, and then Ms. Greszler.

    Ms. Ghilarducci. No, I think you got a right. I mean, the 
Government and businesses are really good investors--you can--
the Government and businesses----

    Senator Braun. The Government is a good investor?

    Ms. Ghilarducci. Absolutely. You just told me the highway 
bill.

    Senator Braun. That is a tangible project.

    Ms. Ghilarducci. Yes.

    Senator Braun. You got an asset, and I agree there, 
infrastructure.

    Ms. Ghilarducci. Human capital, big investor in education. 
That has a rate of return. So, I am with you.

    Senator Braun. But have we gone too far on a variety of 
subjects to be credible as a place that could come in and try 
to fix the same thing we are talking about that we are abusing 
here?

    Ms. Ghilarducci. I don't buy in on the abuse, but we are 
together on the borrowing you do as a Government should be an 
investment. Absolutely.

    Senator Braun. Okay.

    Ms. Greszler. I would disagree that the Government is a 
good investor. I don't think it is. And it would be wonderful 
to talk about having children be able to start retiring day 
one, but we have the exact opposite.

    As you pointed out, debt is the reverse of compound 
interest. So, we have children being born in--already, they are 
immediately burdened with $100,000 or more in debt that they 
are going to have to pay off in the future.

    The best thing that policymakers can do to create a 
brighter future for every generation is to not burden them with 
that debt.

    Senator Braun. Agree 100 percent. And I think, it is kind 
of sanctimonious to be talking about it from here, when we 
would be the greatest example that is kind of abused, the whole 
equation of not trying to borrow money to live in the present.

    It is always a bad business plan. Ms. Greszler, we have got 
a situation back in Indiana, there is actually an act called 
the Susan Muffley Act, which was an example of back when 
Government did step in, it picked winners and losers.

    Again, this had to do with an automotive industry to where 
certain folks got bailed out, some didn't. It begs the 
question, too, of when we do step in, can we be in the business 
of picking winners and losers?

    Even if we do want to do that, are we financially in a 
position to pick any winner or loser in our current shape?

    Ms. Greszler. Yes, I think this is a perfect example of 
how, when we do have these systems that are broken and the 
Government steps in and bails out some and not others, that is 
absolutely unfair.

    The situation with the Delphi workers, those who were 
unionized, got bailed out. They got $1 billion as a package of 
what was at least $17 billion bailout for the UAW and the big 
three, without which older workers' pensions would not be there 
today.

    Now we have a situation unionized, you got $1 billion. Same 
company, non-unionized, they have gotten nothing. 90 percent of 
the workforce is not unionized.

    Senator Braun. Well, thank you. My time is up. I will part 
with this statement, never borrow money to consume it. Get good 
at investing. Your future will be better off. And I wouldn't 
count on this place fixing it until we get our own house in 
order.

    The Chair. Senator Kaine.

    Senator Kaine. Thank you, Mr. Chair. And thanks to the 
witnesses. We do things all the time that benefit some people 
and not others.

    I mean, the notion that doing good for some people is not a 
good thing to do because you didn't do a good for everybody--
every program that we work on usually has some target audience, 
and then it may not benefit other people, and then we figure 
out other programs to benefit them.

    The notion that we helped people preserve pensions, but it 
was a bad idea because we didn't help everybody preserve a 
pension. The American Rescue Plan, we acted as part of that, 
and it passed by one vote in the Senate, one vote, and 
protected the pensions of 2 million workers.

    That followed up an earlier vote that we did to protect the 
pension of United Mine Workers and that number was smaller but 
that is a good thing. By protecting those pensions, we actually 
protect others' pensions as well because it is less likely that 
those 2 million, the failure of those pension plans would drive 
down the funding levels of the PBGC, and so others who had 
pensions that weren't necessarily protected are going to end up 
more protected as well.

    Mr. Chair, I know you probably felt the same way. There can 
be a lot of frustrating days around here, but there have been 
three times when I have been here where something has happened 
by one vote. Saving the Affordable Care Act happened by one 
vote. The American Rescue Plan, 2 million workers' pensions 
happened by one vote.

    The Inflation Reduction Act, cutting prescription drug 
costs and advancing a clean energy economy, happened by one 
vote. There are some days where you wonder why you are here. On 
the days where something happens by one vote, you think, wow, I 
am really glad that I decided to seek office and be in this 
place, because sometimes it is just about one person standing 
up.

    A couple of items I want to emphasize, and these are some 
items I am working on with Senator Cassidy. First is auto 
enrollment--auto re-enrollment. We have a bill, the Auto Re-
enrollment bill, that would periodically sweep people in and 
have them enroll in their company's plans and give them the 
ability to opt out. It is similar to what we do with health 
insurance.

    We are always kind of every year jogging you about health 
insurance and kind of making you think, do you have the right 
plan, or do you want to switch? If we could do that more often 
on the retirement options that our employees have with 
employers, I think it would be a great thing.

    I think it is a bipartisan proposal that I would like us to 
do. The second one I want to focus on is young workers. This 
statistic kind of surprised me. 2.7 million Americans between 
the ages of 18 and 20 work full time hours, 2.7 million 
Americans, but 40 percent of workplace retirement plans set a 
minimum age threshold of 21 to be able to participate in 
retirement plans.

    We ought to change that to 18. We ought to have workplace 
retirement plans pick up 18, 19, and 20 year olds that are 
working and include them in retirement as well. The Helping 
Young Americans Save for Retirement Act is something that 
Senator Cassidy and I are also working on.

    I think, again, it is noncontroversial and bipartisan. And 
then the last thing I will just say, and I am one of these 
people that is trying to do four hearings today, so I am going 
to defer some time back, employee stock ownership.

    If you want to talk about retirement security, the 10 
million Americans that work at ESOPs end up with some powerful 
retirement security. And ESOPs predominated in some unusual 
industries. For some reason, the construction and kind of 
contracting industry has been--but increasingly, you see it in 
retail. Increasingly you see it in some hospitality industries.

    If we can continue to promote ESOPs through our tax code or 
through other strategies, I think that is an element in 
retirement security that can be really, really helpful for 
American workers. And with that, Mr. Chair, I yield back.

    The Chair. Thank you.

    Senator Budd.

    Senator Budd. Thank you, Chairman. Congress has provided 
explicit instructions to the Department of Labor on numerous 
occasions about how to encourage Americans to save for their 
retirement.

    However, the DOL's current fiduciary rule, proposal 
directly contradicts these directives. If implemented, it will 
further restrict access, increase costs to consumers, limit 
personalized financial advice, and only allow consideration of 
very basic investment products.

    This approach toward retirement investors, it is 
incompatible with the current system where individual 
retirement savers are able to make decisions for themselves. 
Mr. Stevenson, do you believe the DOL's proposal is 
counterproductive to the great bipartisan work in the Secure 
Act and Secure Act 2.0?

    Mr. Stevenson. It is a great question. And one of the 
things that we have sort of talked around today is financial 
literacy, right, more education, more training. In general, we 
know that financial literacy doesn't work.

    We have all done tons of programs. And so, that's why auto 
enroll, auto escalate, all those things are just so powerful. 
As it relates to the DOL piece, it is such a broad, sweeping 
piece of legislation or proposal.

    It will take our eye off the ball for a long time and our 
ability to implement all that you have done around Security 1.0 
and 2.0. It will stop a lot of the things that we are working 
on that are so positive, that are so bipartisan, and it is a 
major distraction, and it is a major expense that--those 
expenses will flow to places that we won't like.

    Senator Budd. It sounds like a bad idea. Mr. Stevenson, 
would you agree with the sentiment that in a time when folks 
are living longer, inflation is rampant, and there is a need to 
start saving more and saving earlier for retirement, that this 
rule would leave people worse off?

    Mr. Stevenson. It certainly has the potential. There is 
some challenging parts to it. And again, I would just stick to 
the point around there is so much power that you we have 
created in Secure Act 2.0, and expanding access, expanding--
making it easier for small business to do those things that we 
want them to do.

    Young savers, student loan matching, if we implement those 
things, we are going to make a huge, huge dent in the 
challenges we have all talked about today, and that rule will 
really put that at risk for a few years.

    Senator Budd. Let's talk for a minute, Mr. Stevenson, about 
issues that will help my constituents and folks across the 
country with retirement instead of hurting them, as this rule 
is likely to do.

    Secure 2.0, it had several incentives to help small 
businesses cover startup costs associated with an employment 
retirement plans. While these bipartisan measures were 
important, a simple miscalculation means that the tax credit 
doesn't work for the smallest of businesses out there.

    I am working with Senator Hassan to introduce the Senate 
companion to the bipartisan Rise Act. And what this bill does, 
it addresses that miscalculation to help offset the smallest 
businesses and allows them to offer retirement plans to their 
employees.

    Do you have a positive outlook on whether tax credits like 
these will actually help boost retirement savings for people?

    Mr. Stevenson. They absolutely will.

    Senator Budd. Can you explain that a little bit?

    Mr. Stevenson. Well, it is just so many Americans work in 
small companies and everything that we can do to remove the 
barrier from a business owner to launching their own 401(k) 
plan and making that available to all their employees is going 
to be helpful.

    There is just--we have proven that time and time again, 
especially with the other features around auto enroll, auto 
escalate, that is the pattern, right. Make it easy for the 
business to set it up and then make it easy for the employee to 
participate.

    Senator Budd. That is very helpful. Thank you Chairman, I 
yield.

    The Chair. Thank you, Senator Budd. All right, I think that 
is about it. I think on behalf of the whole Committee, I want 
to thank all of the panelists. I think we can--may have strong 
disagreements about solutions, but we can all agree this is a 
serious problem. Needs discussion, and I think we have begun 
that today.

    Let me thank everybody for being here. That is the end of 
our hearing today. For any Senators who wish to ask additional 
questions, questions for the record will be due in 10 business 
days, March 13th, 5.00 p.m.

    Finally, I ask unanimous consent to enter the record ten 
statements from stakeholders outlining their pension and 
retirement priorities. So ordered.

    [The following information can be found on page 99 in 
Additional Material:]

    The Chair. The Committee stands adjourned. Thank you all 
very much.

                          ADDITIONAL MATERIAL

                                  AARP
    AARP appreciates the opportunity to comment for the record on the 
Senate Committee on Health, Education, Labor, and Pensions hearing to 
discuss the retirement savings crisis in America. At AARP, we work very 
hard to expand workplace retirement coverage and empower Americans to 
save and give them the tools they need to ensure they have a more 
secure retirement. According to the Federal Reserve's 2022 Economic 
Well-Being of Households Survey, only 31 percent of non-retirees 
thought their retirement saving was on track, down from 40 percent in 
2021. \1\ We applaud the Committee for holding this hearing to explore 
solutions to ensure that future generations will be able to retire with 
dignity.
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    \1\  Board of Governors of the Federal Reserve System, ``Economic 
Well-Being of U.S. Households in 2022,'' May 2023, https://
www.Federalreserve.gov/publications/files/2022-report-economic-well-
being-us-households-202305.pdf.

    While there are many ways to address the retirement challenges that 
America faces, as this hearing will explore, AARP will focus on three 
areas where we hope to work with Congress and the Administration to 
improve retirement outcomes in this country: expanding access to 
retirement savings plans, ensuring protections and support for those 
with defined benefit plans, and closing retirement advice loopholes 
that allow conflicted advice to eat away at retirement savings.
 (A) A Lack of Access to Retirement Savings Plans has Exacerbated the 
                      Retirement Crisis in America
    Contributing to this crisis has been a significant shift in how 
Americans save for retirement. The share of workers with defined 
benefit plans has significantly declined. Defined contribution plans 
now hold the largest portion of retirement assets. \2\ This trend away 
from defined benefit plans has shifted the onus of saving for 
retirement away from employers onto employees, who are now responsible 
for saving and investment decisions. Many workers do not even have an 
option to save for retirement through their employers. In fact, nearly 
half of American workers ages 18 to 64 in the private sector work for 
businesses that do not offer any type of retirement plan. \3\
---------------------------------------------------------------------------
    \2\  CRS, ``A Visual Depiction of the Shift from Defined Benefit 
(DB) to Defined Contribution (DC) Pension Plans in the Private Sector, 
December 27, 2021, https://crsreports.Congress.gov/product/pdf/IF/
IF12007.
    \3\  David John, Gary Koenig, and Marissa Malta, ``Payroll 
Deduction Retirement Programs Build Economic Security,'' July 2022, 
https://www.aarp.org/content/dam/aarp/ppi/2022/07/payroll-deduction-
retirement-programs-build-economic-security.doi.10.26419-
2Fppi.00164.001.pdf.

    The smaller the employer, the less likely its workers are to have 
access to a retirement plan. About 78 percent of those who work in 
firms with fewer than 10 employees and about 65 percent who work in 
companies with 10 to 24 employees lack a plan. However, even among very 
large employers with more than 1,000 workers, over one-third of 
employees do not have access to an employer-sponsored retirement plan. 
\4\
---------------------------------------------------------------------------
    \4\  Ibid.

    While about three out of four workers with less than a high school 
degree do not have an employer-provided retirement plan--a much higher 
percentage than workers with some college (50 percent) or a bachelor's 
degree or higher (32 percent), the lack of coverage affects employees 
at all earnings levels. About 81 percent (46 million workers out of 57 
million total) with annual earnings of $50,000 or less do not have 
access to an employer-provided retirement plan. In addition, almost 11 
million more employees earning $50,000 or more do not have access to a 
workplace plan. \5\
---------------------------------------------------------------------------
    \5\  Ibid.

    Access to a plan differs substantially by race, ethnicity, and 
gender. About 64 percent of Hispanic workers, 53 percent of Black 
workers, and 45 percent of Asian American workers lack access to an 
employer-provided retirement plan. Together, these employees account 
for about 46 percent (26 million) of the 57 million without such a 
plan. In addition, 46 percent of all men and 49 percent of all women do 
not have access to an employer-provided plan. \6\
---------------------------------------------------------------------------
    \6\  Ibid.

    Congress is currently considering several pieces of legislation 
that would expand coverage, including the Retirement Savings for 
Americans Act of 2023, which would provide those employees without an 
employer-sponsored retirement savings plan with access to an account 
managed through the Federal Government, and the Automatic IRA Act of 
2024, which would expand retirement plan coverage to millions of 
workers who do not currently have employer-sponsored retirement plans. 
\7\
---------------------------------------------------------------------------
    \7\  S. 3102, the Retirement Savings for Americans Act of 2023, 
https://www.Congress.gov/bill/118th-congress/senate-bill/3102; H.R. 
7293, the Automatic IRA Act of 2024, https://www.Congress.gov/bill/
118th-congress/house-bill/7293.

    Efforts to expand retirement savings coverage have been very 
successful at the state level. AARP's advocacy has been key in helping 
19 states pass legislation to make it easier for workers to save money 
for retirement out of their regular paychecks who otherwise wouldn't 
have access to a retirement plan at their workplace. In total, these 
state programs are now utilized by 820,000 workers, 207,000 employers, 
and have $1.2 billion in assets under management. \8\
---------------------------------------------------------------------------
    \8\  Andy Markowitz and Jacqueline Salmon, ``How Auto IRAs Are 
Helping More Workers Save for Retirement,'' January 8, 2024, https://
www.aarp.org/retirement/planning-for-retirement/info-2023/states-with-
automatic-ira-savings-programs.html.
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      (B) Ensuring Support for Retirees With Defined Benefit Plans
    After years of advocacy, AARP applauded Congress for strengthening 
protections for underfunded multiemployer pension plans when Congress 
passed the American Rescue Plan Act, which included the Butch Lewis 
Emergency Pension Plan Relief Act. AARP had long heard from its members 
who were the participants and beneficiaries of pensions at risk of 
significant benefit reductions due in part to changes in the economy 
and fewer contributing employers. Retirees, who rely on these benefits 
for their retirement income, faced dramatic and often devastating cuts 
due to no fault of their own.

    The Butch Lewis Emergency Pension Plan Relief Act enabled the 
Pension Benefit Guaranty Corporation to support the workers and 
retirees in 100 to 200 severely underfunded multiemployer plans that 
cover millions of retirees and family members. The legislation will put 
many of these at-risk multiemployer pension plans on more sound 
financial footing for decades to come, sparing cuts to participants and 
beneficiaries, and ensuring the defined benefit plans they relied on 
throughout their working years will be there to support them throughout 
their retirement years.

    We urge Congress to continue supporting retirees in multiemployer 
plans through the implementation of the Special Funding Assistance 
program and protecting all current defined benefit plan participants 
through the Pension Benefit Guaranty Corporation. It is vital we 
protect the benefits that workers have spent a lifetime working toward 
and earning so that promised benefits will be there in retirement.

    (C) Close Retirement Advice Loopholes That Allow Conflicted Advice 
to Eat Away at Retirement Savings

    One of the most important parts of coverage is ensuring that 
workers' retirement savings are maximized and not eaten away by 
inappropriate fees and commissions charged by some bad actors. When 
Americans seek out financial advice for their retirement savings, they 
expect the advice they get will be in their best interest, not in the 
best interest of their financial advisor. In fact, people are generally 
quite surprised to learn that not all financial professionals are 
required to put their clients' financial best interests before their 
own.

    This is why the recently proposed Retirement Security Rule from the 
Labor Department is so important. This proposal would require financial 
professionals providing advice to retirement savers to put their 
clients' best interests before their own. Families need to be able to 
trust the advice they get from financial advisors.

    Regulatory loopholes allow some financial advisers to recommend 
their clients invest their retirement savings in products simply 
because the adviser will get higher fees and commissions for doing so. 
This conflicted advice eats into retirement savings, and lessens 
peoples' ability to retire securely, ultimately resulting in further 
costs to state and Federal budgets.

    According to a December 2023 poll conducted by AARP, 89 percent of 
adults 50+ say that they expect professional financial advice to be in 
their best interest, and a similarly large share (87 percent) say that 
they use professional financial advice to make important financial 
decisions. Further, 90 percent agree that financial professionals 
should be required to give advice in the best interest of the 
retirement savings account holder. In fact, two-thirds (66 percent) of 
adults ages 50-plus say that they would be less likely to vote for 
their Member of Congress if they were to overturn a rule requiring 
financial professionals to provide advice in the best interest of their 
clients. \9\
---------------------------------------------------------------------------
    \9\  AARP Research, ``Unbiased Financial Advice About Retirement Is 
Important to Older Adults,'' January 2, 2024, https://www.aarp.org/pri/
topics/work-finances-retirement/financial-security-retirement/
fiduciary-duty-retirement/.
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   This Proposal Is Critical to Closing Existing Regulatory Gaps and 
        Providing Retirement Savers the Protections They Deserve

    When the Employee Retirement Income Security Act (ERISA) was 
enacted in 1974, individual retirement accounts had just been 
introduced, and 401(k) plans were not yet a reality. At that time, the 
primary method of ensuring retirement security was through Defined 
Benefit plans, commonly known as traditional pensions. These pensions 
offered a guaranteed income for retirees that was designed to last 
throughout their retirement. They were advantageous because they pooled 
assets and were managed by a fiduciary, leading to cost efficiencies 
and pooled risk.

    With the shift from pensions to individual accounts that has 
occurred over the past 50 years, the onus of retirement planning has 
largely fallen on individuals. They must navigate complex financial 
products and depend on professional advice, which unfortunately isn't 
always provided with their best interests at heart. This has frequently 
left individuals with the ultimate responsibility for assessing 
economic and market risks, sifting through complex financial products, 
and determining contribution levels, all over a decades-long time 
horizon.

    Currently, the advice retirement savers receive from their 
financial professionals about their retirement investments may not 
align with their best interests. This situation can lead to excessive 
fees, investments in underperforming or illiquid assets, and 
unnecessary risks. \10\ According to some estimates, this conflicted 
advice can cost retirement savers up to 20 percent of their retirement 
savings over a lifetime. \11\ Such circumstances are untenable, 
potentially delaying retirement or diminishing living standards post-
retirement.
---------------------------------------------------------------------------
    \10\  Retirement Security Rule: Definition of an Investment Advice 
Fiduciary, RIN 1210-AC02 (Oct. 24, 2024) (``Fiduciary Release'') 
(``Overall, evidence demonstrates that the combination of inexpert 
customers and conflicted advisers results in investment 
underperformance and negative outcomes for investors. According to a 
2015 report by the Council of Economic Advisers, approximately $1.7 
trillion of IRA assets were invested in products with a payment 
structure that generates conflicts of interests. A substantial body of 
research has shown that IRA holders receiving conflicted investment 
advice can expect their investments to underperform by approximately 50 
to 100 basis points per year.''), https://www.dol.gov/sites/dolgov/
files/ebsa/temporary-postings/retirement-security-rule-definition-of-
an-investment-advice-fiduciary.pdf.
    \11\  The White House, ``FACT SHEET: President Biden to Announce 
New Actions to Protect Retirement Security by Cracking Down on Junk 
Fees in Retirement Investment Advice,'' October 31, 2023, https://
www.whitehouse.gov/briefing-room/statements-releases/2023/10/31/fact-
sheet-president-biden-to-announce-new-actions-to-protect-retirement-
security-by-cracking-down-on-junk-fees-in-retirement-investment-advice/.
---------------------------------------------------------------------------
   The Department of Labor Proposal Will Address Existing Regulatory 
   Loopholes and Provide Retirement Savers with Essential Protections
    The proposed Department of Labor rule proposal addresses the many 
regulatory loopholes that result in retirement savers receiving 
conflicted advice that affects their long-term financial security and 
ability to retire with dignity. When implemented, the rule will help to 
ensure workers have access to high-quality advice and aims to eliminate 
conflicted advice, both of which are essential in the current 
retirement landscape. The proposed rule would create uniform fiduciary 
standards to safeguard retirees and their hard-earned assets. It 
proposes a ``best interests'' standard for investment advice, 
broadening the scope of what constitutes an investment recommendation. 
This change is crucial in empowering workers to effectively manage the 
increased responsibility and risk associated with saving for 
retirement.

    This proposal is a balanced approach, reflecting significant 
changes in our retirement system since 1975. It would address loopholes 
in existing regulations that allow financial professionals to take 
advantage of their clients and recommend they invest in ill-suited, 
high-fee products by focusing on the expectations of retirees--that 
their financial advisers will put their clients' best interests before 
their own. It aligns with standards set by other regulators, notably 
the Securities and Exchange Commission's (SEC) Regulation Best Interest 
(Reg BI) and puts forth the necessary consumer protections for 
retirement savers.

    First, the proposal will do what Congress expected, and provide a 
uniform standard for those falling within the definition of investment 
advice fiduciary. In adopting ERISA, Congress sought to implement 
``uniform fiduciary standards'' designed to ``prevent transactions 
which dissipate or endanger'' retirement assets. \12\ Those providing 
investment advice for compensation would be subject to the best 
interests standard when retirees expect and trust that this is the 
case. The uniform standard would apply to advice providers who hold 
themselves out as fiduciaries, exercise discretionary control over 
retirement assets, or are in the business of making such 
recommendations on a regular and particularized basis.

    \12\  Statement by Hon. Harrison A. Williams, Jr., Chairman, Senate 
Committee on Labor and Public Welfare, introducing the Conference 
Report on H.R. 2, 120 Congressional Record S. 15737 (August 22,1974) 
(``the legislation imposes strict fiduciary obligations on those who 
have discretion or responsibility respecting the management, handling, 
or disposition of pension or welfare plan assets. The objectives of 
these provisions are to make applicable the law of trusts; to prohibit 
exculpatory clauses that have often been used in this field; to 
establish uniform fiduciary standards to prevent transactions which 
dissipate or endanger plan assets; and to provide affective remedies 
for breaches of trust.'').

    Second, it closes a glaring loophole that allows some advisors to 
offer very bad advice to their clients, as long as they only do it 
once. The current, outdated regulation creates a ``one time'' 
exception, which is not in the statute Congress passed. So an advisor 
can give advice to convert the entire balance of your retirement 
savings and not have to do that in a retiree's best interest, simply 
because it was one single recommendation rather than a series of 
recommendations. No senior would expect that making such a substantive 
and critical decision would somehow be exempted from basic consumer 
---------------------------------------------------------------------------
protections.

    Third, the proposal would fill gaps in the existing regulatory 
regime by better aligning the Labor Department's approach with what 
other regulators have already done. The proposal is very similar to the 
SEC's Reg BI, which governs the standards applicable to broker-dealers 
when dealing with retail clients. The proposal will apply the best 
interests standard to recommendations concerning plan distributions, 
decisions not to engage in transactions, and investment strategies.

    Fourth, the definition of ``recommendation'' will explicitly 
include rollovers, even when not accompanied by a specific 
recommendation concerning the investment of the assets. \13\ Those 
deciding on whether to pull assets from a retirement plan and put them 
in an IRA will know that the recommendation must be in their best 
interests.
---------------------------------------------------------------------------
    \13\  Fiduciary Release, supra note 4 (``The Department continues 
to believe that advice provided in connection with a rollover decision, 
even if not accompanied by a specific recommendation on how to invest 
assets, should be treated as fiduciary investment advice.'').

    Fifth, the effect of fine-print disclaimers will be limited. Under 
the proposal, disclaimers will not automatically control an investment 
advice fiduciary's status, at least where inconsistent with ``the 
person's oral communications, marketing materials, applicable state or 
Federal law, or other interactions with the retirement investor.'' 
Where such an inconsistency arises, the disclaimer will be 
``insufficient to defeat the retirement investor's legitimate 
---------------------------------------------------------------------------
expectations.''

    Finally, the proposal also makes clear that platform providers have 
the same duty, at least where they make specific recommendations about 
the securities to be offered. As the Labor Department knows, small 
employers often are sold such platforms with representations that the 
platform will satisfy the employer's fiduciary obligations.
Criticisms of the Proposed Rule are Based on Questionable Research and 
                                 Claims
    Those opposing this important and commonsense rule have made 
baseless claims and do not support a requirement to put their clients' 
best interests before their own financial interests. We would like to 
dispel any misconceptions about the proposal.

    Some have argued that this rule is not necessary, as the SEC's Reg 
BI has already addressed all conflicts of interest in financial 
advising. This is not true. Under Reg BI, implemented in 2019, broker-
dealers registered with the SEC are subject to a ``best interests'' 
requirement. \14\ Reg BI, however, has limited application. First, it 
only applies to retail investors and therefore does not extend to all 
recommendations made to retirement plans. For another, the standard 
applies only to ``investment securities.'' As a result, the standard 
does not generally include such investments as real estate, 
certificates of deposit, certain insurance products, or commodities. 
Even more complex, the same investment may or may not be a security 
depending upon the circumstances, such as gold coins or interests in 
limited liability companies.
---------------------------------------------------------------------------
    \14\  Securities and Exchange Commission, ``Regulation Best 
Interest: The Broker-Dealer Standard of Conduct, Exchange Act Release 
No 86031,'' June 5, 2019 (effective Sept. 10, 2019), https://
www.sec.gov/files/rules/final/2019/34-86031.pdf.

    Annuities further illustrate the complexity. Variable annuities are 
subject to the Federal securities laws; fixed annuities are not. The 
status of fixed index annuities, according to the SEC, ``may or may 
not'' be a security. \15\ Broker-dealers providing recommendations on 
an array of annuities could find themselves subject to Reg BI for some 
of them but not others. And in the case of fixed index annuities, even 
the advice provider may not be sure whether the best interests standard 
applies.
---------------------------------------------------------------------------
    \15\  See Annuities, Investor.gov, SEC, last visited Nov. 27, 2023, 
https://www.investor.gov/introduction-investing/investing-basics/
glossary/annuities (``Variable annuities are securities regulated by 
the SEC. An indexed annuity may or may not be a security; however, most 
indexed annuities are not registered with the SEC. Fixed annuities are 
not securities and are not regulated by the SEC.'').

    Some have argued that the National Association of Insurance 
Commissioners (NAIC) Model Rule is sufficient regulation for the 
insurance industry--despite its gaping limitations. The NAIC Model 
Rule--which states adopt voluntarily, and which has not been adopted by 
all states--would impose some obligations on those selling fixed 
annuities. However, while the NAIC uses the words ``best interests'', 
it does not reflect a ``best interests'' standard. For example, it does 
not apply to all annuities or other insurance products, and it excludes 
cash and non-cash compensation in determining material conflicts (which 
is the very source of many conflicts). \16\ It is clear this Model Rule 
does not provide consumers with sufficient protections and falls far 
short of the protections generally included in plans covered by ERISA.
---------------------------------------------------------------------------
    \16\  See National Association of Insurance Commissioners, 
``Suitability in Annuity Transactions Model Regulation,'' Spring 2020, 
https://content.naic.org/sites/default/files/inline-files/MDL-275.pdf, 
(``Section 6. Duties of Insurers and Producers . . .(A)(1)(d) ``The 
requirements under this subsection do not create a fiduciary obligation 
or relationship and only create a regulatory obligation as established 
in this regulation." And Section 5(I)(2) ````Material conflict of 
interest'' does not include cash compensation or non-cash 
compensation.'''').

    Recommendations to rollover plan assets into an IRA likewise may or 
may not be subject to a best interests standard under the current 
regulation's 5-part test. This is true even though the ``decision to 
roll over assets from a plan to an IRA is often the single most 
important financial decision a plan participant makes, involving a 
lifetime of retirement savings'' and the fact that these 
recommendations ``carry with them an inherent conflict of interest.'' 
\17\ And while rollovers are more common among retirees exiting from 
defined contribution plans, those entitled to defined benefit pensions 
may also be in a position to rollover assets when receiving a lump-sum 
pay out.
---------------------------------------------------------------------------
    \17\  Fiduciary Release, supra note 4 (``Financial institutions 
face an innate conflict of interest, in that a financial institution 
that provides a recommendation or advice concerning a rollover to a 
retirement investor may expect to earn transaction-based compensation 
such as commissions and/or receive an ongoing advisory fee that it 
likely would not receive if the assets were to remain in an ERISA-
covered plan. Further, under the 1975 rule, if an investment advice 
provider makes a one-time recommendation that the worker move the 
entire balance of their retirement plan into an IRA and invest it in a 
particular annuity, then the advice provider has no fiduciary 
obligation under ERISA to honor the worker's best interest unless this 
recommendation is part of an `ongoing'' advice relationship. The 
resulting compensation represents a significant revenue source for 
investment advice providers.'').

    Conflicted advice in rollovers can significantly eat into 
retirement savings. According to a study from the Pew Charitable 
Trusts, ``in 2018 alone, investors rolled $516.7 billion from employer 
retirement plans into traditional IRAs. An analysis of fee 
differentials suggests that over a hypothetical retirement period of 25 
years, those retail investors could see an aggregate reduction in 
savings of about $45.5 billion--just from that single year of 
rollovers.'' Failure to ensure best interest advice for rollovers is a 
glaring gap that can harm the long-term financial security of 
retirement savers. \18\
---------------------------------------------------------------------------
    \18\  Pew Charitable Trusts, ``Small Differences in Mutual Fund 
Fees Can Cut Billions From Americans' Retirement Savings,'' June 30, 
2022, https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/
2022/06/small-differences-in-mutual-fund-fees-can-cut-billions-from-
americans-retirement-savings.

    Another important gap left by the current 5-part test that must be 
addressed is the lack of protections for plan sponsors. The requirement 
that a relationship with an investor be regular or ongoing for it to be 
subject to a fiduciary standard has resulted in this standard not 
applying to advice provided to small businesses. These plan sponsors 
are also not protected under Reg BI, because advice to them is 
considered ``plan-level'', which falls under ``institutional advice'' 
and is therefore exempt. The NAIC Model Rule also excludes from its 
suitability requirements the purchase of annuity-based retirement plans 
by small business owners. It is unclear why those small businesses 
managing retirement plans on behalf of their employees should not 
---------------------------------------------------------------------------
receive the same protections as individual investors.

    Some have argued that in its passage of SECURE 2.0, Congress 
intended to expand access to annuities, indicating that the industry 
should not be regulated further. This is flawed logic--the fact that 
greater access to annuities was provided in SECURE 2.0 does not 
indicate that Congress intended for consumers to receive substandard 
protections. In fact, it underscores the need for greater protections 
and ensuring these products and the people recommending investments in 
them are held to a higher best interests standards.

    Finally, some have argued that lower-and middle-income savers will 
lose access to financial advice, despite no hard evidence. Indeed, 
similar arguments were made before the SEC implemented its own best 
interest standard, and no access problems have arisen. Some have 
pointed to limited industry ``research'' provided by Deloitte. But 
Deloitte itself states: ``The findings presented are based on the 
analysis of information and data provided to Deloitte. Deloitte has 
analyzed, aggregated and summarized the information provided, but was 
not asked to and did not independently verify, validate or audit the 
information provided during the course of the engagement.'' \19\ 
Indeed, the methodology for this ``analysis'' is not provided, nor was 
the underlying data made available to independent parties so that the 
conclusions found could be analyzed and tested--in spite of repeated 
requests by the Department of Labor. \20\ In fact, the findings of this 
report are based on interviews with just 21 of hundreds of firms, with 
no information provided as to how these firms were chosen, whether they 
are representative of the market, or what questions were asked. \21\ In 
short, it lacks academic rigor and transparency.
---------------------------------------------------------------------------
    \19\  Deloitte (commissioned by SIFMA), ``The DOL Fiduciary Rule: A 
study on how financial institutions have responded and the resulting 
impacts on retirement investors,'' August 19, 2017, https://
www.sifma.org/wp-content/uploads/2017/08/Deloitte-White-Paper-on-the-
DOL-Fiduciary-Rule-August-2017.pdf.
    \20\  Consumer Federation of America, ``Comment Letter Re: RIN 
1210-AB82, Request for Information Regarding the Fiduciary Rule and 
Prohibited Transaction Exemptions,'' October 24, 2017, https://
consumerfed.org/wp-content/uploads/2017/10/cfa-dol-fiduciary-response-
to-industry-rule-opponents.pdf.
    \21\  Ibid.

    A more recent study from the National Association of Insurance and 
Financial Advisors (NAIFA) similarly lacks rigor or transparency. It 
does however, shed light on the degree to which the members selected 
for participation in the survey provide conflicted advice to their 
clients. In the survey, 23.58 percent of participants agreed and 43.47 
percent strongly agreed that they would have to stop or reduce sales of 
fixed annuities or non-securities investment products if the rule were 
implemented. \22\ This underscores the importance of implementing this 
rule and ensuring that consumers have the protections they deserve.
---------------------------------------------------------------------------
    \22\  NAIFA, ``Impact of the Proposed DOL Fiduciary-Only Rule on 
NAIFA Members,'' December 2023, https://2635471.fs1.hubspotusercontent-
na1.net/hubfs/2635471/
NAIFA%20Members%20Respond%20to%20the%20Proposed%20US%20DOL%20Rule.pdf.

    Further, as noted, this proposed rule aligns with Reg BI, which was 
implemented in 2019. There has been no evidence that Reg BI has reduced 
lower-and middle-income workers' access to investment recommendations. 
When looking abroad to the United Kingdom, we see that the application 
of similar standards has actually increased access to financial advice, 
rather than decreased access. The UK's Financial Conduct Authority 
(FCA) found that ``[in 2021] approximately 8 percent (4.1m) of all UK 
adults have received financial advice, an increase from 6 percent 
(3.1m) in 2017.'' \23\ Rather than the new proposed rule having a 
negative effect on retirement savers, the rule will instead improve 
their investing outcomes.
---------------------------------------------------------------------------
    \23\  FCA, ``FCA publishes evaluation of its work on the financial 
advice market,'' November 29, 2021, https://www.fca.org.uk/news/press-
releases/fca-publishes-evaluation-financial-advice-market.

    Under existing requirements, it is the lower-and middle-income 
retirement savers who suffer the most from conflicted advice, as 
wealthier investors tend to work with advisers who are already 
fiduciaries and put their clients' best interests before their own. As 
one of today's witnesses, Kamila Elliott, put it when she testified 
before the Department of Labor on the proposed rule: ``The wealthy 
receive financial advice that is best for them. Why shouldn't those 
with moderate incomes be treated the same?'' \24\ There is no reason 
that lower-and middle-income retirement savers do not merit the same 
consumer protections as wealthier investors.
---------------------------------------------------------------------------
    \24\  Kamila Elliott, ``CFP BOARD 2022 CHAIR KAMILA ELLIOTT, CFP 
TESTIFIES AT DOL HEARING ON RETIREMENT SECURITY RULE,'' December 18, 
2023, https://www.cfp.net/news/2023/12/kamila-elliott-testimony.

    While there may be a transition period during which advisers work 
through the requirements of this proposal, currently, 1 in 3 financial 
advisors (97,000 advisors) in the United States are Certified Financial 
Planner (CFP) Board certified. As part of the CFP certification, these 
financial planners make a commitment to act as a fiduciary when 
providing financial advice and to put their clients' best interests 
first. Many financial professionals are already operating under a 
fiduciary standard and put their clients' best interests before their 
own and will not have to make operational changes as a result of this 
---------------------------------------------------------------------------
rule.

    Stronger consumer protections ultimately will result in better 
financial advice as those advisers who would rather put their own 
interests before their customers will either raise their standards or 
lose access to those clients. All retirement savers deserve to have 
their financial advisers make investment recommendations to them under 
a best interests standard--anything less is not serving retirement 
savers and will harm their ability to retire securely and with dignity.
The Department of Labor Retirement Security Rule Should be Implemented 
                             Without Delay
    This is a common-sense rule--and most people are surprised to learn 
it isn't already a requirement for financial professionals. AARP 
polling shows that 9 in 10 adults over the age of 50 support the 
requirement that financial professionals act in their best interest. 
\25\ Retirement savers rely on financial professionals to make 
important investment decisions and need to be able to trust these 
advisers are acting in their best interest.
---------------------------------------------------------------------------
    \25\  AARP Research, supra note 2.

    When people go to a financial advisor with questions about their 
life savings, they need to be able to trust they are getting good 
advice. The United States spends hundreds of billions on tax benefits 
to encourage retirement savings, and those dollars should not be wasted 
when families get conflicted advice from a professional. Where advice 
providers are not required to observe a best interest standard, 
retirement security is undermined, and retirees suffer the 
consequences. Monetary losses can be staggering, and retirement may be 
delayed or postponed. The quality-of-life post-retirement can be 
significantly reduced. We urge Members of Congress to support this 
proposal, oppose any efforts to defund it, and to ensure the Department 
of Labor implements this Rule swiftly.
                             (D) Conclusion
    Thank you for considering AARP's perspective, and the perspective 
of millions of older Americans who have saved for retirement throughout 
their working lives, on ways to address the current retirement crisis. 
We must and can do better for current and future retirees to expand 
their access to retirement plans and protect their retirement savings. 
We look forward to working with Congress on constructive solutions to 
improve coverage and help Americans retire with financial security and 
dignity.
                                 ______
                                 
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     National United Committee To Protect Pensions,
                                           Summerfield, NC,
                                                 February 25, 2024.
    Dear Members of the Senate Help Committee:

    I worked in the trucking industry for over forty years, with the 
last 23 years at ABF Freight. I worked long hours and missed many of my 
children's after-school activities and other family events. Although 
these hours were a significant burden on my family, the biggest draw 
was the promise of a pension, the preferred retirement system in the 
70's and 80's. We all had our dream of working hard and long for 30 
years or so and retiring with dignity in our golden years. The multi-
employer pension system was and still is a great retirement system. You 
had the opportunity to work for different companies, and even if they 
went out of business, you had the chance not to lose your pension time, 
which is something you could never get back.

    The trucking industry was shaken to its core during deregulation. 
The domino effect of mergers and acquisitions was intense for many 
years, but the pension fund system worked for the workers. All of us 
were going through job changes and layoffs and hirings. The one thing 
we were all banking on was the Central States Pension Fund.

    Then, in 2008, the Great Recession happened, and it took only a few 
months for the Central States to lose 11 Billion dollars. They tried to 
make adjustments, but it didn't work. What was needed was exactly what 
the institutions and the banking industry were given--a rescue plan. 
The Pension Fund was slated to go bankrupt in 2025.

    When I received my letter from the Central States Pension Fund 
threatening a cut of 28 percent, we were devastated. It was losing 
everything I worked for and through no fault of my own. I followed all 
the rules and put money aside, and because of Wall Street's 
irresponsibility, it was gone. My Wife and I were sitting at the 
kitchen table, and survival would be tough no matter how much we looked 
at it.

    Fortunately, after forming a grassroots movement and many years of 
lobbying Congress, the Butch Lewis Act was passed by Congress and 
signed into law by President Joe Biden. Without this Act, things would 
have been unbearable. Our adult son with MS lives with us, and now we 
are also sharing responsibility for his son, our grandson. Without this 
rescue, our only option would have been to go on a welfare program or 
another government-subsidized program. It also allows us to give back 
to our community, church, and other family members that need help. We 
know other retirees who also raise grandchildren and are in the same 
situation.

    In addition, and very importantly, this Rescue gave us our dignity 
of work back. It was a much better way to fix the situation than the 
bankruptcy of thousands of companies and putting millions of retirees 
on government poverty programs. It is important to remember that our 
pensions were earned over a lifetime of hard work and dedication to our 
companies, communities, country, and families. Thank God for the Butch 
Lewis Act.

            Respectfully,
                                          Bernard Anderson,
                                                   NUCPP Treasurer,
                                              Kim Anderson.
                                 ______
                                 
     National United Committee To Protect Pensions,
                                           Summerfield, NC,
                                                 February 25, 2024.
    Senate Help Committee:

    Thank you for allowing us to submit a letter to you. I am 69 years 
old, and my wife is 65 years old. We have a combined 42 years in the 
Central States Pension Fund. Our pension is the foundation upon which 
we built our retirement plan. I retired in December 2013, and Bobbie 
will retire on February 29, 2024.

    Our pension allows us to live our lives in our current lifestyle, 
which has been our goal. We can pay taxes, afford medical insurance, 
maintain our residence, donate to our church, and several other 
organizations we support. Retirement was a dream as I worked years of 
third shifts, 6 days a week with Tuesdays and Wednesdays off at my 
first job that included a pension. Not a week went by that I did not 
think of my upcoming retirement. I know our dream for retirement is not 
everyone's dream, but I can tell you personally what a retirement 
nightmare is without a pension.

    My parents are middle class, have no pension, and live on just two 
social security checks and a required minimum distribution from a 
modest 401K. We lost Pop 6 months ago to a stroke. He was in the 
hospital for 16 days, in rehab/long-term care for 60 days, unable to 
walk. Before he passed away, his caretakers told us Medicare would end 
in 30 more days, and current care would be $10,000 a month, self-pay. 
Pop would always ask who was paying for his care, and I told him it was 
Medicare and his supplemental insurance. He never knew it was only for 
one hundred days. He was 88 years old when he passed. My mom is 89 
years old and diagnosed with dementia. Her long-term memory is good, 
but she cannot remember what she ate for supper. What cost for care is 
she facing?

    A pension would not have stopped what happened, but it would have 
given them enough money with their family's help to make it. I do not 
have numbers/statistics, but I think it would be shocking to know the 
percentage of pensions used to pay long-term medical care. What is the 
percentage of people over 65 forced into bankruptcy due to medical 
needs before they die? Pensions will not stop this but will give a 
person enough money to purchase long-term care insurance, which I 
believe is a wiser investment than burial insurance.

    It is safe to say that every pension supports the needs of at least 
three people.

    As my husband stated, having full pensions allows us both to retire 
while maintaining a lifestyle as if we both still worked. In today's 
world, we are all connected; pension moneys will enable us to be 
providers and contributors in society. Our money flows to family, to 
church, to serve God, to missions abroad and this country, to 
businesses, groceries, vehicle maintenance, utilities, maintaining a 
home, to insurance-medical, house, automotive and allows us to take 
trips/vacations. Pension money supports various layers of need, helping 
many people and us to continue providing for our upkeep.

    Working-class people's wages are insufficient to support essential 
family needs such as housing, medical care, education, and nourishment 
while also funding a retirement plan. This is the reason that earning a 
pension is so valuable. Pensions allow us to live with dignity, and we 
thank you for finding a way to ensure we receive our earned pension.

            Truly Blessed,
                                              James Hanner,
                                                     NUCPP Trustee,
                                             Bobbie Hanner.
                                 ______
                                 
     National United Committee To Protect Pensions,
                                           Summerfield, NC,
                                                 February 26, 2024.
    Dear Distinguished Members of the Senate HELP Committee:

    Retirement is a dream goal for almost all people who work hard and 
strive to save toward it. Early in my life, I knew saving enough was 
almost impossible with most wages. As a result, I chose to seek 
employment with a company that offered a defined benefit plan. The 
contributions were paid into the plan by my company but were a part of 
my wages, so they were considered deferred compensation. I worked long 
hours for over 30 years while deferring large amounts of my income into 
my pension plan. As a result of the work, my body was breaking down, 
and my 3rd back surgery denied me the ability to return. I had spent a 
lifetime working and planning for the years when I couldn't work 
anymore. That was in November 2014. I did have concerns about how we 
would survive financially. My family had what they needed, but many 
sacrifices were made.

    Our saving grace was my earned pension. My age did not allow me to 
start collecting, but I knew that in 5 years, my planning would pay 
off. Imagine the anguish and concern that my wife and I had in 2015 
when I received a notification stating that my benefits would be 
reduced by 67 percent! This was almost crushing. What would we do? Why 
had we sacrificed for more than 30 years? Thankfully, Congress did pass 
the BLA and restored the total value of my pension. We now live 
comfortably and give back to our community through donations and time. 
We can continue to help our family and church financially as well.

    Many have criticized the BLA as a taxpayer-funded giveaway, but I 
believe it is the exact opposite. We are and have always been 
taxpayers. Because of my restored pension, we can support local and 
national businesses by spending our money to drive the economy. We take 
care of 100 percent of our healthcare and hopefully have all bases 
covered for long-term care or any other unknown health crises that may 
come our way. Many people live their lives as if tomorrow may never 
come. They may or may not work but will spend everything they have as 
it comes. All these people will land on the shoulders of the U.S. 
taxpayers in multiple ways, like food, housing, energy, healthcare, or 
any of the many other programs my tax dollars have supported and still 
support. When programs like a defined pension, social security, and 
Medicare are threatened, the taxpayers who sacrifice today and plan for 
tomorrow based on these promises begin questioning themselves. Maybe 
they, too, should live every day as if it's the last. Save nothing and 
work as little as possible because all the sacrifices will never be 
rewarded. Without truly believing your plan will come to fruition, 
there is no reason to try. If that happens, all those people who now 
are taxpayers will instead become burdens on the system.

    Thank God for the good people who support and defend the middle-
class workers. Our Country was built and thrives off of their backs.

            Respectfully,
                                              Davey Grubbs,
                                              NUCPP Vice President.
                                 ______
                                 
     National United Committee To Protect Pensions,
                                           Summerfield, NC,
                                                 February 27, 2024.
    I retired from Teamsters Local 200 in Milwaukee, WI, after thirty 
years of service in the freight industry. In March 2015, I received a 
letter about a possible 55 percent reduction to my monthly retirement 
benefit from the Central States Pension Fund. I was devastated. Then, a 
few months later, my wife and I were informed she was ill with terminal 
cancer. That additional stress of not knowing how we would manage our 
monthly and medical expenses became a huge burden. My life changed that 
day. My mind started wondering if I would be forced out of my home. 
Would we become a burden on our children or become dependent on 
government assistance?

    I knew I had to get involved after talking with others at a local 
retiree meeting. My wife and I discussed it, and although we knew tough 
times were coming with her health issues, she asked me to promise to 
fight for the pension until it was saved. I joined the NUCPP and spent 
the next 7 years lobbying Congress and traveling throughout the United 
States. With the government oversight of protecting the multiemployer 
pension funds that was in place, it was Congress's fiduciary 
responsibility to solve this crisis.

    On Day 49 of President Joe Biden taking office, he signed the 
American Rescue Plan into law, which included the Butch Lewis Act to 
help struggling pension funds that impacted over 10.1 million 
Americans. On December 8, 2022, I had the honor of introducing 
President Biden as he announced that the Central States Pension Fund 
would receive almost $37 billion dollars in special financial 
assistance from the PBGC.

    My health concerns which developed from the stress of my wife's 
illness and traveling week after week to DC for 7 years, as well as the 
worry of becoming a burden to my family if I would lose my pension, 
have since improved since the signing of the Butch Lewis Act. I have 
time to care for my health, spend time with my grandchildren, support 
local businesses, and donate to charities that desperately need help. 
Notably, the Butch Lewis Act has given me back my dignity and allowed 
me to collect what I earned over a lifetime of hard work.

    A Promise is a Promise is a Promise.

            Respectfully,
                                         Kenneth Stribling,
                                         NUCPP President-Milwaukee.
                                 ______
                                 
     National United Committee To Protect Pensions,
                                           Summerfield, NC,
                                                 February 27, 2024.
    Dear Members of the Senate Help Committee:

    Thank you for taking the time to review personal statements from 
several NUCPP Executive Board of Directors members. As you can tell, 
the emotional impact on these Teamster retirees was intense and life-
altering.

    If I may, I would also like to call attention to a group of people 
directly impacted, but often the silent minority. As Secretary and 
Director of Communication of the NUCPP, I receive many phone calls and 
emails from retirees that were directly impacted by the threatened 
pension reductions and who are now able to live their lives because of 
the Butch Lewis Act. Many of these calls and emails are from spouses of 
the pension retiree. You often hear the stories of the long-distance 
truck driver who spent days away from home. However, you don't often 
hear from the spouses who, in many cases, could not earn an income 
outside of the home because they were the ones raising the family, 
taking the children to doctor appointments, after-school activities, 
and other functions that are necessary as a family. It was a life 
lesson for the children that mom and dad were sacrificing a quality 
family life in return for his hard work paying off when it was finally 
time for retirement.

    Imagine the gut punch when the letter from Central States Pension 
Fund came, notifying them of a cut in the pension of anywhere from 25 
percent-75 percent. And to add to that, the spouse who was staying 
home, raising the family primarily by herself, would now have her 
survival benefit if the husband passed away (which varies, but could 
already be only half of his pension amount) reduced by that 25 percent-
75 percent! What was she to do, become a burden to her family? How can 
that be explained when that husband and wife were only playing by the 
rules that were in place?

    By the passing of The Butch Lewis Act, all of the sacrifices of 
these husbands, wives, and families were not for naught. They could 
live their retirement as they had planned for.

    It is also worth noting how many of these retirees now support 
children and raise grandchildren. The BLA keeps many of these family 
members off government programs and positively influences the 
importance of working hard. The future of our Country relies on people 
believing that if you work hard and play by the rules, you will receive 
what you were promised. The Butch Lewis Act reinforced that principle, 
and we are thankful for all of those who supported us during our long 
pension fight.

    Thank you for your attention.
                                             Dana M. Vargo,
                    NUCPP Director of Communications-Massillon, OH.
                                 ______
                                 
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 
                                 [Senator  
                                 Cassidy
                                  additional 
                                 material:]
                                 
                                 Insured Retirement Institute,
                                             Washington DC,
                                                 February 28, 2024.
Hon. Bernie Sanders, Chairman,
Hon. Bill Cassidy, Ranking Member,
U.S. Senate Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC.

    Dear Chairman Sanders and Ranking Member Cassidy:

    The Insured Retirement Institute (IRI) \1\ is pleased to submit 
this letter and requests that it be entered into the record for the 
hearing to be held on Wednesday, February 28, 2024, by the U.S. Senate 
Committee on Health, Education, Labor, and Pensions titled ``Taking a 
Serious Look at the Retirement Crisis in America: What Can We Do to 
Expand Defined Benefit Pension Plans for Workers?'' IRI commends you 
for your leadership in conducting this hearing that continues the 
Committee's examination of policy solutions to help America's workers 
and retirees address the anxiety they have about saving for their 
retirement and having protected, guaranteed income to sustain them 
throughout their retirement years.
---------------------------------------------------------------------------
    \1\  The Insured Retirement Institute (IRI) is the leading 
association for the entire supply chain of insured retirement 
strategies, including life insurers, asset managers, broker-dealers, 
banks, marketing organizations, law firms, and solution providers. IRI 
members account for 90 percent of annuity assets in the U.S., including 
the foremost distributors of protected lifetime income solutions, and 
are represented by financial professionals serving millions of 
Americans. IRI champions retirement security for all through leadership 
in advocacy, awareness, research, and the advancement of digital 
solutions within a collaborative industry community. Our members 
support and advocate for common sense, bipartisan policies to help 
America's workers and retirees achieve their retirement goals by 
expanding access to professional financial guidance and lifetime income 
products within an appropriate and effective consumer protection 
framework.

---------------------------------------------------------------------------
        America's Growing Retirement Anxiety and Savings Crisis

    According to a survey of voters aged 25-plus conducted for AARP, 
more than six in 10 (63 percent) are anxious about having enough money 
to live comfortably throughout their retirement years, and only three 
in 10 (29 percent) of voters ages 25-44 believe that they will be able 
to save enough money for retirement. Among voters aged 45-plus who are 
not yet retired, eight in 10 (81 percent) wish they had more money 
saved for their retirement years. The AARP survey also showed that 
virtually all voters (99.7 percent) say that it is important for people 
to be able to save money for retirement while they are working, but 
only two in three (65 percent) employed voters say that they are 
currently participating in a workplace retirement savings plan offered 
by their employer. \2\
---------------------------------------------------------------------------
    \2\  ``Saving For Retirement at Work: Views of Voters Ages 25+'', 
AARP, October 2021.

    Two other studies provide further insights into the depth of this 
anxiety. A study from Allianz Life Insurance Company of North America 
found that 66 percent of America's workers worry they will run out of 
money during retirement. \3\ A National Institute of Retirement 
Security survey found that more than two-thirds--67 percent--say the 
Nation faces a retirement crisis, and more than half--56 percent--are 
concerned that they will not achieve a financially secure retirement. 
\4\
---------------------------------------------------------------------------
    \3\  ``2023 Q2 Quarterly Market Perceptions Study'', Allianz Life 
Insurance Company of North America, July 2023.
    \4\  ``Retirement Insecurity 2021--American Views of Retirement'', 
National Institute of Retirement Security, February 2021.

    The anxiety over attaining retirement security is more prevalent 
among people of color. Fifty-six percent of Black and Latino workers 
and retirees say they are worried about their financial future. \5\ 
That is 10 percent more than their White counterparts. \6\ 
Additionally, according to a December 2021 study, more than half of 
Black and Latino households have no retirement savings. \7\ Of those 
with savings, the median savings for households with savers aged 25 to 
61 is $29,200 for Black households and $23,000 for Latinos. By 
comparison, more than two-thirds of White households have savings and a 
median of $79,000 set aside for their retirement years. \8\
---------------------------------------------------------------------------
    \5\  ``2020 Financial Wellness Census.'' Prudential. March 2021.
    \6\  Ibid.
    \7\  ``Retirement Savings by Race.'' Investopedia. December 2021.
    \8\  Ibid.

    This research confirms what IRI's members hear from the millions of 
people they work with each day to plan and save for their retirement 
years: workers and retirees are shouldering the responsibility of 
accumulating savings to produce income to sustain them during their 
---------------------------------------------------------------------------
retirement years.

    Factor #1: Lack of Access to Workplace Retirement Savings Plans

    One factor that significantly contributes to this anxiety is a lack 
of access to workplace retirement savings plans. According to AARP 
research, almost half of private sector employees--57 million 
Americans--do not have the option to save for retirement at work. Most 
workers who lack access to an employer-sponsored retirement plan are 
employed by small businesses, with about three-fourths of those workers 
at companies with fewer than 10 employees and about two-thirds of those 
workers at companies with 10 to 24 employees. In addition, there are 
disparities by race and ethnicity among those workers, with nearly 64 
percent of Latino workers, 53 percent of Black workers, and 45 percent 
of Asian American workers lacking access to an employer-provided 
retirement plan. \9\ Additionally, Transamerica's research, 
``Navigating the Pandemic: A Survey of U.S. Employers,'' found that 48 
percent of employers do not offer a 401(k) or similar retirement plan, 
and 63 percent of those employers said they are not too likely or not 
likely at all to start a plan within the next 2 years. \10\
---------------------------------------------------------------------------
    \9\  ``Payroll Deduction Retirement Programs Build Economic 
Security,'' AARP Public Policy Institute, July 11, 2022
    \10\  ``Navigating the Pandemic: A Survey of U.S. Employers,'' 
Transamerica Institute, June 2021.
---------------------------------------------------------------------------
 Factor #2: Lack of Lifetime Income Distribution Options in Retirement 
              Plans to Provide Sustainable Lifetime Income
    Another factor contributing to workers' and retirees' anxiety is 
the lack of access to lifetime income distribution options in 
retirement plans that would provide much-needed protection against 
outliving one's savings. According to recent research conducted by the 
Life Insurance Marketing and Research Association (LIMRA), an estimated 
nine in ten defined contribution plans have no in-plan distribution 
option for generating lifetime-guaranteed income for retiring 
employees. The survey found that of private-sector plan sponsors with 
at least 10 full-time employees, 49 percent of those that do not offer 
an in-plan annuity in their defined contribution plan said that they 
have considered adding one at some point but have not yet done so. \11\
---------------------------------------------------------------------------
    \11\  ``Are In-Plan Annuities at a Tipping Point?'', Life Insurance 
Marketing and Research Association (LIMRA), November 2023.

    According to research conducted by Cerulli Associates of defined 
contribution recordkeepers, only 23 percent offered participants a 
distribution option of one-time lump sums converted to protected, 
guaranteed lifetime income paid out in monthly or quarterly payments. 
Conversely, only 8 percent of defined contribution plan recordkeepers 
reported that 16 percent or more of their defined contribution plan 
clients have adopted a guaranteed in-plan retirement income option. 
Less than half of surveyed recordkeepers let their participants take 
ad-hoc withdrawals as needed. \12\
---------------------------------------------------------------------------
    \12\  ``The Cerulli Edge--Retirement Edition,'' Cerulli Associates, 
2016.
---------------------------------------------------------------------------
                  The Decline of Defined Benefit Plans
    While defined benefit plans offer features that can address these 
two factors causing workers and retirees anxiety about their future 
retirement security, another trend is also at play. During the past 
several decades, there has been a substantial decline in employer-
sponsored defined benefit plans and the percentage of assets contained 
in those plans. \13\ The decline of defined benefit plans is attributed 
primarily to the elimination of plans with 100 or fewer participants, 
most of which were eliminated because of the complexity and cost 
required to administer an employer-sponsored defined benefit pension 
plan. \14\ During that same time, there has been a substantial increase 
in employee-funded defined contribution plans and the percentage of 
assets contained in those plans, making it an unrealistic aim to now 
seek to expand the availability of defined benefit plans. \15\
---------------------------------------------------------------------------
    \13\  ``IRI Fact Book 2023'', Chapter 1, Page 10. In 1985, there 
were over 114,000 private pension plans insured by the Pensions Benefit 
Guaranty Corporation (PBGC), and today, that number is about 25,000, 
covering 33 million people.
    \14\  Ibid, Chapter 13, Page 126.
    \15\  Ibid, Chapter 1, Page 11. The percentage of asset allocated 
to individual plans (including annuities, individual retirement 
accounts, and employer-sponsored contribution plans such as 401(k), 
403(b) and 457 plans) versus private pensions has increased steadily, 
reaching 88 percent in 2022. Chapter 12, Page 121. Assets in defined 
contribution plans were $9.3 trillion, or 27 percent of total assets in 
2022, compared to 26 percent in 2000. In contrast, assets held in 
employer-sponsored defined benefit plans decreased from 17 percent to 
only 9 percent of total retirement plan assets between 2000 and 2020. 
At the end of 2022, assets held in individual retirement accounts and 
Keoghs (tax-deferred retirement savings plans for self-employed 
individuals or small business owners) accounted for the largest segment 
of the retirement plan market with $12.0 trillion, or 35 percent of 
total assets, as compared to 23 percent in 2000.
---------------------------------------------------------------------------
  Defined Contribution Plans Offer the Guaranteed Income Features of 
                         Defined Benefit Plans
    The primary goal of a retirement plan is not to obtain tax deferral 
but rather to provide retirement income that will last for the life of 
the retiree. Defined benefit plans distribute their benefits through 
life annuities. In a life annuity, employees receive equal periodic 
benefit payments (monthly, quarterly, etc.) for the rest of their 
lives. If married, and the employee has chosen the joint and survivor 
option, upon his or her death, the surviving spouse can continue to 
receive distributions of at least 50 percent of the employee's periodic 
payment amount. Some defined benefit plans may also allow employees to 
receive their entire benefit in one lump sum at retirement. \16\
---------------------------------------------------------------------------
    \16\  Ibid, Chapter 13, Page 126.

    Today, due to the work that Congress undertook during the 116th and 
117th Sessions, two of the most sweeping and comprehensive new laws 
were enacted aimed at bolstering employer-sponsored defined 
contribution plans to strengthen retirement security for millions more 
of our Nation's workers and retirees. The SECURE Act of 2019 \17\ and 
the SECURE 2.0 Act of 2022 \18\ included measures that will expand 
opportunities to save for retirement during an individual's working 
years and facilitate the availability and use of protected, guaranteed 
lifetime income distribution options for plan participants. These bills 
were developed and strongly supported by a broad bipartisan coalition 
of Members of Congress--including many Members of the Senate Committee 
on Health, Education, Labor, and Pensions Committee.
---------------------------------------------------------------------------
    \17\  Public Law 116-94.
    \18\  Public Law 117-328.

    Specifically, these new laws recognized that workers who are given 
the option to choose to save in an employer-provided defined 
contribution plan should also be afforded a chance to secure protected 
lifetime income through a benefit that mimics a more traditional 
pension. By offering a lifetime income solution, like an annuity, 
employees will be given a choice to invest a percentage of ongoing 
contributions in an in-plan investment option that will build up a 
stream of guaranteed income for life that is not subject to the same 
market volatility of a typical equity or bond investment option in a 
401(k) plan. These in-plan guaranteed income options typically provide 
downside income protection through insurance guarantees, upside income 
potential through participation in financial markets, and guaranteed 
income for life. \19\
---------------------------------------------------------------------------
    \19\  ``IRI Fact Book 2023'', Chapter 12, Page 123.

    Employers offering plan participants a chance to choose a lifetime 
income distribution option (rather than just providing for a lump-sum 
distribution of retirement savings) will help workers who may have 
difficulties allocating their savings across their retirement years in 
a way that is similar to how a participant in a defined benefit plan 
receives distributions during their retirement years. This is 
especially true for retirees who live longer than anticipated. Recent 
IRI research showed that workers have a high level of interest in 
having protected lifetime income solutions, such as annuities, included 
in workplace defined contribution retirement plans. The survey revealed 
that seven in 10 workers of the youngest age cohort (age 40-45) said 
they are very or somewhat likely to allocate a portion of their plan to 
annuities, 87 percent believe it is important that the income from 
savings is protected for life, and 26 percent indicated that lifetime 
income is the most important retirement investment trait. \20\
---------------------------------------------------------------------------
    \20\  ``Retirement Readiness Among Older Workers 2021'', Insured 
Retirement Institute, September 2021.

    It is clear from the research conducted by IRI and others that an 
overwhelming majority of employees want to have retirement plan 
products that offer protected income for life among their options. 
Additionally, the research demonstrates that the insured retirement 
industry is ready to provide in-plan lifetime income solutions via 
products that are already readily available. In other words, the demand 
is strong, and the industry is poised to meet that demand. \21\
---------------------------------------------------------------------------
    \21\  ``BlackRock Is Adding Annuities to 401(k)'s'', Wall Street 
Journal, October 6, 2021.
---------------------------------------------------------------------------
Proposed Measures to Bolster Retirement Security for More of America's 
                          Workers and Retirees
    While much was accomplished through the SECURE Act and the SECURE 
2.0 Act, more can be done to further bolster retirement security. IRI 
respectfully submits for your consideration the public policy proposals 
outlined below, which if enacted into law will expand opportunities for 
savings, facilitate the greater use of protected, guaranteed lifetime 
income solutions, and maintain and augment the current tax treatment of 
retirement savings to encourage savings.

    IRI also submits for your consideration a recommendation that the 
Committee urges the withdrawal of the Department of Labor's (DOL) 2023 
Retirement Security Rule package as it runs counter to Congress's 
intent and the measures included in the SECURE Act and the SECURE 2.0 
Act to strengthen and enhance retirement security for America's workers 
and retirees.
 Public Policy Proposal #1: Expand Opportunities to Save for Retirement
        Require Employers to Offer Retirement Plans to Employees
    To provide more workers with opportunities to access a workplace 
retirement plan and increase their retirement savings, Congress should 
enact legislation such as the Automatic IRA Act of 2024 (H.R. 7293-
118th Congress), which would generally require all but the smallest of 
employers to maintain an automatic retirement savings plan, into which 
employees would be automatically enrolled with the ability to opt-out. 
A recent study of the impact of such a new law on workers' retirement 
security found that over the next 10 years, $7 trillion in additional 
retirement savings would be generated, and 62 million new retirement 
savers would be created. \22\ The legislation will also help address 
the anxiety felt by many of America's workers and retirees about 
outliving their retirement savings by requiring that participants with 
account balances of $200,000 or more be given the choice to receive up 
to 50 percent of their vested balance in the form of protected, 
guaranteed lifetime income products.
---------------------------------------------------------------------------
    \22\  Letter of Support Retirement Subtitle ``Build Back Better 
Act, Page 2, Footnote #s 3-5, ARA, September 2021.

---------------------------------------------------------------------------
     Automatically Re-Enroll Employees Three Years After Opting Out

    The SECURE 2.0 Act of 2022 mandated that all new 401(k) and 403(b) 
plans automatically enroll participants into the respective plans while 
preserving participants' choice to opt out of coverage. This change 
will significantly expand participation in workplace retirement savings 
plans as studies have shown participation rates increase to more than 
90 percent under these circumstances. \23\ An increase in the use of 
automatic enrollment features has increased retirement plan 
participation particularly among Black, Latino, and lower-wage 
employees. \24\
---------------------------------------------------------------------------
    \23\  ``How Americans Save,'' Vanguard, 2023.
    \24\  ``Bringing greater financial equity to the workplace to 
support everyone's opportunity for a better financial future,'' Voya, 
April 2023.

    To further expand the use of automatic enrollment in employer-
sponsored defined contribution plans, Congress should enact legislation 
such as the Auto Re-Enroll Act of 2023 (S. 2517/H.R. 4924--118th 
Congress). The bill would amend ERISA and the Internal Revenue Code to 
allow plan sponsors to automatically re-enroll non-participants at 
least every 3 years. This option will prompt workers who have decided 
to opt out to periodically reevaluate whether to participate in the 
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plan as their careers progress and financial situations change.

    Further, Congress should enact legislation such as S. 2512-118th 
Congress to provide a $500 credit for up to 3 years to any small 
employers (100 or fewer employees) that adopts an automatic re-
enrollment feature in a retirement plan that enrolls employees into 
elective deferral contributions. This new tax credit would not only 
encourage employers to offer this feature in their workplace plans, but 
it would also benefit their workers by providing them an opportunity 
every 3 years to reevaluate their financial decisions.
Decrease the Age for Participation in Workplace Retirement Plans to 18 
                              Years of Age
    Congress should enact legislation such as the Helping Young 
Americans Save for Retirement Act (S. 3305-118th Congress). The bill 
would enable more young workers to access employer-sponsored retirement 
savings plans by reducing the age of participation in an ERISA-covered 
defined contribution plan to 18. Lowering the participation age to 18 
will expand opportunities for younger workers to save for retirement by 
providing them with an additional 3 years to begin saving and take 
advantage of the growth offered by compounding interest.
    Public Policy Proposal #2: Facilitate Greater Use of Protected, 
                  Guaranteed Lifetime Income Solutions
   Expand the Use of Lifetime Income Products as Default Investment 
                                Options

    Qualified default investment alternatives (QDIAs), created by the 
Pension Protection Act of 2006, \25\ have proven to be an essential 
step forward in enhancing retirement security for America's workers. 
Unfortunately, DOL regulations \26\ inhibit the use of certain 
investment options that do not meet specific liquidity requirements. 
The regulations essentially mandate that any funds in a QDIA must be 
available for the participant to transfer or withdraw ``not less 
frequently than once within any 3-month period.'' However, the 
liquidity requirement in the current rules effectively prohibits the 
use of protected, guaranteed lifetime income solutions that have 
delayed liquidity features despite the fact that these features allow 
them to offer higher returns.
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    \25\  Public Law 109-280.
    \26\  Section 404(c)(5) of the Employee Retirement Income Security 
Act of 1974 (29 8 U.S.C. 1104(c)(5)).

    Accordingly, Congress should enact legislation such as the Lifetime 
Income for Employees Act (H.R. 3942-118th Congress). The bill would 
allow plan sponsors to utilize annuities that provide a guaranteed 
return on investment and have a delayed liquidity feature as a default 
investment vehicle for a portion of contributions made by a retirement 
saver who has not made investment selections.
    Encourage the Offering of Protected, Guaranteed Lifetime Income 
                Products as Default Distribution Options
    To address workers' and retirees' anxiety and insecurity about 
outliving their retirement savings, Congress should enact legislation 
providing that employers who offer protected, guaranteed lifetime 
income solutions as a default distribution option for participants in 
their defined contribution plans will have satisfied their fiduciary 
duties under ERISA so long as participants are notified of the default 
annuitization option and have the right to opt-out at the time of 
distribution. Encouraging employers to offer protected, guaranteed 
lifetime income distribution options as a default in defined 
contribution plans will help further protect individuals from longevity 
risk and enhance and strengthen their retirement security.

    Additionally, Congress should enact legislation that would 
establish qualified payout options (Q-PON) that require employers who 
have at least 10 employees and have provided a plan for at least 3 
years to offer a combination of income and payout solutions that 
participants can select from at retirement. Some options that could be 
made available as a Q-PON include protected, guaranteed lifetime income 
solutions, systemic withdrawal options, managed payout options, and 
lump sum withdrawals. Q-PONs would apply to participants or 
beneficiaries of 401(k), profit-sharing 401(a), 403(b), or ``Starter'' 
401(k) plans.
      Authorize the Use of Indexed and Variable Annuities in QLACs
    Qualifying longevity annuity contracts (QLACs) are a valuable tool 
for retirement income planning as they address the risk many retirement 
savers and retirees face of outliving their accumulated retirement 
savings. The SECURE 2.0 Act of 2022 directed the Treasury Department to 
make changes to the regulations governing QLACs to allow retirement 
savers to convert more of their savings into protected, guaranteed 
lifetime income that will help meet their longevity protection needs. 
Additionally, the SECURE 2.0 Act established a 90-day ``free look'' 
period to give investors time to ensure that they have selected a 
product that fits their needs while also clarifying the applicable 
joint and survivor benefits in the event of a divorce.

    While these changes will allow workers and retirees to keep more of 
their savings in tax-deferred accounts longer and access protected, 
guaranteed monthly income throughout their lifetime, Congress should 
enact legislation such as Section 201(5) of the Retirement Security and 
Savings Act of 2021 (S. 1770-117th Congress) that would make a diverse 
slate of indexed and variable annuity contracts with guaranteed 
benefits eligible to be treated as QLACs. Providing retirement savers 
with access to a broader array of products that can meet their 
financial needs and circumstances will further address their anxiety 
about outliving their retirement savings.
   Public Policy Proposal #3: Maintain and Augment Tax Treatment of 
                           Retirement Savings
         Preserve Tax-Deferred Treatment for Retirement Savings
    Tax deferral for retirement savings plays a vital role in spurring 
America's economic growth and serves as a strong incentive for workers 
to accumulate retirement savings. Research conducted by IRI shows 
workers will save less if tax deferral is reduced or eliminated. \27\ 
Congress should continue to promote retirement savings by maintaining 
the tax deferral as a necessary tool that helps America's workers plan 
for and achieve a secure and dignified retirement.

    \27\  ``Boomer Expectations for Retirement 2018'', Insured 
Retirement Institute, April 2018.
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Protect the Current Structure and Variety of Workplace Retirement Plans
    Several types of employment-based defined contribution retirement 
plans are designed to meet employers' and workers' needs in various 
employment sectors, including the private, governmental, church, 
educational, and non-profit sectors. The most prominent types are 
401(k), 403(b), and 457(b) plans. Proposals to consolidate these 
different structures into a single type of plan fail to recognize the 
essential distinctions between these different employment sectors. 
Congress should maintain and protect the diverse array of retirement 
plan structures rather than attempting to devise a single framework 
that would eliminate the unique features of the different plan types 
created to suit the workers who use them.
     Provide Favorable Tax Treatment for Guaranteed Lifetime Income
    Distributions and withdrawals from protected, guaranteed lifetime 
income products--like annuities--are currently taxed as ordinary 
income. However, these products provide significant social and economic 
benefits. By helping older Americans avoid outliving their assets, 
lifetime income from annuities can reduce pressure on Social Security 
and other social safety nets. Congress should create tax incentives--
such as a lower tax rate, an exclusion of a portion of lifetime annuity 
income from taxation, or an increased catch-up contribution--to 
encourage greater use of guaranteed lifetime income products.
  Public Policy Proposal #4: Urge Withdrawal of DOL's 2023 Fiduciary 
                                Proposal
    The common-sense legislative solutions described above would 
enhance access to savings and services to build short-and long-term 
financial security for more of America's workers and retirees. However, 
a recent rule proposal from DOL threatens to undermine the meaningful 
steps that Congress has taken to help workers and retirees prepare for 
and achieve a secure and dignified retirement.

    On October 31, 2023, the President publicly announced a proposed 
DOL rule titled ``Retirement Security Rule: Definition of an Investment 
Advice Fiduciary.'' \28\ The ``one-size-fits-all'' approach taken by 
the DOL in this proposal will expand the definition of who is an ERISA 
fiduciary to virtually all financial professionals providing retirement 
investment guidance. As a result, millions of our Nation's workers and 
retirees--particularly lower-and middle-income retirement savers--will 
be harmed. The proposed rule will make it harder, more expensive, and 
in many cases impossible for individuals to access professional 
financial guidance and lifetime income solutions.
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    \28\  ``Proposed Retirement Security Rule: Definition of an 
Investment Advice Fiduciary; Proposed Amendment to Prohibited 
Transaction Exemption 2020-02; Proposed Amendment to Prohibited 
Transaction Exemption 84-24; and Proposed Amendment to Prohibited 
Transaction Exemptions 75-1, 77-4, 80-83, 83-1, and 86-128, United 
States Department of Labor, Employee Benefits Security Administration, 
November 3, 2023.

    The 2023 rule proposal is functionally equivalent to a rule adopted 
by the DOL in 2016. \29\ When the 2016 rule went into effect, 10.2 
million retirement savers lost access to essential financial advice 
through their brokerage accounts. \30\ The Fifth Circuit Court of 
Appeals vacated the 2016 rule, which helped to prevent more harm to 
retirement savers at that time. \31\
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    \29\  ``Definition of the Term ``Fiduciary''; Conflict of Interest 
Rule-Retirement Investment Advice'', U.S. Department of Labor, Employee 
Benefits Security Administration, April 8, 2016.
    \30\  ``The DOL Fiduciary Rule: A study on how financial 
institutions have responded and the resulting impacts on retirement 
investors.'' Deloitte. August 2017.
    \31\  Chamber of Commerce of The United States of America; 
Financial Services Institute, Incorporated; Financial Services 
Roundtable; Greater Irving-Las Colinas Chamber of Commerce; Humble Area 
Chamber of Commerce, Doing Business as Lake Houston Chamber of 
Commerce; Insured Retirement Institute; Lubbock Chamber of Commerce; 
Securities Industry and Financial Markets Association; Texas 
Association of Business v. United States Department of Labor; R. 
Alexander Acosta, Secretary, U.S. Department of Labor, United States 
Court of Appeals for the Fifth Circuit, March 15, 2018.

    In 2021, Quantria Strategies conducted a study to determine the 
economic impact of the DOL's continued pursuit of a vastly overbroad 
re-definition of ``investment advice'' that would expand the reach of 
ERISA fiduciary status to nearly all financial professionals who work 
with retirement savers. Among the study's findings was the startling 
revelation that adoption of a proposal substantially similar to the 
2016 rule would result in a disproportionate reduction in the 
retirement savings of our Nation's Black and Hispanic populations--
resulting in a 20 percent increase in the racial wealth gap over a 10-
year period. \32\ The DOL has not addressed this evidence that the 
proposal will harm people of color, nor does it present any evidence to 
the contrary or, for that matter, any evidence that changes to the 
existing Federal and state regulatory framework governing the conduct 
of financial professionals are even necessary at this time.
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    \32\  ``Analysis of the Effects of the 2016 Department of Labor 
Fiduciary Regulation on Retirement Savings and Estimates of the Effects 
of Reinstatement.'' Quantria Strategies. November 2021.

    In recent years, the Securities and Exchange Commission (SEC) and 
state insurance regulators have established robust best interest 
standards that protect retirement savers without the unnecessary and 
problematic restraints inherent in ERISA fiduciary status. Nearly all 
firms and financial professionals are now held to a best interest 
standard by regulators with the expertise needed to craft rules that 
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make sense for the industries to which they apply.

    Specifically, the SEC adopted Regulation Best Interest, which 
requires firms and financial professionals to act in their clients' 
best interest when providing advice or recommendations regarding 
securities. \33\ The National Association of Insurance Commissioners 
(NAIC) adopted amendments to its model regulation on annuity sales 
practices to require that firms and financial professionals act in 
their clients' best interest when providing advice or recommendations 
regarding annuities. \34\ To date, 44 states have adopted the NAIC best 
interest model regulation, and the remaining states are expected to do 
so by the end of 2024. Moreover, the DOL established its own best 
interest standard in 2020 as a requirement under Prohibited Transaction 
Exemption 2020-02. \35\ Collectively, these rules establish a robust 
Federal and state framework that imposes tough but fair and workable 
responsibilities on the industry and provide Federal and state 
regulators with the tools they need to effectively protect retirement 
savers and appropriately address the conduct of bad actors.
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    \33\  U.S. Securities and Exchange Commission, Regulation Best 
Interest: The Broker-Dealer Standard of Conduct, adopted June 5, 2019.
    \34\  National Association of Insurance Commissioners, Suitability 
in Annuity Transaction Model Regulation, adopted February 2020.
    \35\  U.S. Department of Labor, Employee Benefits Security 
Administration, Prohibited Transaction Exemption 2020-02, Improving 
Investment Advice for Workers & Retirees, adopted February 16, 2021.

    In 2015, 93 Democratic Members of Congress, 54 of whom still serve 
in the House and three of whom now serve in the Senate, sent a letter 
expressing similar concerns to the DOL in response to the proposal that 
ultimately became the 2016 rule. \36\ Specifically, the letter urged 
the DOL to ensure that its rule ``does not limit consumer choice and 
access to advice, have a disproportionate impact on lower-and middle-
income communities, raise the costs of saving for retirement [ . . . ] 
or disadvantage lifetime income options.'' The concerns raised in the 
House Democrats' letter were not addressed in the final 2016 rule, nor 
are they addressed in the 2023 rule proposal. Leaving these concerns 
unaddressed is to the detriment of all individuals seeking to 
participate in the financial system and secure their financial futures.
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    \36\  Letter to U.S. Department of Labor Secretary Tom Perez from 
93 Democrat Members of the U.S. House of Representatives, September 24, 
2015.

    Adopting the 2023 proposal would represent a significant step 
backward in pursuing enhancements that make the private-sector 
retirement system more inclusive and effective. IRI has called for 
withdrawal of the proposal in testimony during the DOL's public hearing 
on December 12, 2023, \37\ written comments submitted to the DOL on 
January 2, 2024, \38\ and in testimony before the House Committee on 
Financial Services Subcommittee on Capital Markets on January 10, 2024 
\39\ and the House Committee on Education and the Workforce 
Subcommittee on Health, Employment, Labor and Pensions on February 15, 
2024. \40\
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    \37\  U.S. Department of Labor, Employee Benefits Security 
Administration, Retirement Security Rule: Definition of an Investment 
Advice Fiduciary and Related Exemptions Public Hearing, December 12, 
2023.
    \38\  Comment Letter Submitted By the Insured Retirement Institute 
to United States Department of Labor Employee Benefits Security 
Administration ``2023 Retirement Security Rule Package,'' January 2, 
2024.
    \39\  U.S. House Committee on Financial Services Subcommittee on 
Capital Markets Hearing, ``Examining the DOL Fiduciary Rule: 
Implications for Retirement Savings and Access'', January 10, 2024.

    \40\  U.S. House Committee on Education and the Workforce 
Subcommittee on Health, Employment, Labor, and Pensions Hearing, 
``Protecting American Savers and Retirees from DOL's Regulatory 
Overreach'', February 15, 2024.
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                          Concluding Thoughts
    IRI thanks you for your leadership in pursuing solutions to help 
more of America's workers and retirees achieve a financially secure 
retirement. IRI also welcomes the opportunity to work with your offices 
to advance common-sense solutions that will expand opportunities for 
workers to save through workplace retirement savings plans and 
facilitate the use of lifetime income solutions to provide income to 
sustain retirees throughout their retirement years.

    If you have any questions, please do not hesitate to contact Wayne 
Chopus, President and CEO, Paul Richman, Chief Government and Political 
Affairs Officer, or John Jennings, Director Government and Political 
Affairs.

            Sincerely,
                                              Wayne Chopus,
                                                 President and CEO,
                                              Paul Richman,
                      Chief Government & Political Affairs Officer.
                                 ______
                                 
                    American Retirement Association
    Thank you, Chair Sanders, Ranking Member Cassidy, and Members of 
the Committee for the opportunity to submit a statement for the record 
on behalf of the American Retirement Association (ARA) in connection 
with the Hearing entitled ``Taking a Serious Look at the Retirement 
Crisis in America: What Can We Do to Expand Defined Benefit Pension 
Plans for Workers?''

    The ARA is the coordinating entity for its five underlying 
affiliate organizations representing the full spectrum of America's 
private retirement system--the American Society of Enrolled Actuaries 
(ASEA), the American Society of Pension Professionals and Actuaries 
(ASPPA), the National Association of Plan Advisors (NAPA), the National 
Tax-Deferred Savings Association (NTSA), and the Plan Sponsor Council 
of America (PSCA). Combined the ARA represents over 35,000 retirement 
plan professionals nationwide. The ARA's members and their affiliated 
organizations support 95 percent of all the defined contribution plans, 
such as 401(k) plans, in the United States. The ARA and its underlying 
affiliate organizations are diverse in the roles they play, but united 
in their dedication to the success of America's private retirement 
system.

    The ARA's mission is to help working Americans strengthen their 
retirement security by facilitating well-designed workplace-based 
retirement savings plans. We do this by educating and informing 
retirement benefit professionals, and by advocating for policies that 
give every working American the opportunity to secure a comfortable 
retirement.

    Workplace retirement savings plans have proven that they work for 
those that have access to them. These plans provide long term economic 
growth and build financial security for the middle class. This includes 
both defined contributions plans, like 401(k) plans, as well as defined 
benefit plans, such as a standard pension plan. We appreciate you 
holding this hearing and look forward to a productive conversation on 
policies that Congress could implement to expand access and improve the 
employer-based system, not on ways to eliminate it or create a Federal 
system.
         Defined Contribution Plans Work for Those With Access
    For most Americans, the key to a successful retirement is having 
access to a workplace-based retirement savings plan. Recent data shows 
that nearly 60 percent of Americans--roughly 74.5 million--had access 
to a workplace-based retirement plan in 2020. At the end of the first 
quarter in 2021, defined contribution retirement plans (the most common 
being the 401(k) held $9.9 trillion in assets. \1\ Household retirement 
savings--including assets accumulated through those retirement plans 
plus all other types of retirement plans--represents 59 percent of the 
non-bank financial capital provided to the equity and bond markets. \2\
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    \1\  Investment Company Institute, Quarterly Retirement Market 
Data, June 16, 2021, available at https://www.ici.org/statistical-
report/ret-21-q1.
    \2\  Oxford Economics, Another Penny Saved: The Economic Benefits 
of Higher U.S. Household Savings, June 2014, available at: http://
www.oxfordeconomics.com/anotherpennysaved.

    The middle class is the primary beneficiary of these plans. Nearly 
two-thirds (64 percent) of active participants in 401(k) plans have an 
adjusted gross income of less than $100,000 per year. \3\ One-third (33 
percent) of participants have an income less than $50,000. \4\ The 
critical factor that determines whether these moderate-income workers 
save for their retirement is whether they have access to a retirement 
savings plan at work. Data shows that more than 70 percent of workers 
earning between $30,000 and $50,000 will save in a plan if they have 
access to a workplace-based plan, but fewer than 7 percent of these 
workers will save on their own through an IRA. \5\ Put differently, 
workers are 12 times more likely to save for their retirement if they 
have access to some type of payroll deduction retirement savings 
program offered by their employer.
---------------------------------------------------------------------------
    \3\  Judy Xanthopoulos, Ph.D. of Quantria Strategies, analysis of 
Internal Revenue Service, Statistics of Income, Individual Income Tax, 
and IRA Studies, 2017 Tax Year.
    \4\  Ibid.
    \5\  IRS tabulations and Vanguard, How America Saves, 2018.

    Congress's continued support of expanding retirement plan coverage 
and simplifying retirement plan rules will increase retirement savings 
and build even further on the success of the workplace-based retirement 
plan system.
             SECURE 2.0: Working to Close the Coverage Gap
    Congress has taken strong bi-partisan action to close the 
retirement plan coverage gap by passing SECURE 2.0 a little over a year 
ago. This landmark piece of retirement legislation contains a variety 
of provisions specifically designed to make it easier and less 
expensive for small employers to adopt workplace-based retirement 
plans, in addition to helping workers build their retirement savings.

    Helping small employers offer retirement plans for their workers is 
the solution to closing the retirement coverage gap. According to the 
U.S. Small Business Administration, small businesses employ roughly 62 
million Americans, totaling roughly 46 percent of all private sector 
employees. \6\ Recent data shows that only 40 to 50 percent of small 
employers (i.e., employers with fewer than 50 employees) offered 
retirement plans, compared to 70-79 percent of employers with 50 to 99 
employees and 78 to 91 percent of employers with over 100 employees. 
\7\
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    \6\  U.S. Small Business Administration SBA, Office of Advocacy, 
``Frequently Asked Questions About Small Business.'' United States, 
2018. Available at: http://tinyurl.com/3vyjusb5.
    \7\  See Bureau Labor Statistics, ``Employee Benefits in the United 
States, March 2023,'' Historical Tables.

    Many small employers would like to offer retirement benefits to 
their workers, but they often face significant time and financial 
constraints that make it impossible. Fortunately, SECURE 2.0 includes a 
variety of provisions designed to reduce the cost and administrative 
burdens associated with administering a retirement plan, in addition to 
---------------------------------------------------------------------------
streamlining the enrollment process for employees.

    First, SECURE 2.0 created the Starter 401(k) plan, which is a new 
wage deferral-only simple safe harbor 401(k) plan. This plan allows 
employees to save up to $6,000 per year (with a $1,000 catch-up 
contribution) in a tax-preferred retirement account but is far less 
expensive and does not have the same level of administrative complexity 
as a traditional 401(k) plan. This is largely because the Starter 
401(k) plan does not require employer contributions and avoids 
expensive and complicated testing requirements. As a result, small 
employers with significant time and financial constraints can offer 
these plans and help their workers start saving for retirement. This 
will help close the retirement coverage gap because it will bring 
access to an employer-sponsored retirement plan to millions of workers, 
many of whom are moderate-income individuals and racial minorities.

    Second, SECURE 2.0 included a dramatic expansion to startup tax 
credits available for employers that want to adopt a retirement plan 
for their employees. For taxable years after 2022, this expanded credit 
covers 100 percent of the employer's out-of-pocket plan costs, 
increased from the SECURE Act's 50 percent limit. Qualified employers 
with 51 to 100 employees may receive a credit covering 50 percent of 
out-of-pocket plan costs. Just like Starter 401(k) plans, these tax 
credits will help close the coverage gap by removing the financial 
barriers that make it difficult for many small businesses to offer 
retirement benefits.

    Third, SECURE 2.0 now requires plans established after December 29, 
2022, to add an automatic enrollment feature to the plan no later than 
the 2025 plan year. While this is an administrative complexity, SECURE 
2.0 includes a tax credit that will provide $500 for small employers 
for implementing this feature. A recent report by researchers at 
Vanguard found that among new hires, participation rates triple to 91 
percent under automatic enrollment, compared with 28 percent under 
voluntary enrollment. \8\ This data shows that automatic enrollment can 
have an incredibly powerful impact on participant saving which can be 
leveraged to help close the retirement plan coverage gap.
---------------------------------------------------------------------------
    \8\  Jeffrey W. Clark and Jean A. Young, Automatic Enrollment: The 
power of the default, February 2021, available at: https://
institutional.vanguard.com/iam/pdf/ISGAE-022020.pdf.

    Finally, SECURE 2.0 also included a provision establishing the 
Saver's Match, which will replace the Saver's Credit in 2027. Rather 
than a credit against taxes owed, the Saver's Match will be deposited 
directly into the worker's retirement account. Importantly, more savers 
will be eligible for this matching contribution than the Saver's Credit 
thanks to expanded income limits. Under this new provision, eligible 
savers would get a 50 percent matching contribution on up to $2,000 in 
retirement savings annually. These expanded income thresholds mean that 
over 108 million Americans are now eligible for the Saver's Match, 
which includes millions of gig workers and certain government 
employees, such as public-school teachers, many of whom do not 
---------------------------------------------------------------------------
participate in plans with matching contributions.

    Overall, SECURE 2.0 along with provisions in SECURE 1.0, will 
greatly reduce the retirement plan coverage gap. A number of these 
provisions were only effective a few months ago and a few provisions 
have yet to take effect. We applaud the bipartisan work behind SECURE 
1.0 and SECURE 2.0 and look forward to working with Congress to ensure 
the provisions are successful in increasing retirement security in 
America.
         State Plans Are Also Helping to Close the Coverage Gap
    In recent years, state governments have taken steps to close the 
retirement plan coverage gap in their jurisdictions by enacting state 
auto-IRA programs. So far, 15 states have adopted auto-IRA programs, 
and several others are actively considering similar proposals.

    These state auto-IRA programs generally require businesses over a 
certain size to provide their workers with access to some type of 
retirement plan. If employers do not already offer a workplace-based 
retirement plan, or do not want to adopt one available to them in the 
private marketplace, then they must enroll their workers in a state-run 
auto-IRA program. Enrolling workers into these auto-IRA programs is 
very inexpensive and is not labor-intensive, both of which are 
important to the success of these programs.

    Both workers and small businesses benefit from these auto-IRA 
programs. Nearly all small businesses that do not have a retirement 
plan want to offer one for their employees. After conducting a survey 
of small business owners, Pew Charitable Trusts found that 86 percent 
of small-to medium-sized employers without plans support the concept of 
a payroll deduction retirement plan with automatic enrollment. Among 
small employers without plans, 51 percent said they would start their 
own plan rather than enroll workers in the state-facilitated program. 
\9\

    \9\  Pew Charitable Trusts, Small Business Views on Retirement 
Savings Plans, January 2017, available at: https://www.pewtrusts.org/
en/research-and-analysis/issue-briefs/2017/01/small-business-views-on-
retirement-savings-plans.

    Accordingly, ARA supports these state auto-IRA plans specifically 
because they strike the appropriate balance between closing the 
coverage gap and not overwhelming small employers. In conjunction with 
SECURE 2.0, the ARA believes that these state auto-IRA programs will 
help close the coverage gap by expanding employer-based retirement 
coverage to millions of working Americans across the country.
              Auto-IRA will further Close the Coverage Gap
    The ARA also supports the creation of a Federal auto-IRA program 
which will build upon the successful state-run programs. In February, 
Ranking Member Neal (D-MA) of the House Ways and Means Committee 
introduced H.R. 7293, the Automatic IRA Act of 2024. Similar to the 
state auto-IRA programs, this bill would require employers with more 
than 10 employees to automatically enroll their employees in a auto-IRA 
plan or qualified retirement plan, such as a 401(k).

    This bill includes a tax credit of $500 per year for 3 years for 
employers of up to 100 employees that offer an auto-IRA product, 
including those facilitated through a state program. Additionally, 
SECURE 2.0's startup credit can be used to cover the costs of starting 
up their own qualified retirement plan. This means that most small 
businesses will not have to spend any money to comply with this 
legislation and provide their workers with access to an employer-based 
retirement plan.

    Additionally, the Auto-IRA Act will buttress state efforts to close 
the coverage gap, not preempt them. As drafted, businesses that 
participate in certain state-based auto-IRA programs are also exempt 
from compliance. This means that states with mandatory auto-IRA 
programs can continue to run their programs, in addition to ensuring 
that workers in states without Auto-IRA programs have access to an 
employer-based retirement plan.

    Accordingly, the ARA supports the Auto-IRA Act because it strikes 
the right balance to close the retirement plan coverage gap while 
imposing the minimum possible burden on small-to medium-sized 
employers.
  The Retirement Savings for Americans Act Will Decimate the Employer 
                      Sponsored Retirement System
    The ARA vigorously opposes the Retirement Savings for Americans Act 
(S. 3102/H.R. 6065) which would create a new Federal Government-managed 
fund, called the American Worker Retirement Fund (``Fund''), for 
qualifying workers that do not have access to a workplace-based 
retirement plan. While the proposal is a well-intentioned attempt to 
address the retirement plan coverage gap, it is impractical, unfair, 
prohibitively expensive, and ripe for political abuse.

    The most concerning feature of this proposal is the inclusion of 
the taxpayer-funded Government Match provision, which is only 
accessible to individuals who do not currently have access to an 
employer-sponsored retirement plan. The inclusion of a Government Match 
creates a perverse incentive for employers, particularly small 
employers with razor-thin margins, to shutter their existing retirement 
plans so that their workers are eligible to be enrolled in the Fund. 
This would harm certain retirement savers because many of these plans 
that would be eliminated have more generous employer matching rates 
than the Government Match.

    This proposal would also have a devastating impact on financial 
literacy and retirement planning advice, specifically for workers who 
lose access to their workplace-based retirement plan because of this 
proposal. Plan advisors, recordkeepers, consultants, and third-party 
administrators who work with plan sponsors and participants alike to 
ensure that both the employer and employee have the best information 
available to make informed financial decisions. These service providers 
engaged with employer-sponsored retirement plans routinely meet with 
participants to educate them and help them develop their retirement 
strategy. Because everybody's retirement objectives are different, 
having this level of access to a retirement plan professional is a 
tremendous advantage for workers with access to them. The same quality 
of advice, communication materials and other resources simply will not 
exist in the government-run retirement fund.

    Unfortunately, some academics believe the employer should not 
provide a retirement plan to employees. Teresa Ghilarducci, who is 
testifying at this hearing, has specifically stated that the 
relationship should be between the government and the worker when it 
comes to saving for retirement. In a recent Yahoo Finance article dated 
January 30, 2024, Ms. Ghilarducci is quoted in saying ``There's a bill 
in Congress--from Senators Hickenlooper, Tillis, Congresswoman Sewell, 
and Congressman Smucker--that calls for a government match. It gets the 
individual employer out of it and focuses on the worker and the 
government.'' We respectfully disagree with Ms. Ghilarducci's opinion 
and believe that the employer plays a pivotal role in ensuring 
Americans save for a secure retirement.
                               Conclusion
    The employer-sponsored retirement system has helped millions of 
workers secure a comfortable retirement. The system works because it 
provides employers with options on the best retirement plan for their 
employee population, whether it is a defined contribution plan or a 
defined benefit plan. We look forward to working with the Members of 
this Committee on ways to continue to expand the workplace retirement 
plan system to ensure all Americans have access to a retirement plan at 
work.
                                 ______
                                 
                 American Council of Life Insurers,
                                             Washington DC,
                                                 February 28, 2024.
Hon. Bernie Sanders, Chairman,
Hon. Bill Cassidy, Ranking Member,
U.S. Senate Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC.

    Dear Chairman Sanders and Ranking Member Cassidy:

    On behalf of the American Council of Life Insurers, thank you for 
holding the Senate Committee on Health, Education, Labor, and Pensions 
hearing entitled: Taking a Serious Look at the Retirement Crisis in 
America: What Can We Do to Expand Defined Benefit Pension Plans for 
Workers? We appreciate your continued support and leadership on keeping 
the focus on retirement security.

    ACLI advocates on behalf of 275 member companies dedicated to 
providing products and services that promote consumers' financial and 
retirement security. Financial security is our core business, and 
retirement security for all Americans is a critical mission. We protect 
90 million American families with financial products that reduce risk 
and increase financial security, including life insurance, annuities, 
retirement plans, long-term care insurance, disability income 
insurance, dental and vision benefits, and other supplemental benefits. 
As society and work change, we are committed to providing financial 
security solutions that protect all Americans, regardless of where and 
how they work, their stage in life, or the economic status of their 
household. Americans are living longer, and financial security in 
retirement is a big challenge facing our Country. Life insurers help 
people achieve their financial and retirement security goals, through 
products that are available, accessible, and affordable to all.

    ACLI members represent 93 percent of industry assets in the United 
States. Through a well-crafted partnership of the private solutions 
ACLI members provide, and public solutions that are necessary, we 
believe the benefits of financial security can be made available to all 
Americans. Accordingly, ACLI member companies offer insurance contracts 
and investment products and services to employment-based retirement 
plans (including defined benefit pension plans, 401(k), SIMPLE, SEP, 
403(b), and 457(b) plans) and to individuals (through IRAs and 
annuities). Three out of five small employers--those with 99 or fewer 
employees--rely on life insurers' products and services in their 
employment-based retirement plans. ACLI members are also sponsors of 
retirement plans for their own employees. And there are more than 15 
million annuity-based IRAs held by individuals. As product and service 
providers, as well as plan sponsors, life insurers understand that by 
adequately and consistently saving for retirement, effectively managing 
assets throughout retirement and utilizing appropriate financial 
protection products, Americans can supplement Social Security and 
ensure retirement and financial security for life.

    Americans face significant financial security challenges, and the 
life insurance industry plays a critical role in helping them plan, 
save and secure a guaranteed income in retirement. In 2022, American 
families received $422.9 billion in payments from annuities, $138.2 
billion in payments from life insurance, $21.6 billion in disability 
income insurance benefits and $13.3 billion in long-term care insurance 
benefits. \1\ ACLI No other financial institutions provide Americans 
with the level of financial guarantees offered by life insurance 
companies.
---------------------------------------------------------------------------
    \1\  ACLI analysis of 2022 NAIC Annual Statement data.
---------------------------------------------------------------------------
  Guaranteed Lifetime Income Products are Critical Retirement Savings 
                 Tools in Today's Retirement Landscape
    Planning for retirement continues to remain a challenge for many 
Americans. Fewer companies offer traditional lifetime pension benefits 
to new employees. More Americans rely on 401(k) plans and similar 
defined contribution retirement savings plans at work. Americans are 
living longer--sometimes 30 years or more after they retire. For many, 
Social Security's protected income is not enough for a secure 
retirement. These savers will need additional guaranteed lifetime 
income.

    That is why retirement savers are increasingly turning to annuities 
as part of their plan for long-term financial security. An annuity is a 
contract between a consumer and a life insurance company. The consumer 
pays the insurer, which then pays the consumer per the terms specified 
in the contract. Annuities allow retirement savers to replicate a 
pension plan's guaranteed lifetime income stream. And unlike 
traditional defined benefit plans, in which the employer assumes the 
financial risk, with an annuity, the insurance company assumes the 
financial risk.

    There are several types of annuities, with different features that 
can best fit the needs of different financial objectives. An immediate 
annuity provides immediate access to income in exchange for a lump sum. 
If retirement is still years away, a deferred annuity will help grow 
your savings until you are ready to begin receiving payments. Annuities 
are the only individual financial product that offer a guarantee of 
lifetime income and the peace of mind that comes from knowing that one 
will never outlive her retirement savings.

    Stringent state and Federal consumer protections regulate the sale 
of annuities. Since 2020, 42 states, covering nearly 80 percent of U.S. 
consumers, have adopted the new enhanced consumer protections in the 
National Association of Insurance Commissioners (NAIC) updated model 
regulation on annuity transactions. ACLI expects all states to adopt 
this increased standard by 2025. The NAIC updated model regulation 
aligns with the U.S. Securities and Exchange Commission's Regulation 
Best Interest. These state and Federal efforts protect moderate-income 
retirement savers, unlike the Department of Labor's fiduciary-only 
proposal that would eliminate the option for retirement savers without 
the financial means or minimum account balances to hire a fiduciary to 
work with financial professionals compensated on a commission basis.

    Guarding against running out of money during retirement is 
paramount. This year marks the beginning of ``Peak 65,'' the largest 
surge of retirement age Americans turning 65 in American history. A 
record 4.1 million Americans are turning 65 this year. Over 4 million 
Americans will turn 65 each year through 2027, with more than 11,200 
Americans retiring every day. A recent study conducted by Morning 
Consult for ACLI found that retirement savers are interested in taking 
steps to protect their savings through retirement. More than half (54 
percent) say the current economy has them considering independently 
purchasing a guaranteed lifetime income product that pays out like a 
pension and nearly three quarters (73 percent) express interest in 
independently purchasing a guaranteed lifetime income product that pays 
out like a pension, including 68 percent who do not already have a 
pension. \2\
---------------------------------------------------------------------------
    \2\  Morning Consult conducted a nationwide, online survey of 1,003 
employed adults planning for retirement between the ages of 45 and 65 
on behalf of the American Council of Life Insurers (ACLI). The survey 
took place May 10 through May 15, 2023 and has a margin of error of 
plus or minus 3 percent found at: https://consumerprotection.life/wp-
content/uploads/2023/05/2305054-ACLI-Retirement-Planning-CT-FINAL-
3.pdf.

    With the reduction of defined benefit plans in the marketplace, 
it's important to consider that annuities are the only way savers can 
secure lifetime income in retirement through the private sector. 
Annuities provide a ``private pension'' like what beneficiaries would 
enjoy through their defined benefit pension plan. Policies should 
continue to evolve to promote savings and address longevity protection 
by increasing access to lifetime income options, removing barriers to 
annuities in qualified retirement plans, with the aim to create a more 
financially inclusive retirement landscape and one that provides 
opportunities for greater retirement security.
 Congress Should Expand on its Successful Track Record with Continued 
                Bipartisan Retirement Policy Legislation
    Fortunately, retirement security policy legislation has 
historically been a bipartisan endeavor. The most impactful reforms 
have come from across-the-isle collaboration aimed at increasing 
Americans' retirement savings.

    The passage of the Setting Every Community Up for Retirement 
Enhancement (SECURE) Act of 2019, and the SECURE 2.0 Act in 2022, were 
the most comprehensive retirement packages passed since the Pension 
Protection Act in 2006 and are proving instrumental in increasing 
access to retirement plans. Additionally, these new laws took numerous 
steps to not only improve access to lifetime income, but to ease 
burdensome regulations that overcomplicated the use of these products.

    For instance, boosting retirement security for employees at small 
firms and part-time workers was a big part of these efforts. We expect 
the benefits of the original SECURE Act and the SECURE 2.0 Act to be 
fully felt over several years but here is what we are seeing now:

          In 2019, prior to the enactment of the original 
        SECURE Act, 48 percent of those employed by a small private 
        sector business (less than 50 workers) had access to a defined 
        contribution plan.

          In 2023, 52 percent of those employed by a small 
        private sector business (less than 50 workers) had access to a 
        defined contribution plan.

          In 2019, prior to the enactment of the original 
        SECURE Act, 35 percent of all part-time workers had access to a 
        defined contribution plan.

          In 2023, 40 percent of all part-time workers had 
        access to a defined contribution plan. \3\
---------------------------------------------------------------------------
    \3\  Bureau of Labor Statistics, National Compensation Survey, 
accessed on January 25, 2024.

    Still, there is more work to be done. Both the House and Senate 
lawmakers are at work to build upon this progress, and we ask 
policymakers to continue to look at how public support can spur private 
action to help Americans save for and guarantee a more secure 
retirement. Policymakers should continue to encourage retirement 
savings and support guaranteed income options for retirement. Focusing 
on ways to help more people achieve a financially secure retirement--
increasing savings rates, access to workplace-based retirement plans 
and lifetime income security for all Americans, are all key to 
---------------------------------------------------------------------------
financial security.

    As Congress continues to look for opportunities to increase 
Americans' financial security, one critical element is the removal of 
barriers to guaranteed lifetime income products. Removing barriers to 
annuities, as well as modernizing existing law, provides savers with 
the option to ensure they have income for life. Public policy changes 
to increase access to and information about annuities through the 
workplace plans and beyond help to build a financial safety net that is 
critical in retirement.
          Pension Risk Transfer Protects Pension Beneficiaries
    Congress has long recognized an annuity issued by a life insurance 
company as the only permissible substitute for an employer's pension 
obligations. The Department of Labor's Interpretative Bulletin 95-1 
provides guidance to ERISA fiduciaries when selecting an annuity 
provider for the transfer of pension plan benefit obligations. The 
SECURE 2.0 Act directed the Secretary of Labor to review and, in 
consultation with the Advisory Council on Employee Welfare and Pension 
Benefit Plans, determine if amendments are warranted to Interpretative 
Bulletin 95-1. Employers who do not want to continue assuming the risk 
of maintaining a defined benefit plan have the ability to enter into a 
pension risk transfer arrangement with an insurance company--thereby 
transferring the risk to the insurance company while ensuring that plan 
participants and retirees receive the exact retirement benefit they 
have earned.

    Robust and extensive state regulation and oversight to ensure that 
insurers can fulfill their long-term promises to customers. State 
insurance regulators use a variety of tools and confidential 
disclosures to supervise solvency issues and assess risks for both the 
insurer and from the broader holding company, when an insurer is part 
of a group. \4\ This system has proved highly effective: since the 2008 
financial crisis, no insurance company has failed to make a life 
annuity payment to a plan participant following a pension risk 
transfer. \5\ That track record is a function of the robust reserving 
and capital standards applied to insurers. Any additional Department of 
Labor guidance should recognize this strong solvency regime and not 
hinder employers' efforts to purchase annuities to protect private 
pensions for their plan participants and beneficiaries.
---------------------------------------------------------------------------
    \4\  NAIC, State Insurance Regulation, (2021) available at: https:/
/content.naic.org/sites/default/files/inline-files/topics-white-paper-
hist-ins-reg.pdf.
    \5\  National Organization of Life Health Guaranty Associations 
(``NOLGHA''), Consumer Protection Comparison, The Federal Pension 
System and the State Insurance System (2016), available at https://
www.nolhga.com/resource/code/file.cfm'ID=2559.
---------------------------------------------------------------------------
                               Conclusion
    The dedication of the Senate HELP Committee to advancing meaningful 
retirement security policy has had real-world, positive implications 
for savers. The current success of the retirement system can be 
improved further with even greater access and savings for all 
Americans. Public policy should continue to evolve to ensure low-income 
earners, part-time workers, and others can save at work. America's life 
insurers continue to support policies that enable all Americans to have 
access to information about more savings options, and the benefits of 
guaranteed lifetime income through annuities.

    Thank you for your leadership on bipartisan policy solutions to 
increase retirement savings in America. We look forward to continued 
collaboration on retirement security policy efforts.

            Sincerely,
                                            Susan K. Neely,
                                                   President & CEO.
                                 ______
                                 
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 
                        QUESTIONS FOR THE RECORD

  Response by Teresa Ghilarducci, and Eric Stevenson to Questions of 
                          Senator Hickenlooper
                          senator hickenlooper
    Question 1. for Dr. Teresa Ghilarducci: Professor, New School for 
Social Research.

          In my home state of Colorado, nearly 1 million 
        workers do not have access to employer-sponsored retirement 
        savings plans.

          More concerning, according to the Federal Reserve the 
        bottom 50 percent of the wealth distribution has a median 
        retirement savings of $0!

          We need more innovative retirement savings options so 
        low income Americans can build wealth. What do retirement 
        savings plans need to look like to make them work for low 
        income workers?

                Y  Follow-up: Would Senator Tillis and I's Retirement 
                Savings for Americans Act help low income individuals, 
                particularly those from underserved communities, who 
                face barriers to saving for retirement?

    Answer 1. The Retirement Savings for Americans Act (RSAA) would 
unequivocally help low-and moderate-income workers save for retirement 
and retire with security. RSAA, modeled after the proven and successful 
Thrift Savings Plan available to all Federal workers, includes many of 
these key principles and features of a sound retirement system, such as 
automatic enrollment, a generous matching contribution, portability, 
low fees, easy to understand investment options, and good returns. 
After 40 years of matched contributions and a reasonable rate of 
return, someone earning $30,000 annually without leaking could retire 
with about $600,000 in savings paid out in an annuity (This estimate 
assumes that someone contributes 5 percent of their annual income and 
receives a 5-percent match, that the account has a 7-percent annual 
return, and that there are no early withdrawals.)

    Importantly, it would do all of this without crowding out what is 
working well in the private system.

    This is a policy aimed at tackling the last remaining access gap 
that is highly cost efficient, and it has garnered the broadest support 
I have seen for a retirement proposal that is specifically aimed at 
closing the coverage gap for all workers. The range of bipartisan 
cosponsors and diverse organizations that have endorsed this 
legislation--from small business organizations to gig platforms to 
financial titans and the AARP--far surpasses that of any other proposal 
of this nature that I've studied throughout my career.

    Question 2. for Eric Stevenson: President of Retirement Solutions, 
Nationwide.

          Knowing that small businesses employ nearly half of 
        the employees in the U.S., I was proud that two bills I 
        authored aimed at reducing costs for small businesses looking 
        to start a retirement plan were enacted into law.

          How are companies like yours helping small businesses 
        leverage opportunities in Secure 2.0 to increase retirement 
        plan coverage for their workers?

    Answer 2. There are multiple benefits of SECURE 2.0 to assist small 
businesses as they work to provide coverage for their employees. 
Nationwide is focused on helping those small businesses in three ways: 
implementing the provisions, educating financial professionals and plan 
sponsors, and promoting the benefits to plans to encourage adoption.

    The enhancement of startup credits for starting up new plans, 
initially introduced in the original SECURE Act, can play a large role 
in helping small businesses to increase coverage for employees. By 
decreasing the initial startup cost, one of the largest hurdles to 
adoption is removed. Nationwide has promoted these tax credits to 
financial professionals to share with potential startup plans and 
delivered an industry-wide podcast discussing these benefits, as well 
as other provisions.

    The retirement industry is also embracing the SECURE 2.0 provision 
that opens the opportunity for 403(b) plans--generally sponsored by 
charities, educational institutions and non-profits--to participate in 
Multiple Employer Plans and Pooled Employer Plans (MEPs and PEPs). 
Nationwide and our industry peers can support these valuable 
opportunities for employers of close industry affiliations or similar 
demographics looking to group together and offer retirement benefits to 
their employees, thereby offsetting costs and regulatory burdens. The 
work done in both the SECURE Act and SECURE 2.0 to simplify the filings 
and administrative burdens of MEPs and PEPs has cleared the way for 
wider adoption of these types of plans.

    In addition to increasing access through company benefits, 
employees will also benefit from auto-enrollment requirements, thereby 
increasing employee participation across businesses of all sizes. 
Nationwide is encouraging existing plans to offer auto-enrollment now 
so they will see the same benefits that new plans beginning in 2025 
will see when auto-enrollment becomes a requirement.

    Nationwide will not only be implementing key required and optional 
provisions, similar to these, but will continue to participate in 
outreach programs with financial professionals and plan sponsors to 
promote the benefits of retirement plan access to employers and their 
employees.

    Question 3. for Dr. Teresa Ghilarducci: Professor, New School for 
Social Research.

          As policymakers, we have to decide best how to 
        allocate resources.

          Every year the tax code offers $276 billion in 
        retirement tax incentives, but less than 1 percent goes to 
        workers in the bottom 20 percent.

          As a result, the government will need to spend $1.3 
        trillion by 2040 to support workers' with inadequate retirement 
        savings.

    This is why I introduced the Retirement Savings for Americans Act 
with Senator Tillis. Can you please speak to how the bill would address 
both of these concerns if it became law?

    Answer 3. The Federal Government offers generous tax benefits to 
incentivize retirement savings among higher-income workers, but those 
benefits are poorly targeted to low-and middle-income workers--
precisely those who are at the greatest risk of financial insecurity.

    A 021 CBO report showed that tax expenditures for pensions and 
retirement savings were $276 billion, ranking near the very top of all 
expenditures. Fully 84 percent of these subsidies went to households in 
the top two income quintiles. And just 19 percent of households in the 
bottom income quintile benefited from these incentives, compared to 77 
percent in the top income quintile.

    The Retirement Savings for Americans Act would help rebalance our 
upside-down retirement system by offering retirement accounts to all 
workers who don't have access to one through work, and providing a 
matching contribution of up to 5 percent for low-and-moderate income 
workers only. This generous match will incentivize lower income workers 
to save for retirement. We estimate that a worker making an average of 
$30,000 a year who saves 5 percent for 40 years and earns typical 
returns could have about $600,000 saved for retirement.

    This, of course, would meaningfully boost the standard of living 
for the half of all households who are expected to have to take a 
standard of living cut in retirement because of a lack of savings. It 
would also reduce reliance on other government and social safety net 
programs because these workers would now have a significant nest egg to 
draw on in retirement, allowing them to live out their golden years 
with more dignity and security. All of this can be achieved for a 
fraction of the overall expenditures we already outlay for retirement 
savings, making this a highly cost-effective proposal.
                                 ______
                                 
     Response by Teresa Ghilarducci to Questions of Senator Markey
                             senator markey
    Question 1. Today, more than 48 million Americans are providing 
crucial care to family members--and many of these caregivers and 
receivers are older and retired Americans. These caregivers are 
providing $600 billion in direct unpaid care each year, and many of 
them have to sacrifice their own income to provide care to their loved 
ones. How does the retirement crisis make it more difficult for 
Americans to receive care and for family caregivers to provide care?

    Answer 1. There is considerable research on who gives care to needy 
elderly and who among elders who need care actually gets the long term 
care they need. And sadly, who does not. Since our programs are set up 
for either Medicaid financing or self-financing the middle class is at 
the greatest risk of not getting the care they need in old age--the 
poor have Medicaid and the rich have money.

    But, just as important the secondary effect of a spotty and 
incomplete provision for long term care is more Adult kids drain their 
own retirement accounts and cut back work reproducing even more 
retirement insecurity. Middle aged women, especially, need to drop out 
of the labor force to care for elders. This means that the lack of 
long-term care insurance is creating new generations of fragile future 
elderly. The impact of having to care for elderly fall especially on 
women and nonwhite workers.

    Spousal care can also drain the health and wealth of the survivor. 
Without long term care insurance for the broad middle class, old age is 
financially risky which generates fear and shame. Neurologists and 
psychologist researchers identify these emotions as auger for 
depression and anxiety. The time of life that could be full of 
reflection, reckoning, and generativity (see Erik Erickson) is full of 
patching up holes in care and money.

    These conditions militate against dignity. People in old age need 
stable income and stable source of health care including long term 
care.

    Policy recommendation include ensuring that older workers have a 
significant.

    Resources:

    Forden, J; (2023) ``Effect of Elder Caregiving on Labor Force 
Participation'' Schwartz Center for Economic Policy Analysis and 
Department of Economics, The New School for Social Research, SCEPA 
Working Paper Series 2023-3.

    Question 2. Many family caregivers do not receive financial support 
for their caregiving responsibilities, yet they must sacrifice work or 
educational opportunities. Consequently, they may spend out of their 
own saving or be at greater risk of financial insecurity, perpetuating 
the cycle of retirement insecurity. Several Federal agencies--including 
the Department of Veterans Affairs--provide stipends to caregivers. How 
do financial supports, such as stipends, for family caregivers support 
middle class seniors and their families?

    Answer 2. Without long term care insurance for the broad middle 
class, old age is financially risky which generates fear and shame. 
Neurologists and psychologist researchers identify these emotions as 
auger for depression and anxiety. The time of life that could be full 
of reflection, reckoning, and generativity (see Erik Erickson) is full 
of patching up holes in care and money.

    These conditions militate against dignity. People in old age need 
stable income and stable source of health care including long term 
care.

    Question 3. Middle class seniors hoping to age with dignity are 
often caught in the eponymous middle--without access to Medicaid or 
sufficient savings for adequate care. These older Americans and their 
families face stressful and difficult choices about how to manage care 
and maintain financial stability across generations, while navigating a 
patchwork of Federal and state programs. Federal grants to state and 
cities for financial planning services can allow families to navigate 
their eligibility for Federal and state benefits, care options, and 
managing their budget and estate planning. How can these programs 
support families navigating a patchwork of Federal and state programs 
to access information and benefits for long term financial security?

    Answer 3. Having just attended the 2024 American Society of Aging 
conference in San Francisco, browsing the exhibition booths and going 
to the sessions I have concluded that millions of people needing 
support because of the health or financial fragility of an elder in a 
family is broken. Many services and navigators are for profit and they 
had the best swag available at the conference. Other exhibitors were 
tiny charities providing care for specific body parts of million of 
seniors who aren't even covered by Medicare or Medicaid. A popular 
booth was the FTC booth instructing about illegal financial fraud. The 
attendees of the conference were mostly social workers who are trying 
to navigate these systems for tens of millions of elders. But the 
conclusion over and over in the conference is without a Federal program 
supporting long term care and funding innovations in at home care these 
patchwork systems will leave behind many middle class people.
                                 ______
                                 
    [Whereupon, at 11:25 a.m., the hearing was adjourned.]

                                  [all]