[Congressional Record Volume 148, Number 60 (Monday, May 13, 2002)]
[Senate]
[Pages S4246-S4247]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   RETIREMENT SECURITY FOR AMERICANS

  Mr. BINGAMAN. Mr. President, I have come to the Chamber today to 
speak about a subject that is of great importance to the people of my 
State, and I think people throughout the country, and that is the issue 
of retirement security.
  We give a lot of speeches in the Senate about security: national 
security, homeland security--a variety of securities. We are concerned 
about security. The American people are concerned about security.
  But there is one aspect of security that has not gotten a whole lot 
of attention so far in this Congress, and I am here today to call 
attention to it. That aspect of security is retirement security.
  The collapse of Enron and the resulting collapse of the retirement 
plans of many Enron workers and plans across the country that held 
substantial amounts of Enron stock have underscored the need for 
changes in our pension laws and our retirement plan laws.
  Frankly, I am disappointed that the House, in passing a watered-down 
version of the administration's modest proposals, has failed to 
increase retirement safety for those American workers who do have 
pensions, since that is all on which that bill really focuses.
  The one proposal they should have watered down--that was the 
``conflicted adviser'' provision in that bill--was left intact. It has 
the effect of removing one of the few protections in current law 
against conflicts of interest by financial service companies.
  I am hoping the Senate will follow the lead of the Senate Health, 
Education, Labor and Pensions Committee and also the Finance Committee 
and their respective chairs and provide a more meaningful piece of 
legislation drafted to protect the rights of workers instead of 
exposing them to greater risks. So that is an issue that has been 
brought to national attention because of the collapse of Enron.
  At the same time I refer to that, let me say that an even more 
troubling trend is the fact that we have heard nothing from the 
administration and, really, in either House of Congress about the lack 
of pension coverage of any kind for large segments of our working 
population--both the lack of coverage and the substantial reduction in 
retirement wealth for most of the workers in this country.
  Approximately 2 weeks ago, Dr. Edward Wolff of the Economic Policy 
Institute--he is a professor at New York University--presented his 
report entitled ``Retirement Insecurity: The Income Shortfalls Awaiting 
the Soon-to-Retire.'' I would like to take a few minutes to highlight 
some of the points that were made in that report. I believe it makes 
the case, in a very compelling way, of the need for more attention to 
this issue for everyday workers.
  The report and the most recent Department of Labor statistics 
demonstrate that retirement plan coverage has not increased in the past 
30 years despite all of the efforts to expand coverage. Let me show a 
chart I have to make the case.
  This shows the retirement plan coverage rates for full-time, private 
sector workers. You can see this covers the period 1972 to 1999. When 
you look at all workers, you see the retirement plan coverage rate for 
all workers in 1972 was 48 percent; in 1999--nearly 30 years later, 27 
years later--it was 51 percent. So there has been a very modest 
increase, but modest indeed.

  When you look at the figures for male workers, you see there has been 
an actual decline in the coverage rates for full-time, private sector 
male employees during that period, 1972 to 1999. Mr. President, 54 
percent of male workers had pensions of some type. When I say 
``pensions,'' I include in that 401(k) plan participation; they had 
some kind of a plan where they were putting away money for 
retirement. It was 54 percent in 1972; 52 percent in 1999.

  The percentage for women has improved because they were at 38 percent 
in 1972 and they are now at 49 percent. But it is substantially below 
where it ought to be.
  That means roughly half of America's private sector employees will 
have to enjoy their retirement on the other two legs of the proverbial 
three-legged stool. Some who are listening may not be aware of this 
metaphor, but the three-legged stool is what people who focus on 
retirement circumstances are always referring to. They say: You have 
three legs you can depend upon for your retirement income; one is 
Social Security, the second is your savings, and the third is your 
pension.
  What these statistics show is that one of those so-called legs that a 
person can depend upon in this so-called three-legged stool, the 
pension part, is not there for half of the workers in this country. In 
truth, my guess is that many private sector workers who do not have a 
pension or retirement plan probably do not have a second leg on that 
stool either because they do not have any significant savings. So they 
are essentially left with Social Security as their only real source of 
support after their retirement.
  For minorities, the prospects are even dimmer. Unfortunately, the 
coverage for minorities is unacceptably low; it has been for a long 
time and continues. This chart makes the point for different groups of 
employees. For all workers in 1999, the percentage of private wage and 
salaried workers covered under their employer's pension plan was 44 
percent. When you go down to Black, non-Hispanic workers, it was 41 
percent; Asian and Pacific Islanders, non-Hispanic, 38 percent; others, 
minorities, non-Hispanic, 35 percent; and Hispanic workers, 27 percent. 
That last figure is important to me because 40 percent of the people in 
my State are Hispanic. This statistic indicates that only 27 percent of 
the private sector employees who are Hispanic in this country actually 
have a pension on which they can rely.
  There has been an interesting shift I will point out. This comes out 
of Dr. Wolff's report. There has been a shift from defined benefit 
plans to defined contribution plans. Let me explain what that is. A 
defined benefit plan essentially guarantees that when the worker 
retires, they will receive a specific amount, a defined benefit, 
regardless of what has happened to the economy or to the investment, 
the retirement funds, or anything else in the interim while they were 
working.
  In 1975, when you looked at all of these various pensions people had 
in the private sector, 71 percent of them were defined benefit plans 
and only 29 percent were defined contribution.
  Defined contribution, of course, means the risk is much more on the 
employee. It does not guarantee you any particular payment on a monthly 
basis or a yearly basis once you retire. It says you put in a specified 
amount each month while you are working, and then at the end of your 
work time, we look to see what the investment of those funds has added 
up to and how much there is for you to actually get in the way of 
retirement. So there is much less risk on the employer, much more risk 
on the employee in a defined contribution plan.
  The interesting thing about this chart is the defined benefit plans 
used to represent 71 percent of all pension plans; now they are 35 
percent. The defined contribution plans used to represent 29 percent; 
they are now 65 percent. So there has been a dramatic shift away from 
defined benefits to defined contributions.

  When this trend started, the case was made by those who advocated it 
that this was going to allow much greater expansion of pension 
coverage; we were going to be able to cover a great many more workers 
if we shifted to a defined contribution plan instead of a defined 
benefit plan. So we did. We had a dramatic shift from defined benefit 
plans to defined contribution plans. Unfortunately, there has not been 
any increase in the percentage of workers covered, as that earlier 
chart made the case very clearly.

[[Page S4247]]

  One of the reasons many of these companies shifted to defined 
contribution plans is that the employee makes the majority of the 
contributions to the plan when it is defined contribution--not the 
employer but the employee. As I indicated before, the risk is shifted 
to the employee. The risk of the funds not being well invested and the 
investments not turning out well shifts to the employee rather than the 
employer.
  Clearly, half of our private sector employees did not get any benefit 
out of this bargain because they don't have a pension of any kind from 
the start. As I am about to explain, it does not appear that a majority 
of the covered workers got much out of this either.
  Let me put up a few more charts that are interesting. One which is 
hard to read is a chart that shows, State by State, the pension 
coverage we have in the private sector around the country. This is a 
chart that got my attention. You cannot read it from any distance, I am 
sure, but you can see that in Washington State, 45 percent of private 
sector workers have pension coverage. It is substantially better in 
some other States. In Vermont--the Presiding Officer has an interest in 
Vermont--40 percent of the private sector employees have some kind of 
pension. That means either some kind of defined contribution or defined 
benefit plan. They may have a 401(k). That would be in that 40 percent.
  The reason this chart catches my attention is that if you go over 
this chart and look at all of the percentages, the State with the 
lowest percent is New Mexico. Twenty-nine percent of the private sector 
employees in my State actually have some kind of pension.
  I have a chart I also want to put up for the attention of various 
Senators. It shows the percentage of private sector workers without 
pension coverage. It shows about the top 15 States. In New Mexico, 71 
percent of the private sector employees, according to these statistics, 
don't have any kind of a pension; Louisiana, 69 percent; Nevada, 67 
percent; Florida, 66 percent; Mississippi, 66 percent.
  People might look at this and say, you are generally talking about 
southern, southwestern States, close to the border. There are all kinds 
of problems there with the economy.
  Let's go to some others. I know my colleague from North Dakota is in 
the Chamber. According to this chart, 61 percent of the private sector 
employees in North Dakota do not have a pension. This is data from the 
employee benefits supplement to the Census Bureau statistics in 1993.
  The national average, according to that period, in 1993, was 50 
percent; South Carolina, 61 percent; in Texas, where our President was 
Governor, 62 percent did not have a pension.
  The reason I point this out is to make the point that this is a real 
issue for a great many Americans. I know we have had people come to the 
floor and say--in fact, I think my colleague from Texas spoke a couple 
weeks ago and said the biggest economic issue that this Congress has to 
deal with is to make permanent the repeal of the estate tax. Well, to 
change the law as it will be 9 years from now, as relates to the estate 
tax, when I look at these statistics, I don't think that is the biggest 
economic issue from the point of view of the people I represent. We 
have other big economic issues, one of which is pension coverage.
  At the same time that coverage rates were made flat and employees 
shifted towards the defined contribution plans, the retirement income 
of retirees and those nearing retirement has decreased as compared to 
their current incomes.
  I have another chart that makes that point. Let me put it up. This is 
a chart that I think is very interesting because it deals with the 
issue of the share or percentage of households with an expected 
retirement income that is more than half of their current income. We 
are not suggesting that people in retirement are likely to have incomes 
equal to their current income. We are saying that once they retire we 
would like them to have incomes that are at least half of their current 
income.
  In 1989, according to this chart, 70 percent of the people who were 
retiring had incomes that equaled half of their current income. So they 
had as much as a 50-percent reduction in their income, but it wasn't 
worse than that. In 1998, a couple years ago--the most recent year for 
which we have statistics--that dropped to 57 percent. So only 57 
percent of households had an income that was half of their current 
income by that time.
  So who are the winners? Who has benefited from all these changes that 
have occurred, according to Dr. Wolff's report? The data released in 
this report demonstrates that only those with retirement incomes of 
over a million dollars saw their retirement wealth, in 1999, increase 
as compared to their retirement wealth in 1982. This chart takes each 
of these different groups--if your wealth is $25,000, or if it is 
$25,000 to $49,999, $50,000 to $100,000, $100,000 to $250,000. And then 
the final part of the chart is a million dollars and over.
  So if you have $1 million and over in your wealth, you have probably 
seen that increase during that period from 1983 to 1998. But if you are 
not in that income category and in that wealth category, then you did 
not.
  So the conclusions from this report are pretty stark. Coverage rates 
have been stagnant. The percentage of our private sector workers that 
have coverage--some kind of pension--has been stagnant for several 
decades. Minorities still have worse coverage than nonminorities. There 
has been very little improvement in that regard. The promise of 
increased coverage due to the shift toward the defined contribution 
plans that we used to hear about has not occurred.
  Finally, the relative wealth of almost all classes of retirees--that 
is, everybody except the people with wealth of over $1 million--
decreased over the past two decades, even though we have seen a huge 
runup in the stock market. All of the statistics I have given you here 
are through 1998. We all know there was a booming stock market in the 
1990s, up through 1998. The stock market has come down substantially--
at least certain parts of it--in the last couple of years. None of that 
is reflected in any of these statistics. So we will have to get updated 
figures as quickly as they come out. But I don't want to suggest that I 
am taking last week's information in order to make the case. We are 
making the best case we can, assuming that the stock market did not 
drop, as we all know it did.

  We will see a further erosion in retiree wealth when we get those 
updated statistics. It is time to start thinking about ways to improve 
coverage. We cannot let these trends continue. We need to talk about 
reducing and dealing with other issues than just the repeal of the 
estate tax, as we go through the rest of this Congress. We also have 
proposals, as I am sure the Presiding Officer knows, that suggest that 
the top priority for this Congress ought to be privatizing the Social 
Security system. That is the one remaining leg of the stool that exists 
which has not yet been whittled away.
  These statistics make the case convincingly that at least that should 
be left alone and we should get about the business of trying to help 
people save for retirement and have a pension upon which they can 
depend.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BINGAMAN. Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, the Senator from New Mexico raises a point 
that a lot of people are not talking about much. They talk about 
pension reform a lot around here but they fail to mention that a good 
many Americans have no pension.
  The Senator from New Mexico used statistics--for example, 61 percent 
in my home State, and I think 70-some in New Mexico, have no pension. 
We should do pension reform, but we also ought to think through how do 
we encourage additional retirement savings and pensions to be offered 
to workers.

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