[Congressional Record Volume 156, Number 125 (Thursday, September 16, 2010)]
[Senate]
[Pages S7170-S7171]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
RETIREMENT SECURITY
Mr. KOHL. Madam President, I rise today as chairman of the Special
Committee on Aging to talk about retirement security in America. In
recent years, workers have seen their savings take a hit, with many
wondering whether they will ever be able to retire. The current
retirement income deficit--in other words, the gap between what
Americans will need in retirement and what they will actually have--is
$6.6 trillion, according to the nonpartisan Center for Retirement
Research at Boston College. Now more than ever, we need to strengthen
our Nation's pension and 401(k) systems so that Americans can protect
the retirement savings they work a lifetime to earn.
In doing so, we must recognize that today's retirement savings
vehicles look a lot different than they did a generation ago. Our
current system increasingly places the responsibility for saving on the
individual, meaning that people have to make retirement decisions on
their own because many employers are not doing it for them. That is why
the Aging Committee is working to give people more guidance, more
tools, and more protection.
Many Americans are increasingly relying on 401(k)-type defined
contribution savings plans to fund their retirement. Having a 401(k)
requires an individual to make several proactive decisions, including
the decision to save, how much to save, how to invest their savings,
whether to take loans out, and how to make their savings last through
retirement. The committee's focus has been on helping participants make
better decisions. After all, a person should not have to be a financial
planning expert in order to plan for a secure retirement.
We are discovering that the best system would have certain automatic
features, such as automatic enrollment with escalating contribution
rates and target date funds that adjust automatically, combined with
options to opt out for those who want to create their own portfolio. We
are pushing for more retirement coverage through ideas like better
target date funds that are designed in the best interests of
participants.
We are collaborating with the Department of Labor on many of these
issues and also introducing our own bills in some cases. Senator Tom
Harkin and I introduced a bill to require the disclosure of 401(k) fees
to participants. A small difference in fees, compounded over a
lifetime, can make a huge difference in overall savings. I commend the
Labor Department for recently issuing regulations that will bring
greater transparency and disclosure of 401(k) fees and make it easier
for employers to ensure that their plans' fees are reasonable, and I
look forward to reviewing the Department's participant fee disclosure
regulations when they are issued this fall. Senators Bingaman, Isakson,
and I have introduced the Lifetime Income Disclosure Act, which would
have 401(k) statements translate the balance into a potential stream of
retirement income. This will help participants save and plan for an
adequate retirement. I am also working with my colleagues to ensure
that oversight of the Pension Benefit Guaranty Corporation, the entity
that insures the pensions of more than 44 million workers and retirees,
is strengthened.
Of course, we cannot talk about retirement security without talking
about Social Security. The Aging Committee recently released a report
that lays all the options on the table for making it secure over the
long term. We also must make sure that those who rely on it the most
are protected. Finally, one of the most important ways to have a secure
retirement is to work longer. We are focused on the removal of barriers
to working past retirement age for those who choose to do so. Our
efforts will keep people in the labor force and encourage employers to
offer the benefits and flexibility many are looking for later in life.
In closing, I would like to applaud the many advocacy groups that are
striving to create a universal, secure, and adequate pension system.
Their efforts to bring necessary attention to the important issue of
retirement security are appreciated. Together we will continue our work
to improve retirement security for all Americans.
Mr. HARKIN. Madam President, I rise today to speak out in support of
Retirement USA's ``Wake Up, Washington!'' Month and to wake up my
colleagues to the looming retirement crisis in this country. The public
has already woken up. A recent survey found that 92 percent of adults
aged 44 to 75 believe there is a retirement crisis in America. Now it
is time for Congress to address this crisis before it is too late.
We are already seeing the beginnings of the retirement crisis. Just
look at all of the older Americans forced to delay retirement or go
back into the workforce because of the economic downturn. If we do not
change course, it is going to get much worse.
Next year, the first baby boomers will turn 65, and it is clear that
many are not prepared for retirement. According to the Employee Benefit
Research Institute, nearly one-half of them are at risk of not having
sufficient retirement resources to pay for basic retirement
expenditures and uninsured healthcare costs.
The picture is not any better for the rest of American workers.
Thirty-one percent of workers do not have any retirement savings at
all, and 43 percent of workers have less than $10,000. If those numbers
are not sobering enough, the Center for Retirement Research at Boston
College calculated America's retirement income deficit for Retirement
USA. They estimate that the gap between what people need for retirement
and what they actually have is $6.6 trillion. That is a scary number.
There simply is no question that retirement is getting less and less
secure in this country. In the past, people relied on the ``three-
legged stool'' of retirement security--private pensions, personal
savings, and Social Security--but that stool has gotten awfully wobbly.
Over 40 percent of workers lack access to any employer-sponsored
retirement plan at all, the rising cost of living and stagnant wages
are making it tougher for people to save, and our Social Security
system is under attack.
It used to be that many workers could rely on defined benefit
pensions. Those plans are one of the best ways to ensure that workers
have a secure retirement because they provide a predictable, guaranteed
source of income that workers can count on for the duration of their
lives. But, unfortunately, the traditional defined benefit pension is
an endangered species. The number of employers offering these plans has
fallen drastically over the past three decades. Now, less than 20
percent of workers in the private sector have the security of a defined
benefit pension.
The vast majority of employees with any retirement plan at all just
have a 401(k), but those plans do not provide real retirement security.
They leave workers exposed to the constant risk that the plans'
investments will perform poorly. Look at what has happened to people's
401(k)s over the past few years. Billions of dollars of retirement
savings have just evaporated, and lots of workers--especially people
getting close to retirement--saw any chance they had of retiring vanish
overnight. 401(k)s also do not provide workers with guaranteed lifetime
income like traditional pension plans. That means that workers and
their families are forced to bear the risk that they will outlive their
retirement savings.
Plus, in these troubled economic times, families are facing
unprecedented challenges and saving for retirement just is not an
option for many. Wages have been stagnant for years, yet the cost of
living keeps going up. People are working harder and longer than ever
before, but they still cannot seem to meet the costs of basic everyday
needs, like education, transportation, and housing, let alone save
enough to support them in their old age.
For many Americans, the only retirement security they have is Social
Security, but that, too, is under siege. There are those that want to
privatize the system, cut back benefits, and raise the retirement age.
They say that everyone should just work longer and that retirement is a
``luxury.'' Clearly, those people do not swing a hammer for a living.
They do not toil in our corn fields or work on our oil rigs. For
Americans who work in these physically demanding jobs, working longer
simply is not an option. A lifetime of hard work takes its toll, and at
some point, a person just cannot do it anymore.
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We are facing a future where no one other than the rich will have the
opportunity for a safe and secure retirement. People that work hard for
their entire lives will find themselves teetering on the brink of
poverty, unable to pay the basic costs of living. That is going to have
drastic consequences for families and our country as a whole.
It is time for our Nation to face the retirement crisis head on, and
for our lawmakers to take aggressive action to protect future
generations. We can start by working on some fixes for the current
system. We need to shore up the Pension Benefit Guaranty Corporation,
protect Social Security, and address the problems facing the Nation's
corporate and multiemployer pension plans. We should also consider
improvements to 401(k) plans like improved disclosures and lifetime
income solutions. But all of those things are just short-term fixes.
We need to go further. We need to work toward comprehensive reform of
our retirement system. Americans who have worked hard and played by the
rules deserve a secure retirement. They deserve to be able to enjoy
their golden years, to spend time with their families, and to rest
after a lifetime of hard work. We need to help people to work toward a
secure retirement by expanding access to retirement plans, making it
easier for workers to save, and finding ways to make sure they do not
have to worry about outliving their savings.
The retirement crisis is just too big to ignore, so as chairman of
the Committee on Health, Education, Labor and Pensions, I am making
retirement security a priority. The committee will be holding a series
of hearings to explore the difficult issues surrounding retirement
security, and I am hopeful that, together with my colleagues on both
sides of the aisle, we will be able to come up with creative solutions
to our Nation's retirement challenges.
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