Harkin Statement at HELP Committee Roundtable: “Pension Modernization for a 21st Century Workforce”
*As Prepared for Delivery*
“I want to welcome everyone to the extraordinary roundtable we are holding today. We have brought together a number of very experienced and thoughtful participants to talk about an issue that is critically important for the middle class –rebuilding the pension system.
“Defined benefit pension plans are one of the simplest, most cost-effective ways for middle class Americans to earn a dependable source of retirement income. And they are incredibly effective at keeping older Americans out of poverty. Pensions boost savings rates, reinvest in our economy, and play an instrumental role in job creation.
“But despite all the good pensions do – all the security they provide middle class families – the system is disappearing. Now, only about 1 in 5 people has a pension. 30 years ago, that number was 1 in 2.
“The disappearance of pensions has had a profoundly negative impact on retirement security in this country. And it’s made worse by the fact that the middle class is being squeezed between stagnant wages and rising costs. It’s getting tougher and tougher for people to prepare for retirement, and there’s really no question that we’re facing a crisis.
“The retirement income deficit – that is, the difference between what people have saved for retirement right now and what they should have at this point to be on the path to a secure retirement – is $6.6 trillion – that’s trillion with a “T.” And half of Americans have less than $10,000 in savings. For most of the middle class, the dream of a secure retirement is slipping out of reach, and there’s not much they can do about it.
“I was back in Iowa recently – travelling around the state and talking about retirement security – and I met a woman name Linda in Des Moines. Linda was a home healthcare worker. That’s a tough, often thankless job. She worked hard for her entire life and played by the rules. But she got sick, and that wiped out the little savings she had. Now, after a lifetime spent helping others, she’s struggling just to make ends meet in retirement. You see, she never had the opportunity to earn a pension. Her employers didn’t offer one. All she’s got is Social Security. And that’s just not enough.
“Linda isn’t alone. I met dozens of people just like her all over Iowa, from Spencer to Waterloo. And there are millions and millions more all over the country. It’s time for folks in Washington to recognize what people in Iowa already have; the private retirement system isn’t working for the middle class.
“That’s why I released a report called “The Retirement Crisis and a Plan to Solve It.” The report is the culmination of more than 2 years of hearings, discussions, and investigations into the root causes of the retirement crisis. And it offers a plan to solve the crisis by rebuilding private pensions.
“The basic idea is to provide universal access to a new type of privately-run pension that I am calling Universal, Secure, and Adaptable Retirement Funds – USA Retirement Funds for short.
“For participants, USA Retirement Funds would look a lot like traditional pensions. People would make contributions, and their money would be professionally managed by fiduciaries. Then, when they retire, they would get a check every month for as long as they live. But unlike many pensions, the benefit would be entirely portable so that people can take it with them as they change jobs.
“For employers, offering a USA Retirement Funds would be as easy as cutting a check. Employers wouldn’t be responsible for administering the funds or managing the money. That would all be handled by an independent board of trustees. Employers would just have to enroll their employees and make sure that contributions go into the plan. That would make it much easier for small businesses to offer a good retirement benefit.
“I think USA Retirement Funds would be a real win for middle class Americans. But I intended the proposal to be the starting place in an evolving discussion about retirement security. And that is why we are here today – to have that discussion.
“We have an excellent panel of experts that were gracious enough to offer the benefit of their experience and to help us figure out how to modernize pensions for our 21st century workforce.
“Pension policy has traditionally been an issue of bipartisan interest, so I look forward to working with my good friend the ranking member and my colleagues on both sides of the aisle to use what we learn today to ensure that everyone has the opportunity to retire with dignity and financial independence. Thank you all for being here today.”
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