Ranking Member Cassidy Delivers Remarks During Hearing on the State of American Retirement

WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, delivered remarks during today’s hearing on the state of American retirement plans.

Click here to watch the hearing live. 

Cassidy’s speech as prepared for delivery can be found below:

Thank you, Chair Sanders.

The singular focus of this hearing on promoting the Defined Benefit system is a bit puzzling. It seems to prescribe an agenda that is respectfully outdated and disconnected from reality. 

In 1974, Congress passed the Employee Retirement Income Security Act in response to tens of thousands of Americans losing their retirement security because their employer’s Defined Benefit system failed. This was exemplified by the collapse of the Studebaker automobile company and about 1,800 other pension plans terminated over a 4-year period, impacting hundreds of thousands of workers.

Since ERISA, the Defined Benefit system has been largely replaced by the Defined Contribution system, which has flourished. As of 2021, 146 million Americans collectively own $9.5 trillion in retirement assets.

The advantage of the Defined Contribution system, and why many have flocked to it, is that workers own their own retirement savings. No matter what happens to a worker’s current or previous employer, their retirement funds are secure.

Congress just passed SECURE Act 2.0 on a bipartisan basis to make improvements to our nation’s retirement system. We had the option to take an approach like the one the Chair is advocating for and chose not to. Instead, we 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 by a vote of 414 to 5.

The Chair speaks of needing to find a solution to a crisis, but we already have a solution. By the way, there are still provisions of SECURE Act 2.0 that need to be implemented, including those that help low-income individuals. For example, the Enhanced Savers Match, a tax credit that goes right into low-income Americans’ retirement accounts goes into effect in 2027.

Our Chair has referenced many statistics to paint the picture of a retirement crisis. But these statistics are from 2021—predating the passage of SECURE 2.0, any improvements it has made, and the improvements it will make, especially in provisions specifically targeting lower income Americans.

This isn’t to say there is no place for the Defined Benefit system. With reforms it can be successful. In 2006, we passed needed reforms to the single employer Defined Benefit system, which resulted in those plans now being overfunded—even weathering the 2009 financial crises. However, those reforms have not been implemented in the largely union utilized multiemployer Defined Benefit space.

Many of these multiemployer Defined Benefit plans had been struggling for years when in 2021 they told Congress they needed a bailout.  Many of these plans were widely mismanaged. Democrats passed a $90 billion bailout of the multiemployer Defined Benefit system on a party line vote, without any strings on the tax dollars to prevent future failures. This is the same system that the Chair wants us to expand.

Unfortunately, the large labor unions successfully lobbied Democrats to make sure the bailout did not come with any meaningful reforms to protect workers and prevent the programs from future failure. Simple reforms like requiring certain funding levels and disclosures for Defined Benefit plans and requiring unions to provide their beneficiaries with a clear report of their Defined Benefit program’s financial state.

We are already seeing the results of the failure to enact these provisions.

The Central States Pensions Fund received a $127 million overpayment in their bailout because they included thousands of deceased participants on their bailout application. Teamsters President Sean O’Brien, to his credit, told this committee the money should be repaid.

However, the Central States Pensions Fund now tells the Committee that it would be impossible for them to repay the money they were improperly paid.

Workers covered by the Central States should be alarmed about the financial state of their retirement plans if returning funds Central States was never supposed to have would destabilize the fund.

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

If the Chair truly wants to expand the use of Defined Benefit plans, I would be happy to discuss reforms similar to the ones that have been extremely successful in the individual employer space and pass them to stabilize the entire Defined Benefit system. We will have to overcome staunch union opposition to any reform that provides greater oversight and protection for workers. But together, I think we can get it done.

To be clear, Republicans do not support putting the thumb on the scale to prefer Defined Benefit or Defined Contribution plans. We need to support what works.

Many businesses with individual employer Defined Benefit plans want to continue to offer and expand their programs. If it is working, we should support them.

We are seeing the good work of companies – who are importing the best of the Defined Benefit system into the Defined Contribution system. This includes many innovative lifetime income products. I agree with the Chair that lifetime income is desired by many Americans. Let’s make it easier for Defined Contribution plans to include them.

These are things we can do on a bipartisan basis. Which is why it was disappointing that rather than working together to hold a bipartisan hearing, the majority planned this hearing on a partisan basis, with no input allowed from the minority on scope or legislative focus.

We need bipartisanship to pass something with 60 votes in the Senate. There are many things we can accomplish if we treat that as a priority, not an inconvenience.

Earlier this year, Senator Kaine and I introduced two bipartisan bills:

The Helping Young Americans Save for Retirement Act would make it easier for younger workers between the ages of 18 and 20 to save for retirement by removing barriers that currently make it harder for them to join an employer’s retirement plan.

Additionally, the Auto Reenroll Act of 2023 would assist workers who previously declined to participate or contributed little to their employer’s pension plan. Many workers early in their career make less money and decide they would like to have more money in their paycheck to pay for bills and expenses than contribute to their retirement. Later, their wages grow but we find they often forget to opt back in and start contributing to their retirement. This legislation allows businesses to periodically auto-enroll employees back into their plans, so employees have the option to opt out if they’d like but don’t accidentally miss out on crucial years preparing for retirement.

I hope the Chair would indulge us with a markup on these bipartisan pieces of legislation.

Many other members on this committee had wonderful ideas that were included in SECURE 2.0. It would be great to explore the current and the effectiveness of those provisions and discuss any other creative ideas that enhance the system we have.

Thank you.

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