Senate HELP Committee Examines Ways to Enhance American Retirement Savings, Encourage Participation and Planning

Today, the Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing titled, “Rise and Shine: Improving Retirement and Enhancing Savings.”

Ranking Member Burr’s prepared opening statement:

“Good morning.  Thank you Chair Murray for scheduling this hearing to highlight the need for Congress to consider legislation to encourage Americans to save more for their futures. 

“It’s not often we have hearings on the pension part of the HELP Committee, but as I look at my remaining nine months in the Senate I’m very aware of the importance of working and saving towards a secure retirement. 

“Our labor committee hook into retirement issues is ERISA – the Employee Retirement Income Security Act.  ERISA sets standards for retirement and health plans in private industry to protect individuals in these plans.  The Finance Committee handles the Internal Revenue Code portion.

“Retirement bills require our Committees to work in concert so that ERISA and the tax code properly work together to help Americans save for their own retirement. 

“As a member of both HELP and Finance Committees, I consider my office a one-stop shop on retirement matters.  Not only will I help shepherd ERISA matters through this Committee, I will also shape the work of the Finance Committee.  

“At our hearing last year, we focused on defined contribution plans, the reliable superstar of the retirement world.  Today we will examine how we can make further improvements to these plans.   

“The questions before us are simple: what is working well and what needs improvement?

“The answer to that first question seems easy at the surface level.  The system works great, when you participate.

“The two most important words for a secure retirement are compound interest.

“If you put a little bit of money aside every paycheck and let it grow, your future retirement will be a lot better off.

“But the system doesn’t work great when individuals don’t or can’t participate.   

“What we need to do is help Americans and their employers offer, operate, and fund individual retirement plans. 

“One option we’ll learn about from TIAA, which has a great North Carolina presence as all smart companies should, is Multiple Employer Plans.  TIAA has picked up the mantle as an administrator and advocate for the enhancement of these plans.  

“Under these plans, employers pool together to gain efficiency to reduce costs and administration of plans.  Less money spent on administration means more money being saved.

“Congress has been working to reinvigorate these pooled employer plans to get retirement plans out to more and more worksites and employees, especially small business employees.

“The wonderful thing about defined contribution plans is that Americans who participate in them can pick up a piece of paper and see at least two things: their name and an account balance. 

“It’s their money.  And it’s there.  It’s not a concept. It’s not an accounting notation.  It doesn’t require a bailout. 

“It requires personal contributions, maybe an employer match, some basic financial knowledge, and then compounded interest does its work. 

“Here’s a truth: Americans need to save more.

“The gap between the retirement savings that Americans have and the savings they need is already in the trillions of dollars and likely to grow.

“Not only are many Americans struggling to keep track of their savings needs, even more alarming is how many people have no savings at all, outside of Social Security.

“The data we’ve seen says that over one-quarter of non-retirees have nothing in their retirement piggy banks, many of whom are already nearing traditional retirement age.

“And while the long-term impact of the pandemic and economic lockdowns and the Great Resignation remain to be seen, we know that many Americans chose to tap into their retirement savings, draining assets from their intended retirement purpose. 

“The bright side is that we’ve learned some good lessons.

“According to AARP, workers are 15 times more likely to save for retirement if they can make a payroll deduction to a savings plan at work – you don’t spend what you don’t see.

“We have also seen the success of automatic enrollment and employer matching to defined contribution plans.

 “So, the challenge to this Congress is finding ways to help employees and employers take advantage of the savings programs that already work.

“I look forward to hearing from the panel today about how to overcome the barriers individuals face in their retirement planning, and the barriers employers face in offering retirement plans to workers. 

“I hope throughout this process Congress remembers that we shouldn’t be trying to take our opinions of how to plan for the future and take choices of retirement options away from individuals.

“The American people didn’t send us up here to be maternalistic or paternalistic and make their investment decisions for them or limit their choices.

“If we were all that good with planning ahead we probably wouldn’t have a $30 trillion debt.

“What I want the most is for Americans to control their own money, have safe options on how to invest and save, and live with as few government and industry middlemen or middlewomen as possible.

“Thank you.  I look forward to our discussion.”