Congressional Hearing on Modernizing Retirement
By Ryan Muller, Legislative Analyst, Williams & Jensen
Americans are worried about retirement more than they fear their own mortality, according to a 2025 study. Witnesses before the House Education and Workforce Subcommittee on Health, Employment, Labor, and Pensions made sure that Members of Congress knew this jarring fact. While some concerns are timeless, such as worries about inflation, taxes, and Social Security’s solvency, another concern has taken center stage in recent decades—the possibility of outliving retirement savings.
As defined benefit (DB) plans have fallen out of fashion in the private sector, defined contribution (DC) plans have emerged as an imperfect substitute. With traditional DB pensions came stability—a check that would come like clockwork; a deferred compensation for years of loyal service. Retirees knew where their next dollar was coming from, bearing little risk and resting easy, knowing that their future was secure and stable.
With the rise of DC plans came a reallocation of risk. Without the guarantees offered by a DB pension, savers bear the risk that employers once shouldered. Retirement savers must worry about market downturns, portfolio growth, and, eventually, they must figure out how to responsibly draw down their savings, finding a delicate balance between having enough income to live on and not withdrawing their money too quickly, causing it to run out. This challenge often comes with little guidance from plan sponsors due to fiduciary law and the risk of litigation, leaving retirees on their own to navigate this tedious task of making the account last a lifetime.
Wayne Chopus, President and CEO of the Insured Retirement Institute, touted annuities as a solution to this growing problem. He defended annuities as a decidedly middle-class tool, pointing out that the average annual income for an annuity holder is $76,000. In response to a question from Rep. Virginia Foxx (R-NC), Chopus indicated that consumers want more choice, with the option of turning retirement savings into a guaranteed income through annuities, which is one way to provide peace of mind for anxious retirees.
Members of Congress latched onto this idea of choice, stressing that retirees should be presented with options as they decumulate their retirement savings, and asking why more people do not take advantage of these tools. Ken Levine, Executive Director of Global Retirement Strategy at RTX, said that the uptake of guaranteed lifetime income products has been slow because of misconceptions and limited knowledge among investment consulting and plan sponsor communities.
Dr. Nari Rhee, Director of the Retirement Security Program at the University of California, Berkeley Labor Center, reframed this discussion as being out of touch with the lived experiences of most retirement savers. She revealed to the Subcommittee that 75% of workers approaching retirement age have less than $100,000 in savings, stating that this is not enough for retirement even with Social Security supplementing their income. She argued that the discussion around annuities is moot, as only about five million Americans have enough in retirement savings to consider annuitization, paling in comparison to the 150 million Americans covered by Social Security. Rep. Mark Takano (D-CA) agreed—this is an elite issue, a conversation most Americans will never even have to entertain.
Members of the Subcommittee, accepting and acknowledging the severity of the retirement crisis, came to different conclusions about how this issue ought to be addressed. Democrats, led by Subcommittee Chairman Mark DeSaulnier (D-CA), emphasized that Social Security should be bolstered, noting that this is often the only lifeline for the millions of retirees who were unable to save enough in their working years. He stressed that the ability to save is directly tied to workers’ wages, which have remained stagnant in recent decades despite meteoric advancements in worker productivity, and highlighted the role unions historically have played in bolstering participation rates in retirement plans while simultaneously improving wages. Democrats broadly lamented that the affordability crisis had made it impossible for working-class Americans to meet their everyday needs and have enough to accumulate for their golden years.
Republicans, in general, were more receptive to arguments in favor of annuitization as a means of guaranteeing lifetime income, supporting the approach as another choice for consumers and stressing the importance of reducing barriers that would deter plan sponsors from offering these products. When Subcommittee Chairman Rick Allen (R-GA) probed Surya Kolluri, Head of the TIAA Institute, on what Congress could do to improve access to lifetime income options, Kolluri responded that Congress should do more to encourage lifetime income plans as the default option and require defined contribution plans to offer qualified payout options (Q-PONS).
Fears remain that many retirees do not fully understand annuities, and several Committee members raised concerns about the relatively high fees associated with the product. Once the decision to annuitize retirement savings is made, it is one that cannot be undone. The fees associated with annuitization often exceed those of traditional 401(k)s, though proponents maintain that the fee is supportable through the mitigation of longevity risks. More education regarding this option is needed and making it available was broadly supported by Committee members of both parties and the witnesses.
What is clear is that 401(k) plan participants are demanding solutions. According to a 2025 survey of over 2,000 401(k) participants conducted by Nuveen and TIAA Institute, 93% of respondents said it is important that their plans offer options to convert savings into guaranteed monthly income, with 87% of respondents believing their employer bears some responsibility in ensuring income security in retirement. A similar TIAA survey from 2021 showed that only 60% of respondents shared this view. This dramatic change reflects the growing salience of the problem, and possibly even a worsening of the problem itself. As Congress continues to face pressure to address retirement issues, guaranteed lifetime income will doubtless be at the forefront of debates.
Please be assured that NCPERS will closely monitor developments in this area of public policy and will apprise its members of any significant developments.