National Conference on Public Employee Retirement Systems

The Voice for Public Pensions


HELP Committee Hearing on Retirement

The strong bipartisan votes in both chambers on the SECURE Act and the SECURE Act 2.0 are evidence that there is much more that unites us than divides us on the issues surrounding retirement security.
By: Tony Roda, Partner, Williams & Jensen

Chairman Bernie Sanders (I-VT) of the Senate Committee on Health, Education, Labor, and Pensions unveiled some startling statistics during the Committee's hearing on February 28. The hearing was focused on the retirement crisis in the U.S. as well as a discussion of proposals to spur a reemergence of defined benefit (DB) plans in the private sector.

Regarding the size of the problem, the Majority Staff Report, in part, highlighted that:
  • Nearly half of Americans 55 and older have no retirement savings.
  • Roughly 52 percent of Americans 65 and older are living on less than $30,000 annually, and one in four survive on less than $15,000 per year.
On access to DB plans, the Report cited that:
  • Nearly 30 percent of the workforce had a defined benefit plan in 1975; now only 13.5 percent do.
  • More than 27.2 million workers participated in DB plan in 1975, versus 11.2 million workers participating in defined contribution (DC) plans. In 2019, 85.5 million workers participated in DC plans versus 12.6 million DB plan participants.
The importance of this shift from DB to DC plans in the private sector was discussed in testimony provided by Dan Doonan, the Executive Director of the National Institute on Retirement Security (NIRS). Mr. Doonan quoted from a 2017 Wall Street Journal article:

“Many early backers of the 401(k) now say they have regrets about how their creation turned out despite its emergence as the dominant way most Americans save. Some say it wasn't designed to be a primary retirement tool and acknowledge they used forecasts that were too optimistic to sell the plan in its early days. Others say the proliferation of 401(k) plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers while making it easier for companies to shed guaranteed retiree payouts. The great lie is that the 401(k) was capable of replacing the old system of pensions.”

Finally, on access to a retirement plan, the Report stated:
  • Roughly 57 Americans do not have a way to save for retirement easily and automatically out of their regular paycheck and only 13.5 percent of workers have a pension.
  • As for potential solutions, the Report lists enhancing Social Security benefits and Retirement Security for All Legislation, which is being developed. In addition, the Committee issued a Request for Information (RFI) on ways to reinvigorate the DB pension system in the private sector. Responses to the RFI are due on May 1.
NCPERS is pleased that the Report also highlighted the work being done at the state level to fill the access gap by establishing state-administered, Individual Retirement Accounts (IRA) for private sector workers. These plans vary in features, but they are typically referred to as Secure Choice plans. The Report stated that, “State action on access to retirement plans has had quantifiable positive outcomes. As of December 2023, there are six state-facilitated automatic IRA programs up and running with more than $1.1 billion in assets under management.” NCPERS was an early advocate of these plans and is pleased with the progress thus far.

Chairman Sanders and his staff will soon be in the process of collecting and reviewing responses to the RFI. This will likely spur the introduction of new legislation on retirement access and further proposals to increase Social Security benefits. Senator Sanders already has introduced S. 393, the Social Security Expansion Act, which would expand benefits across the board.

As I mentioned in my previous article, The Secure Act 3.0, Congress is interested in pursuing additional retirement legislation in the coming years. With 12,000 Americans each month this year turning age 65, there is a considerable focus on retirement and retiree healthcare issues when Members of Congress meet with their constituents.

The overarching themes of the next retirement bill should roughly parallel what we've seen in recent legislation: (1) savings enhancement and increased coverage; (2) preservation of income; and (3) simplification and clarification. Chairman Sanders is laser focused on increasing coverage. Some of the comments by the Committee's Ranking Member Bill Cassidy (R-LA) focused on the changes made in the recently enacted SECURE Act 2.0, such as the enhancement of the saver's credit. He encouraged the Committee to hold a hearing on whether these provisions have been successful.

As it has done consistently in the past, NCPERS will maintain an open channel of communications with Members of Congress and staff from both political parties as they develop proposals for the next retirement bill. The strong bipartisan votes in both chambers on the SECURE Act and the SECURE Act 2.0 are evidence that there is much more that unites us than divides us on the issues surrounding retirement security.

Tony Roda is a partner at the Washington, D.C. law and lobbying firm Williams & Jensen, where he specializes in legislative, regulatory, and fiduciary matters affecting state and local pension plans. He represents the National Conference on Public Employee Retirement Systems and state-wide, county, and municipal pension plans in California, Colorado, Georgia, Kentucky, Ohio, Tennessee, and Texas. Tony has an undergraduate degree in government and politics from the University of Maryland, J.D. from the Catholic University of America, and LL.M (tax law) from the Georgetown University Law Center.


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