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>> the committee on health education labor pensions will come to order. and the purpose of this hearing is at issue were going to be discussing, it's have enormous consequence but it fortune i don't getting the attention that it deserves. i want to thank all of the witnesses for being here and i look forward to a good and serious discussion. let me start off by saying, as a nation we have more income and wealth inequality today than we ever had an history of america. while the billionaire class becomes wealthier, our social safety net for the most vulnerable in our country remains far behind other wealthy nations. it's a disaster. and if we do not get our act together it's only going to get worse. we have the highest rate of childhood poverty of almost any

major nation. our child care is now dysfunctional. more than 600,000 fellow americans are homeless, and over 85 million uninsured or underinsured. but let's be clear. it's not just the children and the poor who in the richest country on earth are hurting. our nation's senior citizens are struggling as well. the truth is that we now have a retirement crisis in america that demands our immediate attention, which brings us to the subject of today's hearing. in the united states today,, almost 45% of older americans between the ages of 55 and 64 have no savings at all, and no idea how they will retire with any shred of dignity or respect. 45% of workers between 55 and 64, zero retirement savings.

and as frightening as the retirement crisis is for older workers, it is even a bigger concern for the millions of senior citizens who are no longer able to work, who have exhausted all their savings and to have no pensions at all. incredibly, and this really is quite incredible, one out of every four senior citizens in america are trying to live on an income of less than $15,000 a year. think about that. while over half of our nation's seniors are trying to survive on an income of less than $30,000 a year. just put yourself in the place of that person. how do you pay the rent? how do you pay for health care, prescription drugs? how do you put food on the table on just 15,000 or even $30,000 a year? and the truth of the matter is that many cannot.

that should not be happening in our country. according to the oecd, the organization for economic cooperation and development, we now have the dubious distinction of not only having one of the highest rates of childhood poverty in the industrialized world for our children, we also have one of the highest rates of senior poverty compared to other wealthy nations as well. in denmark only 3% of seniors live in poverty. in france come 4.4. the united kingdom, 15.5. but in america over 23% of seniors are living in poverty. i would hope that we would agree would hope that we would agree that that is simply unacceptable and that's got to change. 50 years ago it was not uncommon for corporations to provide workers with a defined benefit pension plan that guaranteed a monthly income in retirement. back then many corporations made a promise to the workers, if they worked at the same company for reasonable period of time, they would be rewarded with a

monthly check that would enable them to live comfortably in retirement. not a radical idea. that's what it was then. the longer you worked at the same company, the bigger your retirement check would be. and the employer would bear in those days all of the responsibility to fund the pensions of their workforce. sadly, tragically, those days are mostly behind us. as a result of a relentless forty-year war on the working-class waged by corporate america, traditional pension plans have become an endangered species on their way to extinction. and the a result for workers been tragic. 1983, 31% of american 1% of american workers were at risk of not being able to maintain their standard of living in old age. in 2020, that number rose to 51%. in other words, we are moving in exactly the wrong direction. all right, that's the problem. what we do to address that

crisis? first, at a time when far too many seniors are living in poverty and many have nothing in the bank for retirement, we must expand social security, not cut social security. as many of my colleagues in congress would have us do. and we must make social security solvent for the next 75 years, so it will be there for our kids and our grandchildren. legislation that i've introduced along with nine cosponsors accomplishes those goals. according to the social security administration, the legislation i've introduced would make social security solvent for 75 years and increase benefits by $2400 a year for seniors who need them. how'd you do that? my goodness. how do you do that? well, at a time of massive income and wealth inequality we have the radical idea that maybe

the people on top should start paying their fair share of taxes. today, a billionaire pays the same amount of money into social security a somebody makes $168,000 a year, as result of the cap on the social security payroll tax. got that? you make a billion dollar a year, you make $168,000 a year, you pay the same amount. anybody in america thinks that make sense? idle. the legislation with proposed would lift the cap on social security starting at $200,000. you do that, tactile income, social security is solvent for the next 75 years, increase benefits by $24 per person. but that's not all that we have to do. in my view every corporation in america should be required to provide retirement plan for the workers. if corporations should choose not to offer retirement plan the

must give workers the option of contributing to a federal pension plan similar, guess what, to what members of congress have come house that? good for congress, good for the american people. today federal employees and webs of congress have a certain percentage of their sellers deducted from their paychecks and put into the program that provides a a pension based on salary and years of service. bottom line, if it is good for members of congress, our staff, it's good for the american people. so that's where we are. we've got a crisis. i think with some common sense solutions, and i look forward to working with members of this committee to address them. senator cassidy, the mic is yours. >> thank you, chair sanders. a little odd. the focus today seems to be promoting the defined benefits of the system. prescribing an agenda frankly that is outdated and a little bit disconnected. and i took to the four congress passed the employment retirement

income security act, the erisa act, respond to tens of thousands of americans losing the retirement security to give their employees defined-benefit system fail. but typified buy the collapse of studebaker automobile company at and about 1800 other pension plans terminating over four years, imagine the impact upon this hundreds of thousands of workers who were employed by them. since the erisa -- module replaced by the defined contribution, which has flourished. as a 2021, 146 million americans collectively own $9.5 trillion in retirement assets.

we have the option to take the one such as the chairs advocating for and on on a bipartisan basis chose not to. instead based the social primer on the success of the defined contribution solution. secure 2.0 was so popular it passed out of all format committees of jurisdiction with unanimous votes and on the house floor, can you imagine this, by a vote of 414-five. picture speaks of needing to find a solution to a crisis that we had that solution. by the way they're still privations of secure act 2.0 0 that yet to be completed including those helping low income individuals. for example, the enhanced savers match, a tax credit going right into low-income americans retirement account, which goes into effect in 2027.

the chair as reference statistics pointing to retirement crisis but many of these are from 2021 which predate the passage of secure 2.0, the improvements it has made an improvement that it will make, especially those targeting low-income americans. now, either way there is a place for defined benefit system. with reforms that can be successful. in 2006 we passed these reforms which resulted in some of those funds now being overfunded. even weathering the 2009 financial crisis. however, these reforms have not been implemented in the largely unionized utilized, union utilized multiemployer defined-benefit space. many of these multiemployer defined-benefit plans have struggled for years when in 2021 they told congress they needed a bailout. many of the plans were badly mismanaged. democrats passed a $90 billion bailout of the multiemployer

defined-benefit system on a partyline vote without strings on the tax dollars to prevent, unicode strings that would say you have to make these reforms to prevent future failures. now, this lack of reform system is that which some wish to expand. unfortunately the large labor union successfully lobbied to make sure the bailout did not come with any meaningful reforms protecting workers and preventing future failure. simple reforms like requiring certain funding levels, disclosures for defined-benefit plans, requiring that unions to provide beneficiaries with a clue report of the defined-benefit programs financial state. now, we're seeing the results of the failure to enact these privations. the central states pension fund received $127 billion overpayment in the bailout because they included thousands of deceased participants in their bailout application. let me give credit where credit is due.

teamster president sean o'brien told this committee that money should be repaid. however, the central state pension fund tells the committee it would be impossible for them to repay the money that they were improperly paid. workers covered by the central state should be alarmed about the financial state of the retirement plan, if returning money they were not supposed to receive we destabilize the fund now. frankly, it's infuriating to hear that the union's pension plan could be on the verge of collapse only a few years after they received tens of billions of dollars to bail. if the chair truly wishes to expand the use of defined-benefit plans i am so happy to discuss reforms similar to the ones that have been very successful in the individual employer space and pass them come destabilize the entire defined-benefit system. but we will have to overcome staunch union opposition to any reform that provides greater oversight and protection for their workers. together though i think we could do it. to be clear, republicans do not

support putting the thumb on the scale to prefer either defined-benefit or defined contribution. we support what works. most businesses with individual point defined-benefit plans wished to continue to offer and expand their programs. if it's working don't fix it. we are seeing the good work at companies who are importing the best of defined-benefit system into the defined contribution including many innovative lifetime income products. i agree with that your lifetime income is desired by many americans. let's make it easier for defined contribution to include them. there are things we can do on a bipartisan basis which is why it was disappointed the rather working together to hold a bipartisan hearing, the majority plan is hearing on a partisan basis with no input from the minority on scope or legislative focus. we will need something bipartisan to passed with 60 votes. we can do it. earlier this year senator kaine and i introduced two bipartisan bills, for helping young american safe retirement act would make it easier for younger

workers between the ages of 18-20 to save for retirement by removing barriers currently making it harder to joint and employers retirement plan. the out-of-control act of 2023 assists workers who previously declined to participate or contributed little to the employers pension plan fund many workers are in the career make less money, they want the money in a paycheck to pay for bills as opposed to contributing to retirement but when the wages grow we find that they get to opt back into start contributing to their retirement. this legislation allows the business to periodically auto enroll employees back into the plans with the option to opt out, but that way they don't accidentally miss out on crucial years preparing for retirement. i hope the chair will indulge us with a markup of these bipartisan pieces of legislation. in closing, many of the members of this committee had wonderful ideas that winkler in the secure 2.0. it would be great to explore the current, the current effectiveness of these provisions and discuss any other creative ideas that enhance the

system we have. thank you and i yield. >> thank you, senator cassidy. we have five excellent, knowledgeable witnesses. we we're going to begin with sa schambers. ms. schambers is a fourth-generation ford auto worker and his been a uaw member for 17 years. she spent her first six years as a full-time temporary employee at a a ford subsidiary in plyh michigan. in 2012 to secure permanent status to support a family center was forced to move from michigan to ford's louisville assembly plant in kentucky. she now works at ford livonia transmission plant in michigan is a member of uaw local 182. thanks much for being with us. >> thank you and good morning. as senator sanders said my name is sara schambers, anna pratt fourth-generation autoworker. i followed up my great-grandfather skim my grandparents and my mother's

footsteps. i build cars were living and a proud of the work that i've done. but the difference between my generation in past generations is they had a pension. i do not. i don't have health care i retire and they do not have retirement security. i have been on autoworker for 17 years, six of those years i worked at ford as a full-time temporary employee until 2012. that was a a big moment for m. because for generations getting a job at ford meant stability and security and being able to plan for yourself and your children. it meant being able to buy a house and see a future for yourself. but for those of us that hired in after the financial crisis, that has not been our truth. instead, we have been fighting to get back the american dream and try to turn these jobs back into careers. just like they were when my parents and grandparents who built this country and the american auto industry. two of my grandparents who retired from the big three had

very different paths. my grandfather gave three decades to ford motor company and in return he got to retire at age 55 with the pension and healthcare. he was afforded the dignity of a life after ford motor company. he was able to have a life with his kids, his grandchildren and his great-grandchildren, be part of his community and not just work until he died. my grandmother, she had a different path. she was hit with lou gehrig's disease. she had to retire early for her illness. she didn't have to choose between doctors, rent, or food. she knew she had healthcare and a pension to rely on and she retired and struggled to her health. for me, in sickness or in health, i don't know what my future holds. it causes fear and anxiety in the working people that don't know how long they're going to be able to laugh at a job. it makes people think maybe i i

won't buy that house, maybe i won't put down roots in this community, or maybe i will say at this company. i didn't become a fourth-generation autoworker because i love building cars. i didn't become a fourth-generation autoworker because i love the low starting pay. or the lack of a retirement security that we now know. i come from a family of auto workers because for years it was a career, one that you would quit working and get something out of it. and a lot of ways for generations ford was the american dream. it meant if i pitched in, if i worked hard, i be able to have a life after ford motor company. but without a pension, without healthcare, we have people leaving these companies after 30 years with nothing more than a have a nice day and hope the stock market doesn't crash. that is unacceptable for america. as you know of uaw when major victories in our six-week strike.

i proud of the accomplishments that we've made after 15 years of falling behind after the financial crisis. but we still fell short of what generations of auto workers had. we still fell short of what the american dream should be. the companies were adamant that they couldn't afford to add to our pension liability. they said that wall street would look down on them, and that giving back our pensions could affect their stock prices and possibly lead to lower credit ratings. nowadays, the stock price is more important than 150,000 autoworkers. that's a shame. our next big three contracts expire in 2028 and we are ready to fight like hell for retirement security, for pensions and healthcare when i retire. there's an old saying, we will strike if provoked. well, i think wall street calling the shots and telling the big three that autoworkers

can't have retirement security, that's what i call being provoked. there's another old saying, which side are you on? so want to close by asking you, our u.s. senators, who represent us, which side are you on? the american workers who elect you, or corporate greed in wall street isn't a dignified retirement is too much or the american people to ask for? thank you for your time. >> thank thank you very muc, ms. schambers. our next witness will be teresa ghilarducci, who's a professor of economics at the new school in new york city. she has frequently published in academic journals and has authored several books on how we can enter retirement security for all american workers. thanks very much for being with us. [inaudible]

access talk, sorry. because of inadequate pension system in the united states, our elder poverty rate exceeds all of our peers. we are the highest at 23%. in contrast, the poverty risk for dutch elders is a very low 3%. the u.s. retirement system gets c's and d's on international benchmarks, and the dutch system gets in a jerk you might hear about the average retirement wealth being quite high, and actually growing, but for the typical american, the average, the median retirement wealth has gone down for the bottom 90%. because averages don't tell the story. distribution does. it elon musk walked on the witness stand today we would be the richest on average witnesses of all time in the h.e.l.p. committee. but the typical retirement wealth for us would not, would

not go up here for the typical american approaching retirement, and my study looks at the elder households and the typical retirement wealth, the social security wealth is the most important. the stream of social security benefits, defined-benefit system, for those in the bottom half of the wealth distribution is worth about $180,000. but they have zero retirement wealth and zero home equity. for the typical household in the next 40%, the middle class, their retirement wealth is only about $20,000 and they have, we have come about when that are $29,000 in home equity. it's only the top 10% who over the past 30 years have had rapid increase in the retirement health, retirement wealth, the health as well, and their home

equity exceeds four times that of the middle class. this all adds up, this all adds up into a like every time it readiness. and that lack of retirement readiness has materialized even though congress has given lots of tax breaks for retirement savings. there are a lot of other proceedings policies like home owning incentives. they have been soaring tax breaks for savings and there's been lots of substantial investments into financial advice and all sorts of retirement products. the u.s. retirement system has not flourished. it lacks three fundamental elements of a well-designed pension system. a well-designed pension system only needs three things. needs to have all americans accumulate enough money into their retirement account. it needs to all americans invest well into their retirement account. it needs to have a good way for

americans to de-accumulate the retirement account for lifetime benefit. so what is to be done? well, senators here have tried to protect the defined-benefit system. senator cassidy and senator kaine mandate that erisa plans let people into these plans earlier at 18 18 cannot at 2. in rome -- reenrollment act would help reinvigorate the auto and moment provisions to help more participation. and you may hear about auto ira's. these are automatic individual retirement accounts, at the state level and at the federal level. they are good baby steps for more access, but ira's permit linkages and he did not pooled investment. because people access their individual retirement accounts for emergency savings, homeownership and other life events, they should be called individual emergency savings

accounts. they are not retirement accounts. but we can extend wealth building opportunities to all americans. and one bipartisan, powerful proposal already exists. senator hickenlooper along with senator tillis, , republican, democrat and also democrat and republican house, terri sewell and lloyd smucker would expand retirement accounts to all public sector workers who don't have one. they do not crowd at existing accounts. it follows the successful thrift savings plan, the savings plan of members of congress and staff. would feature automatic enrollment here it would feature portability, had good investment options and sensible the accumulation that it meets that three-pronged test. this also 5% match which which helps mitigate the top heaviness of our current match. it's indoors but experts all across the political spectrum, the aarp, to charles schwab.

last week i was on a radio talk show and the 25-year-old npr host asked me why, professor, is retirement in american becoming a luxury? my students asked me every semester, why do so many people in america who are old, why are they poor and why do they have to work? i congratulate committee members from both parties for recognizing the urgency, a disaster, and the crisis, and for your caring and for your wisdom to solve it. i heard you all say that you need a bold bipartisan reform. thank you. >> thank you very much. our next witness will be dan doonan who is executive director of the national institute on retirement security. he has more than 20 years of experience working on retirement issues. thanks a lot for being with us.

>> thank you. chairman desantis, ranking member cassidy and members of the senate health mitty, i appreciate the opportunity to testify on the state of retirement in the united states and the role of defined-benefit pensions and delivery retirement security. i'm dan doonan exec director. where a nonpartisan nonprofit think tank in washington, d.c. and we have five membership-based financial service plan sponsors, labor unions and nonprofits including aarp. caucuses may progress to address america's retirement crisis. the secure active secure to put over steps in the right direction. however, much work remains to ensure americans can be self-sufficient in retirement. key points i like to make today our first americans to face an alarm retirement saving shortfall. second, the move away from pensions is a a major call ine nation's retirement crisis. a 401(k) plan are an important

part of the retirement equation. they which is not designed to replace pensions. and third, today's pension designs and management can be beneficial for employers,, workers and the economy more broadly. pensions for the most economically efficient way to deliver retirement income and the offer workforce advantages to employers. pensions are paid at more than $600 billion in 2020 supporting $1.3 trillion in economic activity. and pensions of course our user-friendly for workers and face little leakage. in the past the biggest challenge has been for employers that cost of an unstable. i today there are more sophisticated tools and benefit designs that have addressed this challenge. i believe that if companies givt pensions a fresh look they will discover that win-win solutions are possible. diving a little deeper into the gravity of the u.s. retirement

problem, the data clearly shows most americans will not have enough money for financial, financially secure retirement and they are worried about it. our generation x research found the bottom half of gen x burners only had a few thousand dollars saved for retirement, and in the household, that individual household has only 40,000 in retirement savings. also retirement savings or gen x are highly concentrated amongst the highest earners. more broadly the national retirement risk index finds half of u.s. households will not be able to maintain their standard of living when they retire. americans understand the scope of this crisis. 79% of americans agree there's retirement crisis with 55% concern that they cannot achieve financial security in retirement. retirement. looking ahead, the burden for preparing for retirement increases as we live longer, face large risks without wistfully and deal with rising

costs. research shows the nation's individual savings based system is not well suited for workers. it's important to note 401(k)s were never meant to replace pensions. there were meant to be a supplemental vehicle. conventional wisdom suggests 401(k)s cost less, but i think what i hear when that is said, it means we are putting less money into a less efficient system, and as costs rise, i'm hoping for the best. postretirement brings the biggest challenges and inefficiencies. our news research asked how much retirement income was $100,000 nest egg generate annually for someone at age 65? responses were jarring. only 8% of of workers provided an accurate response, most wildly overestimated the low income they could count on.

third, many assume pensions had similar benefit designs and nothing could be further from the truth. to back public plans providing sample and a very transparent in their operations. the wisconsin retirement system and a south dakota retirement system. my written comments provide a chart showing the remarkable cost stability of the systems throughout volatile times. fourth, the ground is shifting with respect to the employers offering pensions. we've heard about the interest at uaw to return to pensions, and we've all read the news about ibm moving back to pensions, which actually produces substantial cash savings for ibm as well. finally, i written testimony details policy issues that could help facilitate a pension renaissance. these key issues are about enabling companies to employ fiscally cautious funding strategies that reduce cost volatility over time without a major disincentive to err on the safe side. in conclusion, thank you for holding the support hearing and

the opportunity to testify. i'll be happy to respond to questions. thank you very much, mr. doonan. senator cassidy joint integration with a? >> yes please. my pleasure introduce rachel greszler senior research fellow at the heritage foundation roe institute his work focuses on retirement and labor policies that the economic growth individual freedom and wealth, well-being. before joining heritage ms. greszler was a senior economist for the united states congressional joint economic committee. shields of the economics and university of mary washington as well as master degree in public policy economics from georgia. welcome ms. greszler that e appreciate you being and look forward to your testimony. >> thank you for the opportunity to be of this morning. and my testimony i would like to look at the current state of americans retirement security and also discuss the failure of certain defined-benefit pensions. older americans financial well-being is strong by historic standards. the share of older americans

with no retirement savings fell to 12% in 2022. even after excessive inflation has eaten away at the amount of american savings, retirees wheel incomes are up over 30% over the past 35 years. importantly, the lowest earners have highest replacement rates in retirement. household in the bottom 20% average 123% of their pre-retirement incomes, worse households at the top average 75%. older americans report greater financial well-being than any other age group, and over the past ten years the percentage of people over 65 who say they're just getting by or having a hard time getting by fell by half. as retirement savings have shifted from defined-benefit to defined contribution plans, assets have surged. the 1.5 trillion, americans inflation-adjusted retirement assets have increased 330% over

the last 35 years. defined benefit and defined contribution plans can provide secure retirement. but when not managed properly defined-benefit plans can end up like ponzi schemes. that's what happened with social security and multi employer or union pensions. past and current congresses have failed to properly manage social security and failed to require sound funding rules for union pensions. now, neither can come close to providing retirees what they promise. social security will be insolvent in nine years and it will implement 23% across the board benefit cuts. that's $5300 $5300 per yer the average retiree. now a a program that was suppd to prevent younger generations from having to bear the burden of older generations has instead and asked a $22.4 $.4 trillion unfunded obligation.

that amounts to $172,000 for every household in america. simply maintaining current benefits would require the average household to pay at least $3000 more per year in taxes. that money would be far better off in a in a personal acc. my analysis shows if a younger worker today were about to put their social security taxes into a personal account they would have three times as much in retirement after purchasing an annuity. policymakers must reform social security before it becomes an even worse deal for younger workers. by shifting towards the universal benefit and making other commonsense changes, policymakers can approve the program, increase economic growth, and enable greater personal savings. private union pension plans are an even more worse disaster than social security. multiplayer pension funding has $823 billion in unfunded obligations as a 2021, and 41

cents on the dulled in promised benefits. this underfunding is systemic. 96% of participants are in a plan that is less than 60% funded. this happened because unions took advantage of preferential rules that allow them to increase benefits without requiring higher contributions to fund those benefits. yet instead of fixing the broken multiplayer system, congress passed the worst possible type of bailout, one that takes winners and losers, does absolutely nothing to fix the root problem, and which encourages more recklessness. while roughly 15% of union plants are not, not privy to taxpayer bailout, about 10 million workers are in plans that will not receive bailouts and it will still become insolvent. to prevent union workers and retirees from receiving less than half of the promised benefits and to prevent tax prep from having to pay and other ane $700 billion in bailouts,

congress must show up the pbgc and apply the same funding rules to union pensions as a dusty nonunion pensions. social security and union pensions are anything but secure. the last thing that americans need is for lawmakers to try to put more of their retirement savings into accounts that they need their own or control and which are managed by groups of people who repeatedly put own personal incentives about workers. to help improve this type of cybersecurity financial americans colluding younger workers who face the greatest financial struggles today, policymakers should enact universal savings accounts so that it is simpler and easier for americans to save for all types of expected and unexpected life events. thank you. >> thank you very much. first, ms. greszler, you almost nailed your five minutes. i must compliment you. now i have the pleasure to introduce mr. eric stevenson,

the president of retirement solutions at nationwide come bring you more than 17 years of experience having joined nationwide in 2006. he holds his bachelor of business administration and finance from university of oklahoma and masters of business administration degree from northwestern university. he is responsible for overseeing nationwide retirement plans operation and delivering workplace solutions for plan sponsors and participants. mr. stevenson, welcome back to the u.s. senate and thank you for being here. >> good morning and chairman desantis, ranking member cassidy and members of the committee, thank you for convening today's hearing to discuss the nation's retirement system and how we can better meet the needs of america's workers and retirees. as a speech of my neighbors eric stevenson, i'm president of nationwide retirement solutions nationwide mutual insurance co-pay, , a fortune when it come based in columbus, ohio. we provide a a full range of insurance and financial services products with nationwide admission 26,000 retirement plans protecting to $200 billion advertisement assets and helping

to secure financial futures for over 2.5 main participants. we are the top provider of governmental 457 retirement plans with 7600 governmental 457 retirement plans with 7600 plans serving 1.84 million workers. we also focus on helping small business employers, employees where the average plan size is 40 employees or less. through nearly 25,000, 401(k) plans in a space. when nationwide began back in a century is a very different landscape that we see today. employers offering pensions took on the risk and the burden of managing that asset on behalf of their employees, most of whom would work for that employer for their entire career before retiring with your benefits. by 1975 there were to defined contribution plans for everyone defined-benefit plan in the market. the burden of managing retirement assets began to shift onto the shoulders of the retirement saver and away from the employer of the plan sponsor. while neither party solutions, while neither of these solutions on their own was purpa,,

traditional dves kept in place tied with her employer through testing primes and calculations. plans expected average employs to have the knowledge and the confidence to manage their own investment choices with little support. both system is an advocate of sites. traditional dbs offer reliable income stream from retirement, often including some survivor benefits, too. plans were portable and can be moved with her work from job to job as a search for higher pay and new opportunities. now in 2024 we have the ability to take the best of both systems and move past are less desirable features. the successful passage of secure act of 2019 and secure act 2022 creative opportunities to innovate and approve the plans and offerings that didn't previously exist. today's plans come with a host of education support and financial planning tools.

there are taxes it is to encourage a small business to offer plans to employees and to make employer contributions to their savings. student loan matching helps young savers start early, auto enroll features get more and more workers savings for retirement. most importantly plans can easily integrate protected retirement income into an employer-sponsored plans. workers with access to these products can select to invest in them knowing what they're their guaranteed income will be upon retirement. nationwide has dedicated significant resources to build out a conference a suite of products on a platform to specifically meet these needs. encouraging plan sponsor to offer at least one protected retirement income solution in their plans will go a long way in making sure that people have guaranteed income when they retire. with 2024 2024 represents n americans are going to turn 65, the largest number in her history. that's 12,000 people are turning 65 65 a day. with that kind of trend i am

especially energized to be a today with all of you seeking the same goal of a secure retirement or america's workers, and i look forward to your questions as we look for ways to solve this crisis. >> thank you very much. that will begin with the questioning. you know, at hearings like this experts throughout a lot of numbers. i look at the world a little bit different than some of our conservative economist in terms of what's happening to working families. but at the end of the day you've got millions and millions of people who have worked their whole lives, are entering retirement and they are scared to death. and i think, ms. schambers, , yr testing was extremely moving because i think you're not just speaking about your own life, not even about the uaw union members. you are talking millions in aid to people. talk a little bit that only for your own experience from your friends, your family, what it's

like to work in your case 17 just for one of the major corporations in america, and doesn't as understand right now you have no retirement program, no pension program. on an emotional basis, on a personal basis what is that like? >> so, yeah, we have a 401(k) and we got a raise in our 401(k) and it's great. it's a good stepping stone. it's a good foot forward. but when i retire, my 401(k) is based off, , and rest of america now that's in my generation, is based off what the stock market is doing. i seen several times in my lifetime where the stock markett went down and we lost a lot of money in our 401(k). i'm not at retirement age when i look at my 401(k) and the amount of money that was bleeding out of it with the covid, it makes me very uneasy. it kind of feels like, especially working at ford.

i had a goal post when i first hired in and then it was well, you're a full-time until further notice. so then now i speak explain to members quote-unquote timber in particular a temporary employee for six years? what does it meet? >> so i was considered full time comes i worked 40, 50, 60 hours a week and i was locked in at $14 an hour into 2013. and i was expected to everything a full-time employee did, , buti didn't get any of the benefits. and actually when i hired in i question what parts of the contract i felt under and they said, it depends on what we're talking about. so there was never any fold e here's your book, this is your rules and regulations. like no, what are going to come under that. >> okay. thank you. thank you very much. ms. ghilarducci, we are in one

sense the wealthiest country in history of the world, right? a lot of billionaires out there doing very, very well. how does come in your judgment, the american retirement plan, the status of older americans compared to people around other wealthy nations? >> my data really looks at that question. so i compare what people were like when they are approaching retirement 30 years ago and then take the same snapshot of the generation that looks like an right now. and as i said in my written testimony, today 50% will not be able to meet the retirement standards and most of them won't be able to meet poverty standards. compare that to other countries with all different kinds of systems, the scandinavians, the

germs, the french, even the italians, just look at our peers, and we fall way behind. i i was looking at the elderly poverty rate of kazakhstan does better than us. so there's a couple of design -- >> i heard from some of the economist here today that we're doing just great, , things are getting better. >> , so that was my little lesson on averages versus medians. because the rich have done so well they have brought up those averages that people who talk about average retirement wealth can point you, ghana. but that's because the top 10% got the benefit of retirement tax cuts, to get the benefit of the run up in the market. they didn't take money out, you know, to buy their houses. >> last question, thank ty much. mr. doonan, right now billionaire pays social security taxes on $168,000. that's about it. massive amounts of untaxed money

there, despite massive income and wealth inequality. does that make sense to you? microphone. >> thank you for the question. you know, i would note that one of the reasons social security finance a fellow track is we used to capture 90% of total income, and that was sort of expected to continue. but with rising inequality i think were down to about 82 or 81. when these projections were done in the early '80s, i feel like they did a pretty nice job. we had 40 years of level costs, but there are some areas where the projections didn't come true. >> senator cassidy. >> i will defer to senator tuberville. >> thank you mr. chairman. thanks for having this. this is interesting. and we all know that as mr. stevenson said, a lot of us are retiring. i if years ago and then my wife

told me to go get a a damn joo here i am today. you know, i for four years paid max in the social security, max, and probably paid close to a million dollars in social security. and to think i get it out 3000 a month, maybe. and by the way, social security for those of you who don't know, this group of. 1983 voted to tax social security. and then a few years later tax it again. it's all a scam. this is all a scam. i mean we've got people is getting ready to talk this going to try to live off $2-$3000. impossible. it's impossible. because what happens, it comes up here, we spend it with 35 to indent. we don't have any money. we are dead broke. a contact% $2 trillion in credit card debt. we are in huge trouble. in this body we had better start figuring that out because we are

going to have run on this city here soon and is going to be about 150 million people come appear saying where's our damn money that we paid in? i i could've put my social security money, 40 years, in tax, in the market and probably before eight to 10,000,000 today. but the federal government wasted it, so i'll get off my horse. it's good we had this because we've got, you know, i get a little pension from education. i was part of the union. it's not going to help people, people go back to her, continue to work longer and longer and i write, you say something that social security and it being taxed for some reason like we're taxing people for the second time on the social security that they put into come into an account. >> yet and i liked when it went social security was first founded, those who established it, it was started out as a 2% tax and is that this will never take more than 6% of your income. today it takes 12.4%, debate of whether you go with cv or social

security trustees and needs to take between 15.8-17.5% were talking thousands of dollars more per year. it also of dollars more per year. it also was only originally recommended that the tax up to $66,000 $66,000 equipment in today's dollars of earnings. but over time it is expanded massively and the money has been spent every year, so where as everything since when has been set aside for me. no, for the past 13 years every dollar that is got out of workers paychecks has gone immediately to pay promised benefits and that's what happens when you have a system that enables those in charge of it to spend the money in the immediate term and leave the buck to connection ration that's coming along. because social security has gone so much it to the detriment of lower income workers in particular who have to be such a large share of their tax, their paycheck to social security two of the left to save for retirement and then lower income and african american workers have the lowest life expectancies. so they are the most likely to

get nothing back in return. what data for african american men will die between the ages of 45-64 after having paid into the system for decades, tens if not hundreds of thousand dollars and they might get nothing back. >> what's the solution? >> i think we all don't have to shift towards the universal benefit system. that's what true social insurance is picked this is not make sense we are paying the biggest benefits to the highest income earners. so gradually over time we need to bend down the benefits for the middle and upper income earners. actually increase them for the low income earners, look at things like indexing like retirement age to life expectancy, more accurate inflation index. and i think workers need an option to have the money in something that actually earns a positive rate of return and can't just need be spent by congressman for 28 and a 290, two boys got a job working are paying social security. they asked all the time that, but i have seen of that money? will they see it? >> i think you will see some of it. that's exact same thing i do whenever i ask a group of younger workers and none of them

raises their hand. i think there will be something there but it's not going to be what has been promised. >> mr. stephen, educating thing to add to the. >> was thank you, senator. what i would add his woman talk what's also security, talk about pensions, the two things about them in, is that guaranteed income. you know what you're going to get chilly speaking at the end of it. what i referenced in of protected retirement we developed solutions that give at both of those in a very efficient way and address the issue around market volatility because we have step and walk-ins. it's an efficient way to lose that to millions of americans that we've been talking, and that's all because of what you'll did rent secure act 1.0 and 2.0. that's what i'm really encouraging us to have every 401(k) plan corporate 457, 43. at least one solutions for american workers can choose if you want to do with it when and retirement we can deliver young people of all ages as me like it would put our money at her own

401(k) instead of put it in social security? is her an answer to that? >> i think what i love is there asking the right question. savings anyway is a good thing and i think there's a place for social security. there's a place for pensions and there's certainly a a pleasure what we're doing in 401(k) plans. >> senator hassan. >> thank you very much, mr. chair and thanks you and the ranking member for having this hearing, thanks to all of our witness her being here today. mr. stevenson, i want to start with the question for you. we can increase americans retirement savings i supporting small businesses that offer retirement plans to their employees. that's why my colleague on this committee senator budd and i working to develop a bipartisan bill to improve the existing retirement plan started tax credit. this bill would ensure the smallest businesses receive tax cuts that fully cover the cost of starting a retirement plan. mr. stevenson, how can expand retirement within tax incentives for small businesses help

increase access to retirement security for the workers at how can congress continue to support small businesses in efforts to provide retirement plans? >> the credits for small businesses are really important. everything we can do to encourage small business to start a 401(k) plan issued to successful. what i would add is as if small former small business owner myself wondered things when you start a small business that you struggle with is just there so methinks you're messing with an sometime getting to the parties try to make sure you can make payroll, so making it easy, making it really automatic for people to set those 401(k) plans the super important as well. >> thank you. another question for you, mr. stevenson. since 2019 targus has twice passed into law bipartisan legislation to increase access to retirement savings options, particularly for military spouses, part-time workers, and student loan borrowers. however, 57 million americans still do not have access to a workplace retirement plan.

mr. stevenson, how can congress continue to build on this bipartisan momentum to increase access to retirement option? >> i can secure act 1.0 and 2.0 have just huge in terms of momentum and with it integrate more access. we're on the right track but we need to do now and hold us a cattle engines up on the side of the table is with you to make sure people are taking fan of those benefits that you provided, that the utilizing those. there's a lot out there, 2.0 just past and working on that but that's, i think you just hear on the right track. we've done so much of it got to keep pushing down that path. >> and it will be helpful foro understand as 2.0 is getting a permitted, what challenges we are seeing and what other changes we can make to just make it easier and easier for americans to save earlier and earlier in their careers. many shoppers, want to turn to you and thank you very much for your testimony. it's really meaningful.

-- ms. schambers. also wanted to talk specifically about the impact that working, that motherhood has on working women and on the capacity to save for retirement. according to a recent department of labor report, mothers lose an average of nearly $240,000 in income over their lifetime as a result of the time that they spent caring for the kids. this lost income in turn reduces mothers retirement savings by nearly $60,000. we all this have to do more to help moms and to help caregivers so they can retire with dignity. as a understand it, you have two children, is that right? how was your experience been trying to both care for your kids and save for retirement? >> so thank you for the question it's really important with having children to be able to say i know when i can leave my career and and i know that n still provide.

when the cost of living goes up, so does babysitting, so does daycare, so it is everything else this world. and until this recent strike our wages were way behind, right? at the top of that when school is out or daycare is a you have to take time off work in order to stay home with your children. so any of the 401(k) that in putting into, whether i'm off for for a day or six weeks with my children, i'm not putting into my 401(k) daily. on top of that its max at 40 hours. so if i work 60 hours, i'm only putting, i'm only allowed, or the company only matches up to 40 hours of what i work. >> got it. >> if i don't work at 40 hours i'm already behind. >> thank you very much. again thank you very much for your testimony. thanks, mr. chairman. >> senator cassidy. >> thank you. hey, thank you all for being here. i think we share a concern. how do we improve retirement for

elon musk for the kind of folks who are at the low end? and so, ms. ghilarducci, you and, sir, and asked her indulgence? you to shoot it. can we restart of me defer to him? okay, nevermind. so, , really the two of you, ms. ghilarducci and, ms. ghilarducci, saying ever thinks so you said is almost portions having parts of it you mentioned, ms. greszler, that your statistic come of our deck and 50% of those just getting pie by has decreased by one half percent of that income is 120% of pre-retirement income. so can you respond going to ask you to respond? spread love to because we've heard some widely different statistics here. the difference is looking at survey-based data which just asks individuals what your income is versus administrative data such as irs tax records,

what people have actually reported on their taxes. .. >> so you'll see in page three of my testimony here, there's a study that's using the irs panel data and 123% replacement at the median, 93% replacement. so most people on their tax records appear to have significant income in retirement. >> can you briefly respond to that? >> that study is old. the cps has been corrected for

that. i use a much more comprehensive study from the university of michigan that looked at what happened when people live their lives after they've filed their taxes through orlife course and right on the verge of retirement how much they have. that's been double-checked with irs data with administrative records and i stand by my written testimony, the bottom have have barely anything. the middle $200,000. the top have almost a million. >> and last words quickly? >> the date it on the internet and you can look that up. >> and you mentioned the defined benefit and you mentioned ibm. i think of ibm having relatively stable employment. and says the average number of jobs someone holds in a six-year period from 18 toe to 24 is 5.7. an average from 25 to 34 and

2.9 from 35 to 44. it does seem like our current job market, people move a lot and the defined contribution allows-- (inaudible) as opposed to five years before i qualify. which we dothere are changes

and there's always been turnover, you know, the incentives have changed dramatically. >> if you added defined benefit, people are more likely to stay with their job. >> we to that. >> i'll say whenever i read a large number, meta is laying off a lot of people, it's often not the workers choice it's the employer's choose to point that out. mr. stevens, the anxiety of an investor dependent upon her retirement about the kind of stock market moving up and down. it's one thing if you have a cushion and in your experience, another, oh, my gosh, i'm 10 years away. you mentioned the term, step up and lock in. now, i'm guessing that from what i'm hearing from you, that would be a way to deal with the

anxiety of that small investor, can you elaborate? >> yeah, absolutely. you've got it exactly right. and again, it's really taking the best of what the pension world had to offer and bring that into the defined contribution plan and we've developed and a number of my peers, addressed that issue 100%. and what i love about this, we know that 60% of americans don't have an advisor and probably goes without saying and making these available inside 457 plans or 401(k) plans, you get the meta institutional level or the corporation, small corporation. >> got to wrap up, because he's tapping the thing. and mr. chairman, the statements from the american benefits council, the a arissa, retirement ira-- >> without objection. >> and i thank you for the

hearing and i want to thank the witnesses for the expertise you bring to the hearing. i don't think there's anyone in the room that doesn't understand the scope of the problem especially after the testimony how important it is to have savings for all of life's needs no matter where a person lives, no matter their circumstances, that, of course, includes retirement. we know that secure, reliable pensions have been phased out by major corporations over time that in my judgment are increasingly cutting costs on the backs of workers and this has contributed to some devastating data with regard to retirement savings and the gaps therein. professor ghilarducci, i want to start with the findings in your gunman, i want to make sure you have this right. half of americans near retirement 51 to 64 have no

wealth in retirement accounts, is that true? and also, that that same group, meaning ages 51 to 64 have no home equity, half don't. >> that's true, too. and that's because our debt creating institutions have overwhelmed our wealth creating institutions for most american workers. student loans, helocs, no down payments for your house, credit card debt, baby-sitting money. the ability to take money out of your retirement account. that's the account of first resort. that should be the account of no resort until you retire. so our wealth institutions have not worked for most americans. >> i want to talk to you about a bill that i've introduced to confront part of the problem, it's called the 401 kids savings account act to help at least begin to reverse these trends.

this bill automatically creates savings accounts at birth for all children, all children in the country with federal support for low and moderate income families and then starting when that child reaches the age of 18, funds can be used for higher education, a small business or first home or retirement. starting to save at birth means families can put the market to work for them leading to compound savings and greater assets later in life. to illustrate this in one particular example, the aspen institute found that starting savings at birth rather than at age 32 when the typical family starts saving for retirement, results in an additional $473,000 for retirement. so that's what our 401 kids plan can achieve. i wanted to ask you about that and also, ask mr. stevenson for

others about the importance of building savings starting at birth. >> yeah, i can quote einstein who said the power of compound interest was one of the most powerful forces on earth and it works the other way, debt, if you compound debt and you have debt when you start off, it can compound the other way. so, it's a really good plan. we should start with wealth and accumulate it. >> mr. stevenson? >> senator, what i would add, you know, we encourage savings at any rate at any level. what i would add is if we auto enrolled everyone at age 21 when they graduated from college, we wouldn't have a crisis either. we would make huge progress, just getting people started 21 versus 31 captures a vast majority of the number that you quoted. >> i know i'm close to running out of time. what's your sense of this in terms of the importance of starting savings at birth?

>> i think when we look at-- i think when you look at a retirement system, it's too common to start at age 40. you have a short time frame. you don't have the opportunity for investment returns to support the cause for retirement. so starting earlier, obviously, makes the math work much better and i think it could help with equity issues and possibly help relieve some financial pressure, you know, stress, that sort of i think this, too. thank you. >> thanks very much. thanks, mr. chairman. >> thank you, senator. >> i want to ask miss ghilarducci and crestler this question, does it ever make sense to borrow money to consume, to spend. start over-- ments yeah, sure, there's good debt, good debt. >> know the to-- i'm saying to spend it, to consume it as opposed to investing it. you knows there's a big

difference there. does it ever makes sense to borrow money to spend it in the present for something that's other than an investment. >> rarely. >> rarely. >> what about you? >> only if it's going to produce a positive return over time like a-- >> you flipped it to an investment. >> so, i'd like to propose this piece of information. when we came out of world war ii we had the highest debt in the history of our country, but that was the greatest generation. they grew up in the depression. they fought world war ii, we somehow ended up paying off all that debt building the interstate highway system, begs the question, how much of what ails us today when we even display it through our own federal government that we're a society that wants to live in the present to where you're not

investing for the future? and here i'll point out in the institution that wants to be backstop for some of this stuff we're talking about, it would be wonderful if we could do it. five years ago when i got here we were borrowing a trillion a year and now it's a trillion dollars every six months. not to mention somebody, i think you did earlier, social security goes broke in nine years, medicare in about four or five. and we don't fix even that. so, aren't we kind of missing the main issue that maybe as a country, as a society, we've lost sight of actually what builds for a good future and my point would be, that you need to become savers and investors inherently, rather than consumers and spenders which we've become through society and as a government. and comment on that. >> no, i think you've got it

right. i mean, the government and businesses are really good investors. you can-- the government-- >> the government is a good investor. >> absolutely you told me the highway bill. >> that's a tangible project, yes, so you've got an asset. i'd agree there infrastructure. >> human capital, big investor in education. that has a rate of return. so i'm with you. household-- >> have we gone too far on a variety of subjects to be credible as a place that could come in and try to fix the same thing we're talking about that we're abusing here? >> i don't buy in on the abuse, but if that were together on the borrowing you do as a government should be an investment, absolutely. >> okay. >> i would disagree that the government is a good investor, i don't think it is and it would be wonderful to talk about having children to be able to start retiring day one, but we have the exact opposite. as you pointed out. debt is the reverse of compound

interest so we have children being born in already they're immediately burdened with 100,000 or more in debt they're going to have to pay off in the future. so the best thing the policy makers can do to create a brighter future for every generation is to not burden them with that debt. >> i agree 100% and i think it's kind of sanctimonious to be talking about it from here when we would be the greatest example that has kind of abused the whole equation of not trying to borrow money to live in the present. it's always a bad business plan. we've got a situation back in indiana, the act called the suzanne muffly act was an example where government stepped in and picked winners and losers, and had to do with an automotive industry to where certain folks got bailed out, some didn't. it begs the question, too, and

when we do step in can we be in the business of picking winners and losers, and even if we do want to do that, are we financially in a position to pick any winner or loser in our current shape? >> no, i think this is a perfect example of how when we do have the systems that are broken and the government is steps in and bails out some and not others. that's not fair. the delphi workers, those unionized bailed out. a billion dollars of a package what was it at least $17 billion bailout for the uaw and big three, without which older workers pensions would not be there today. we have a situation, unionized, you got a billion dollars. same companies, nonunionized they got nothing. >> i'll part with this statement. never borrow money to consume

it. get good at investing, your future would be better off and i wouldn't count on this place fixing it until we get our own house in order. >> senator caine. >> thank you, mr. chairman, and thank you to the witnesses. we do things all the time to benefit some people and not the other. and the notion that doing good things is not good if you don't don't do it for everybody. and every program we do target some and then others then. we helped people preserve pensions and was a bad idea because everybody dent get a pension. >> that passed by one vote and protected the pensions of two million workers, that followed up an earlier vote that we did to protect the pension of united mine workers and that number was smaller, but that's a good thingment by protecting those pensions, we actually protect other's pensions as

well because it's less likely that those two million, the failure of those pension plans would drive down the funding levels of pbgc. so others who had pensions that weren't necessarily protected are going to end up protected as well. mr. chair, you probably felt the same way. there can be frustrating days around here and three times i've been here where something happened by one vote, saving the affordable care act happened by one vote. american rescue plan, two million workers pensions happened by one vote, the inflation reduction act, cutting prescription drug costs and advancing a clean energy economy happened by one vote. there are some days you wonder why you're here, on the days when something happens by one vote, you think wow, i'm glad to seek office and be in this place. sometimes it's one person standing up. items i'm working on with the senator, auto reenrollment.

we have the auto reenroll bill that would periodically sweep people in and enroll in their company's plans and give them the ability to opt out. similar to health insurance. we're every year jogging you about health insurance and making you think do you have the right plan or do you want to switch. if we could do that more often on the retirement options that are in place, with employers, i think that would be a great thing and i think it's a bipartisan proposal that i would like us to do. the second one i want to focus on is young workers, this statistic kind of surprised me. 2.7 million americans between the ages of 18 and 20 work full-time hours, 2.7 million americans, but 40% of workplace retirement plans set a minimum age threshold of 21 to be able to participate in retirement plans. we ought to change that to 18. we ought to have workplace retirement plans pick up 18,

19, 20-year-olds that are working and include them in retirement as well, helping americans save for retirement act and again, i think it's noncontroversial and bipartisan. and then the last thing i'll just say, and i'm one of these people doing four hearings so i'm going to defer back. employee stock ownership, you want to talk about retirement security. 10 million workers that work at east opes end up with some powerful retirement. and there are unusual industries, construction and increasingly you see it in retail, increasingly in some hospitality industries and if we can continue to promote esops through our tax code or through other strategies, i think that's an element in retirement security that can be really, really helpful for american workers and that, mr. chair, i yield back.

>> thank you. >> senator. >> thank you, chairman. so congress has provided explicit instructions to the department of labor on numerous occasions how to encourage americans to save for their retirement. however, the dul's current fiduciary rule proposal directly contradicts these directives if implemented will further respect access, increase cost to consumers, limit personalized financial advice and allow consideration basic investment products, so this approach towards retirement-- retirement invests is incompatible with the current system where individual retirement savers are able to make decisions for themselves. mr. stevenson, do you believe that the dul's proposal is counterproductive to the great bipartisan work as the secure act and secure act 2.0? >> that's a great question. one of the things we've talked

about today. financial literacy, more education and training. in general we know that financial literacy doesn't work and auto enroll, auto escalate, all of those things are powerful. and as a result of dul. it will take our eye off the ball for a long time, stability to implement all you've done around secure act 1.0 and secure act 2.0. it's a major distraction and it's a major expense that those expenses will flow to places that we won't like. >> sounds like a bad idea. mr. stevenson, would you agree with the sentiment in the time when folks are living longer, inflation is rampant, and there's a need to start saving more and saving earlier for retirement, that this rule would leave people worse off? >> it certainly has the potential. there are some challenging parts to it and again, i would just stay to the point around,

there's so much power that you have created in secure act 2.0 and expanding access, expanding, making it easier for small business to do the things that we want them to do. young savers, student loan matching. if we implement those things, we are going to make a huge, huge debt in the challenges we've all talked about today and that rule will really put that at risk for a few years. >> let's talk for a minute, mr. stevenson, about issues that will help my constituents and folks across the country with retirement instead of hurting them, as this rule is likely to do. secure 2.0, it had several incentives to help with start-up costs in employment retirement plans. while these bipartisan measures were important, a simple miscalculation means the tax credit doesn't work for the smallest businesses out there. so i'm working with senator hassan to introduce the senate companion to the bipartisan rise act and what this bill does, it addresses that

miscalculation to help offset the smallest businesses and allows them to offer retirement plans to their employees. so, do you have a positive outlook on whether tax credits like these will actually help boost retirement savings for people? >> they absolutely will. >> can you-- >> just so many americans work in small companies and everything we can do to remove the barrier for launching their 401(k) plan and available to their employees is helpful. we've proven that time and time again. and especially features with auto enroll and auto escalate. that's the pattern. make it easier for them to set it up and the employee to participate. >> thank you, mr. chairman, i yield. >> thank you. i think that's about it. i think on behalf of the whole committee i want to thank all of the panelists. i think we can-- may have strong disagreements about solutions, but we all agree this is a serious problem and needs a discussion and i think we've begun that today.

let me thank you for being here. and i have a hearing today. for any senators who wish to ask additional questions, questions for the record will be due in 10 business days and finally, i ask unanimous consent to enter the record, 10 statements for stake holders, outlining their retirement priorities. so ordered. the committee stands adjourned. thank you very much. [inaudible conversations] [inaudible conversations]

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