US Senate Committee on Health, Education, Labor, & Pensions

Statement of Senator Tom Harkin (D-IA) At the Aspen Institute Initiative on Financial Security: “Improving Retirement Security: Expanding Coverage to All Americans”

*As Prepared for Delivery*

Thursday, May 16, 2013

“It’s great to be here today to talk about the retirement crisis and my proposal to solve it by expanding pension coverage. 

“But before I get into my remarks, I want to thank Lisa Mensah and the team at Aspen for sponsoring this event as well as the other speakers here today.    I would also like to commend my friend Congressman Neal for his thought leadership on retirement issues.  He is working hard as a member of the Ways and Means Committee to solve the retirement crisis and help rebuild economic security for middle class families. 

“Retirement is a subject near and dear to my heart.  I have been focused on it for many years.  And I know from my constituents that the dream of a secure retirement is growing fainter and fainter.  Whether it’s a young family struggling to pay off student loan debt, save for their kids’ education, and put something aside for their own retirement, or a 65-year old nurse finally eligible to stop working, most Americans are deeply worried that they will not have enough money to live on when they stop working. 

“They’re right to be deeply worried.  When I started looking into retirement issues, it quickly became clear that we are facing one of the most under-reported crises out there.  Consider this: the retirement income deficit – meaning, difference between what people have saved for retirement and what they should have at this point – is a staggering $6.6 trillion and growing.  That’s ‘trillion’ with a ‘T.’ The sad truth is that most people just aren’t prepared financially for retirement. 

“And what happens to people who run out of money when they get old?   They can’t keep up their standard of living.  They become a burden to their families – if they’re lucky enough to have family to turn to.  And they lean more and more on the social safety net, squeezing government at all levels. 

“Hardworking Americans want to enjoy their golden years with dignity and financial independence.  But that is getting less and less likely for the average person.  Today, half of Americans have less than $10,000 in savings, and only 14 percent are ‘very confident’ they will have enough money for a comfortable retirement.  We can do better.  We must do better.

“One of the biggest problems is that almost half of the workforce doesn’t have access to an employer-provided retirement plan.  And the truth is that, if people don’t have access to a pension or 401(k), they just aren’t going to save. Study after study has confirmed that.  By simply providing people access to a retirement plan we can drastically increase the likelihood that they will have a secure retirement. 

“That’s why I put out a proposal to ensure that every working person has automatic access to a secure retirement plan.  My plan does a couple of things.  

“First, I would create Universal, Secure, and Adaptable Retirement Funds – USA Retirement Funds for short.  These funds would have the advantages of a traditional pension – professional management, economies of scale, longevity risk pooling – but they wouldn’t force employers to bear all of the risk.  Third-party independent trustees would run the funds, and employers would only be responsible for making fixed, predictable contributions. 

“Second, I would ask employers who do not already offer a pension or a generous 401(k) to automatically enroll their employees in a USA Retirement Fund and make modest contributions. 

“The end result of my proposal is that every working American – not just those lucky enough to work for a good employer – every working American would have an opportunity to earn a secure source of retirement income that they can’t outlive. 

“I should point out that my plan wouldn't directly affect people with pensions already.  They wouldn't have to do anything different.  There are plenty of employers that are doing the right thing already, and we should be fighting to help them.  But by making sure everyone has access to a good retirement plan – by lifting everyone up – we can reduce the gap between the haves and have-nots.  And we can create a level playing field for all businesses.  And most importantly, we can take a huge step toward solving the retirement crisis.  

“We’ve got a big job ahead of us.  We have to educate people – and raise consciousness – about the scale of this retirement crisis.  We need to come together around the kinds of practical solutions that I have talked about this afternoon.  But I’m confident we can do it.  We just need to roll up our sleeves and get to work.

“I thank you for the opportunity to share my thoughts with you today.”

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