Murray, Burr working on bipartisan retirement and emergency savings package
Before the COVID pandemic, two in five families would struggle to get $400 for an emergency
Many people still lack access to retirement plans, don’t participate in them, and don’t have clear complete information needed to make important financial decisions
Senator Murray: “It is painfully clear we need to do more to strengthen people’s emergency savings and retirement security.”
*** WATCH: SENATOR MURRAY’S OPENING REMARKS HERE ***
(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA), Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, led a hearing focused on enhancing emergency savings and strengthening retirement security. Senator Murray discussed how the COVID-19 pandemic highlighted the urgency of making sure Americans have the tools and information they need to be able to save for emergencies and prepare for retirement. While financial experts say families with low-incomes should have six weeks of emergency savings, reports from before the pandemic found almost two-in-five Americans would struggle to come up with $400 in an emergency.
“The COVID-19 pandemic upended our economy, and with it the financial security of people across the country. I’ve heard from families in Washington state who were forced to raid savings meant for their futures, just to make ends meet—savings for their kid’s college fund, a down payment on a house, or for their retirement. And that’s not even the half of it. Many people across the country have never even had access to a retirement plan, and never even been paid enough to make ends meet—let alone save for the future,” said Senator Murray “COVID-19 was exactly the kind of crisis millions of families simply could not afford.”
In her opening statement, Senator Murray noted she and Senator Burr are currently working with their Senate colleagues on bipartisan retirement legislation they are aiming to put forward later this spring, and laid out some of the issues she hopes to address in their package. The bipartisan bill in the works would build on the House’s Retirement Improvement and Savings Enhancement (RISE) Act with additional proposals focused on improving people’s financial security like providing new emergency savings options, auto re-enrollment, helping people find ‘lost’ retirement accounts, improved transparency around lump-sum offers and fee disclosures, and more.
“Ranking Member Burr and I are working now to pull together bipartisan ideas in this space, and move a retirement legislative package later this spring,” said Senator Murray. “I hope our discussion today will inform and improve these efforts, and our Democratic and Republican colleagues will continue to bring forward ideas over the next few weeks so we can build a good, bipartisan package that helps workers, retirees, and families. Because it is painfully clear we need to do more to strengthen people’s emergency savings and retirement security.”
Along with several other issues, Senator Murray also raised the importance of ensuring people have clear, complete information regarding hugely consequential financial decisions. A GAO report she requested found that fee disclosures for 401(k) plans are not effective at helping people understand key information. Another GAO report found that disclosures related to lump-sum offers, where people trade a lifelong pension for a one-time payout, often lack key information—an issue Senator Murray has introduced legislation in the past to address.
The hearing included testimony from Petros Koumantaros, Managing Director and CEO of Spectrum Pension Consultants, Co-Founder and Chairperson of GROUPIRA, and financial consultant at intellicents; Ida Rademacher, Vice President at the Aspen Institute and Executive Director of the Financial Security Program; Cindy Hounsell, President and Founder of the Women’s Institute for a Secure Retirement (WISER); and Doug Chittenden, Head of Client Relationships at the Teachers Insurance and Annuity Association of America (TIAA).
Senator Murray’s opening remarks, as prepared for delivery, are below:
“The COVID-19 pandemic upended our economy, and with it the financial security of people across the country.
“I’ve heard from families in Washington state who were forced to raid savings meant for their futures, just to make ends meet—savings for their kid’s college fund, a down payment on a house, or for their retirement.
“And that’s not even the half of it. Many people across the country have never even had access to a retirement plan, and never even been paid enough to make ends meet—let alone save for the future.
“COVID-19 was exactly the kind of crisis millions of families simply could not afford.
“That’s why we worked in a bipartisan way in the CARES Act to give people more flexibility in managing their retirement resources, and making ends meet during this crisis. It’s why I worked in the American Rescue Plan to save workers and retirees from having the benefits they rely on slashed. And it’s why Ranking Member Burr and I are working now to pull together bipartisan ideas in this space, and move a retirement legislative package later this spring.
“And I hope our discussion today will inform and improve these efforts, and our Democratic and Republican colleagues will continue to bring forward ideas over the next few weeks so we can build a good, bipartisan package that helps workers, retirees, and families. Because it is painfully clear we need to do more to strengthen people’s emergency savings and retirement security.
“When it comes to emergencies: Financial experts say families with low-incomes really need enough emergency savings to get through six weeks, but before this pandemic started, almost two-in-five Americans would struggle to get $400 in an emergency.
“We need to give workers and businesses tools that make it easier for families to put money away for a rainy day, so that sudden expenses don’t upend their lives in ways that undermine their finances for years to come.
And when it comes to our retirement system, it’s clear retirement plans right now just aren’t working for most Americans: when too many workers don’t have access to one; when one in nine of those who do have access to a retirement plan—don’t participate in it; when one in six don’t think their retirement savings will even last a decade; and when people often inadvertently lose retirement benefits when changing jobs.
“TIAA estimates 30 percent of Americans left a retirement account at their previous employer, and according to the Government Accountability Office millions more have left two accounts behind—all to the tune of billions of dollars workers earned, saved for their future, and simply aren’t able to use.
“We need to fix that—and I know Senator Warren and Senator Daines have a bipartisan bill to address the issue of ‘lost and found’ retirement accounts.
“There are also ideas for how we can better increase participation in employer-sponsored retirement plans through auto-reenrollment.
“As well as bipartisan ideas for how we can get more people retirement options in the first place, by building off steps we took in the SECURE Act to make it easier for small businesses to offer quality retirement plans to their employees, and expand which employees are eligible to participate in them.
“I pressed hard in our work on the bipartisan SECURE Act to make millions of part time workers eligible for their works’ retirement plans, and I have continued pressing to make even more people eligible in my Women’s Retirement Protection Act—I know Senator Casey and Senator Scott have a bipartisan bill on this as well.
“Of course, we also need to make sure that when people have retirement plans, they are given the tools they need to make the most of them as well.
“For example, tools to help people manage spending down their nest egg so they can make retirement resources last for the rest of their lives, and clear and complete information they need to make decisions that will affect their financial security for years to come.
“Unfortunately, a GAO report I requested found that fee disclosures currently provided by 401(k) plans simply aren’t cutting it. Looking at current fee disclosures, four in ten people in a plan incorrectly believed they weren’t paying any fees.
“And the stakes are even higher for retirees when they are forced to consider whether to take a lump sum and trade a lifelong pension, for a one time payout.
“GAO found financial disclosures people were given to consider these huge financial decisions often skipped details like how the value of the lump sum compared to their existing benefit, or the fact that accepting a lump sum would mean losing federal protections.
“I’ve previously introduced legislation to change this, and hope we can get this done soon.
“And speaking of federal protections—401(k)s, by far the most common type of retirement plan, currently aren’t required to have spousal protections like defined benefit pensions plans are required to have. These protections make sure a spouse can’t make decisions with huge financial consequences—like raiding a couple’s retirement resources—without their partner’s knowledge and consent.
“I’ve called to strengthen these protections before, and last week Senator Burr joined me in asking GAO to look at how steps like this could help people.
“When it comes to the issues we are discussing today, it’s clear there is a lot of bipartisan interest in enhancing Americans’ savings, improving their retirement planning options, and strengthening their financial security.
“And I’m hopeful today’s hearing will help me, Senator Burr, and our colleagues on both sides of the aisle to put together a package that builds on the bipartisan SECURE Act we all worked to pass in 2019, and the bipartisan legislation the House has been developing with even more common sense steps to make our retirement system work better for families in Washington state and across the country.
“And of course, we all know emergency savings and retirement are just the tip of the iceberg when it comes to issues that can undermine people’s financial security.
“There are big challenges throughout our economy like low wages and pay discrimination, high costs for child care and health care, burdensome student loan debt, and more. Costs that, like investments, compound over time and set workers back by hundreds of thousands of dollars—in some cases millions—by the time they reach retirement.
“And so, in addition to steps to strengthen our retirement system, and help families save like we are discussing today. I’m also going to continue pushing to bring down costs, and make our economy work for working families.
“And now I’ll turn it over to the Ranking Member, Senator Burr, for his opening remarks."