Ranking Member DeSaulnier Opening Remarks at Subcommittee Hearing on Improving Retirement Policy
WASHINGTON – Ranking Member Mark DeSaulnier (CA-10) delivered the following opening statement at today’s Health, Employment, Labor, and Pensions Subcommittee hearing entitled, “Modernizing Retirement Policy for Today's Workforce.”
“Thank you, Mr. Chairman.
“I want to thank the witnesses for being here. This is a profoundly important issue that may be very dry to a lot of people, except for staff who study these issues. But in an era where working people have more and more stress and less disposable income to invest in anything – retirement, their family, or healthcare – this is just really an important discussion. I hope we are all mindful that we want everyone to benefit from this.
“There’s nothing wrong with private investment, and we still need social security, of course, because more Americans depend on that than ever – but what’s happened with [private] investment[s] is really going to be concerning generationally. And that is why this really should be a completely nonpartisan issue: how do we manage these opportunities to help the economy, but make sure it helps everyone? As people prepare for retirement, and some people don’t prepare for retirement, as we all did, most likely, when we were in our 20s, and we thought we would live forever. This is a really important discussion.
“In 2008, the Department of Labor issued a regulatory safe harbor regarding the selection of annuity products in retirement plans. And then, in 2019, Congress took bipartisan action to establish a statutory safe harbor that makes it much easier for retirement plans to offer annuity products. If there is bipartisan interest in going beyond what Congress has already done, we must proceed carefully, as I said in my first comments, as these kinds of investments can be costly, opaque, and complex. And we want it to be easy for everyone to analyze their risk assessment.
“But I think it’s important for us to take a step back and be mindful that we are having this discussion about ‘lifetime income options’ in 401(k) plans at a time when there are far too many workers, as I said, who are struggling to earn a decent income over their lifetime.
“Right now, many workers across the country are struggling to pay their bills and meet basic needs, let alone save for retirement. It is incredibly hard for workers to save for retirement when, according to the Federal Reserve, a simple $400 unexpected expense, like a car repair, could force them into a really dire financial situation. I think the numbers from the Fed are more than 40 percent of Americans are a $400 unexpected cost [from falling into] a dire financial situation. It’s a cash flow problem.
“So, it is very important, with our failure so far to extend the premium tax credits under the Affordable Care Act, to have a meaningful discussion about how we address that fixed cost in American households: health care. That’s going to make it more difficult for those 20 million Americans – and in this Committee, we have had extensive hearings over the last four years about the 120 million Americans who get their health care from employer-based [plans] – bad for the employer, bad for the employee – the Chairman and I have had multiple conversations about how we could work to make sure that both for employers and employees, those health care plans are also addressed, because the quality of the care and the cost is going up as well.
“So, in all of that context, the average American is trying to decide how much they can contribute to retirement given the pressures on housing costs, health care, transportation, education, and all the other fixed costs – and the lack of discretionary income makes this a really important long-term discussion that should be bipartisan, in my view, and has been, historically, in this Committee. I think the Chairman and I have worked collaboratively.
“I’d like to really thank Dr. Rhee for being here – go Bears! – representing a district that, I like to say, if you go up to the Berkeley Hills, I have the pleasure of looking down from my district at Berkeley. So, thank you for being here. I have nothing but respect for the Center [for Labor Research and Education], which I’ve had a lot of interaction with over the years. Thank you for your testimony, as well as the other witnesses.
“We must work to fix these inequities. I’ve mentioned the Ranking Member of the full Committee, Mr. Scott, and I consistently make the case that retirement security is fundamentally aligned with workers’ wages. If you don’t make enough, and [then] you don’t have enough discretionary income to be able to make decisions and investments for retirement, it makes it that much more difficult. The more people earn, the easier it is for them to plan and save for retirement.
“At a minimum, we must support policies that increase workers’ wages and strengthen their ability to organize and collectively bargain. The data is clear that unionized workers have greater access to retirement plans and higher participation rates than their non-unionized counterparts. The research is also clear, for their non-union counterparts, that the union members’ ability to negotiate a fair retirement plan helps the non-union members as well.
“But we shouldn’t stop there. In 1935, President Roosevelt signed the Social Security Actinto law and, when doing so, he said, ‘[this] will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.’ I would remind people that before Social Security, if you were old and you were an average American, you were poor. Social Security remains one of the nation’s most effective, successful, and popular programs. It currently provides “lifetime income” to over 67 million Americans.
“According to the Center for Budget and Policy Priorities, for four in ten retirees, it provided at least 50 percent of their income; and for one in seven retirees, it provided at least 90 percent of their income. There have been Republican-led attempts to privatize or destabilize Social Security in the past – but fortunately, those misguided efforts were rejected. We must now work together to protect and strengthen Social Security for future generations, such as the Baby Boomers – of which I am one – who will all be at least 65 by 2030.
“Finally, Mr. Chairman, today’s hearing is happening at a precarious time for retirement savers. Risks are increasing, while core protections are being abandoned or attacked.
“For instance, the current administration is walking away from a sensible rule protecting workers and small businesses from harmful retirement investment advice – often related to certain annuity products— while the administration is also finalizing a regulation to make it easier for retirement plan sponsors to offer risky investments, such as crypto, in workers’ 401(k) plans.
“At the same time, some of my colleagues across the aisle appear intent on advancing legislation that would make it harder for retirement savers to seek justice in courts when charged with excessive fees. It seems that such legislation may be connected to today’s hearing – I hope not – as Republican witnesses at a prior hearing testified that litigation and the threat of it were impacting 401(k) plans.
“And lastly, just a few numbers that, to me, were staggering, that Dr. Rhee will talk about. Among near-retirement households, the share of 401(k) and IRA assets held by the bottom 70 percent has substantially decreased since 2007, from 7.2 percent to 4.9 percent, reflecting growing retirement inequality. This is a survey of consumer finances. The top 20 percent of households in this age group held 86 percent of 401(k) and IRA assets in 2022, which is a reflection of the earlier numbers about how many Americans are completely or largely reliant on Social Security because they can’t afford to get 401(k)s.
“So, with that as an opening statement, I hope you take this from a perspective of, we want to work to make the system work, and not have high-risk, or low-risk, high-reward for some investors, and high-risk, low-return for other investors, like 80 percent of the American public.
“Mr. Chairman, I really appreciate this hearing, and I look forward to working with you to make sure Americans have secure retirement for generations to come.”
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