WASHINGTON, D.C. | April 22, 2009
We’re here this morning to discuss Chairman Miller’s legislation to change the way 401(k) retirement savings plans operate.
Much of the focus has been on the bill’s requirements for increased reporting and disclosure, so let me start there, and let me be perfectly clear: Republicans support sensible disclosure to make 401(k)s more transparent and understandable to workers.
We’re approaching this issue with a spirit of openness and a hope that we can work with the majority as a proposal is crafted.
Unfortunately, it seems the drafting process has ended before it ever began. Instead, we’re starting the process with a bill that largely mirrors the proposal that stalled last year because of legitimate concerns from Members on both sides of the aisle.
I, for one, was not able to support last year’s proposal because I saw the potential for harmful unintended consequences that would limit options for workers.
For instance, the bill’s requirement that all plans offer an index fund is tantamount to a government seal of approval on a particular investment option. This could inadvertently steer savers in a direction that isn’t best for them.
The bill also requires the “unbundling” of services for the purposes of voluminous new reporting. This, despite the fact that experts have told us “unbundling” could actually drive up costs for workers – the exact opposite outcome we’re trying to achieve.
I hope we can address these issues as the process moves forward. But I think a more open process would have allowed this debate before the legislation was introduced.
I’d also like to take a minute to clarify two separate and very serious issues facing American workers.
The fees that workers pay on their 401(k) accounts can significantly impact their long-term savings. Transparency in these fees is a real concern, and one that Republicans share.
But to blame 401(k) fees for the substantial losses workers are seeing in their retirement accounts is to ignore the real culprit – a stock market that has plummeted in the face of a continuing recession.
Again, this is a serious issue, and one that is deeply impacting Americans from all walks of life, whether they are new parents establishing a college fund or workers preparing for retirement.
Let me say it plainly: The downturn in the stock market should not – it must not – be used as an excuse to enact controversial policies on 401(k) reporting and disclosure. To do so would not only be disingenuous, but it threatens to do a disservice to the very people we are seeking to help.
401(k) transparency is an important topic in its own right, and one that deserves an honest and realistic debate.
When it comes to the market downturn, unfortunately, solutions will be much harder to come by. But that isn’t going to stop us from trying.
That’s why I’m joining other Republicans today to introduce the Savings Recovery Act, a bill that takes important first steps to help Americans begin to rebuild the savings they have lost.
Our bill gives Americans flexibility and freedom to save, while eliminating penalties that would make it harder to rebuild what has been lost.
We’ll raise contribution limits on retirement accounts, and we’ll stabilize pensions with a glide path for recognizing losses and additional time to boost funding.
We’ll make it easier for families to save for college, and we’ll get capital flowing again by temporarily suspending the capital gains tax on newly acquired assets. And we’ll allow more Americans to increase their income by doubling the Social Security earnings limit.
The Savings Recovery Act is the product of a Republican Solutions Group that came together to address the very real concerns of Americans who have seen their nest eggs evaporate. We know that savings can’t be rebuilt overnight, but that’s no excuse to ignore the challenges that families are facing.
As for the bill before us today, the focus is much narrower. Rather than responding to the broader losses in Americans’ savings plans, this bill offers a specific prescription for 401(k) reporting requirements and investment options. And so, recognizing the parameters of the bill, I look forward to a thorough examination of these issues.
Members on both sides of the aisle recognize that Americans need to be able to save for retirement. I hope we can find similar agreement on what steps should be considered to enhance current savings opportunities, rather than stifling them.
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