WASHINGTON, D.C. | April 22, 2009
Good morning, and welcome to our distinguished panel of witnesses. Some of you are making a return appearance before the Committee, and we appreciate your efforts to continue to provide us with your expertise on issues of such national importance. Others are joining us for the first time, and we look forward to your new perspectives.
We return today to a debate we started in the last Congress, specifically regarding the nature and transparency of fees charged to 401(k) plan participants, and how best to address that issue. We have before us this morning a bill that was introduced yesterday – providing insufficient time for staff on our side – not to mention the witnesses before us this morning – to review in any sort of detail. Republican staff has been advised that the bill we are discussing is substantively identical to the fee disclosure legislation we voted to report out of this Committee in April of last year – an amended version of the bill originally introduced by Chairman Miller. On that point, Mr. Chairman, I take you and your staff at face value, and accept as a matter of faith that we are discussing materially the same bill that received a vote in Committee last year.
As we take up this debate, let me say first that we must be guided this morning by facts – not rhetoric. In previous hearings, we’ve been painted a sinister picture of greedy financiers “raiding” employees’ 401 (k) plans and robbing them blind through exorbitant pension fees.
Mr. Chairman, I submit we stick to the data. When you run the numbers, an individual with an average 401 (k) account balance would have paid a median total of pension fees of roughly $346 per year. Those with lower-than-average balances – such as lower-income workers – would, obviously, pay even less. I welcome a fair debate about the appropriateness and transparency of pension fees – and I hope we can proceed today without hyperbole or fear-mongering – in either our language or our action.
In the same vein, I would encourage my colleagues to avoid grandstanding and posturing here this morning. Specifically, I would hope none of us yields to the temptation to characterize the dramatic decline in many workers’ 401(k) plans as simply an issue of “fee disclosure.”
American workers and retirees are justly upset and frightened by the dramatic effect the market downturn has had on retirement savings. But we do no one a service – indeed, we do a great disservice – to suggest the cataclysmic failure in our markets are no more than a function of so-called “hidden” fees or corporate raiders. The dramatic loss in retirement savings was not caused, nor would it have been avoided, by the difference of a fraction of a percent in an investment fee.
Mr. Chairman, you may recall that debate on this bill last year generated substantial concerns from committee members on both sides of the aisle. I hope that as we start the process fresh this year we are both willing and able to work together to forge common ground on how we might improve pension fee disclosure under ERISA. As I said during our markup last year, I stand ready and willing to join you in this effort.
Indeed, as we address our retirement system more broadly, I hope we explore genuine efforts to help Americans rebuild their 401(k) nest eggs, as packages brought forward by our Republican Leadership – including the Savings Recovery Act, which is being introduced today – are prepared to do. Among its provisions, our bill would enable seniors to keep more of their retirement savings by further suspending the mandatory withdrawal that requires a certain portion of retirement savings to be withdrawn after an individual turns 70 ½ or retires. This provision protects the investments of seniors and retirees at a time when the value of their accounts is low – and is just one of the many factors worthy of discussion as we consider how to help Americans rebuild their savings.
That said, we have an excellent panel of witnesses here before us this morning, and we should hear from them directly.
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