WASHINGTON, D.C. | June 14, 2011 -
The Subcommittee on Health, Employment, Labor, and Pensions, chaired by Rep. Phil Roe, M.D. (R-TN), today held a hearing to review the state of private pension plans and the challenges facing plan sponsors, workers, and retirees.
"Roughly 60 million workers participate in an employment-based retirement plan," said Chairman Phil Roe
. "They, like so many Americans, have felt the impact of the recent recession and continue to experience tough times during this slow economy. As more Americans reach into their retirement savings just to make ends meet, policymakers have a responsibility to examine the difficulties facing workers and retirees and discuss whether federal policies are helping or hurting efforts to rebuild retirement savings."
Witnesses described the difficulties confronting plans, including:
The recent recession
"The impact of the recession and financial crisis on retirement security is twofold. A decline in retirement assets (or the failure for assets to increase in value as expected) has left many workers and retirees with less than anticipated. Some older workers have chosen to remain in the workforce longer to offset the decline in retirement assets, but the overall unemployment rate of older workers remains high relative to pre-recession levels. And younger workers unable to find jobs due to the weak economy are not contributing to employer-provided retirement plans, thereby also reducing future retirement income and security." (Alex Brill, Research Fellow
, American Enterprise Institute)
An uncertain regulatory environment
"In today’s globally competitive marketplace, employers are increasingly sensitive to the costs, risks, and potential liabilities of all their activities. Government policies that raise the costs, risks, and potential liabilities associated with retirement plan sponsorship jeopardize the employer commitment to providing retirement benefits." (James Klein, President, American Benefits Council)
"One of the greatest impediments to the employer-provided system today is the lack of predictability of the rules and regulatory flexibility to adapt to changing situations. ... Consequently, it is increasingly important to ensure that there are no statutory, practical, or political barriers to innovation that would discourage participation in the private retirement system." (Dennis T. Delaney, Executive Vice President, Ingram Industries)
Speaking of a proposed change to current fiduciary standards, Klein added, "We are very concerned that an overly broad definition would actually have a very adverse effect on retirement savings by inhibiting investment education and guidance for plans and participants, raising costs, and shrinking the pool of service providers willing to provide such investment education and guidance."
While Democrats decided to ignore the challenges facing pension plans in order to highlight their failure to produce a plan to save Medicare, Republicans remain committed to finding bipartisan cooperation on solutions that strengthen the retirement security of workers and retirees.
"This hearing is our first opportunity to take a closer look at the challenges facing the pensions and retirement savings of workers and retirees," concluded Chairman Roe. "In recent years, these issues have generated a lively debate, yet have generally resulted in a bipartisan effort to strengthen the retirement security of our nation. It would be regrettable at such a critical time for our country to abandon that spirit of cooperation today."
To learn more about this hearing, please click here.