WASHINGTON, D.C. | May 18, 2017
Retirement security is a leading priority for this committee, and one that crosses party lines. After decades of hard work, every American should be able to retire with dignity and peace of mind. Unfortunately, too many Americans are struggling to save for their retirement years. Now more than ever, we need policies that empower workers to put money aside for retirement.
Those policies should include strong protections for workers. I was proud to champion a resolution to close a regulatory loophole that would have resulted in countless individuals losing the retirement protections they have long been afforded under federal law. This loophole was put in place by the Obama administration to allow states to force workers into government-run IRAs.
The answer to our nation’s retirement challenges isn’t more government. Part of the answer is getting the economy to grow faster. The sluggish economic growth, weak job creation, and stagnant wages we’ve seen in recent years certainly haven’t made it easy for people to save for retirement. After all, the most important step toward a strong and secure retirement is a good-paying job.
Working families are also in desperate need of health care relief. With health insurance premiums increasing faster than wages, something has to give. For many individuals, that means saving less for the future. That’s why the committee has advanced free-market health care reforms that lower costs. We’ve also played an important role in delivering regulatory relief to help create jobs and grow the economy.
I say all this because truly tackling the issue of retirement security is going to require a holistic approach. We can start by removing regulatory barriers facing retirement savers.
For years, this committee has led the fight against the flawed fiduciary rule. According to one report, this rule was the most expensive regulatory action of 2016 and will impose more than $46 billion in costs on retirement savers. Let me repeat that. $46 billion. Now, we all agree that investment professionals should act in the best interests of their clients. In fact, this committee advanced bipartisan legislation increasing protections for retirement savers.
However, the last thing working families need is to lose access to their trusted financial advisors. Unfortunately, that may be the case for low- and middle-income families if the flawed fiduciary rule takes effect. Already, we are seeing the types of services those with fewer savings depend on begin to diminish. As this trend continues, many individuals will no longer be able to afford retirement advice. They’ll be left with robo-advisors or forced to fend for themselves.
It should come as no surprise that the robo-advice industry has come out in full force in defense of the fiduciary rule. An executive of one of the industry’s largest firms recently told the press, “An expansion of the fiduciary rule would be nice for our business.” Another robo-adviser said they “are sad that it looks like … the rule might go away.” There was even a national ad campaign urging the Trump administration to keep this flawed rule in place.
We have nothing against robo-advisers. People should have choices and access to retirement advice in all forms. However, many individuals prefer to choose personal financial advice. But as we’ve warned all along, that choice may soon be out of reach for those who can no longer afford it.
We’ve also warned of the impact on small businesses. Many rely on financial advisors as they set up retirement plans for their employees. But as one Indiana small business owner testified before the committee, this rule “puts all of that in jeopardy.”
What we should be doing is making it easier for small businesses to offer retirement plans to their employees. According to a recent survey, 37 percent of small businesses cite “set up expenses” as the key reason for not offering retirement benefits. One way small businesses could provide retirement plans to workers at a more affordable cost is through multiple employer plans, or MEPs.
Unfortunately, these plans are currently restricted by the federal government. With roughly 58 million American small business employees, it’s time to change that. We should empower small businesses to band together through MEPs — an idea that has received bipartisan support over the years.
Additionally, we need to reduce red tape. We can file taxes online and students can receive information about their federal student loans online. Yet the federal government limits the ability of workers and retirees to receive information about their retirement accounts in anything but a hardcopy. Simply allowing employers to provide information about retirement benefits electronically would reduce the cost of administering retirement plans by an estimated 36 percent.
All of the solutions I outlined have one thing in common. They would all empower workers and families to save more for retirement. Many in this room likely have other ideas as well, and that’s exactly why we’re here — to have a thoughtful dialogue on how we can strengthen retirement security for all Americans.
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