Today, the Subcommittee on Health, Employment, Labor, and Pensions held a hearing focused on maximizing the retirement security of American workers.
Subcommittee Chairman Rick Allen (R-GA) started the hearing by discussing the need to strengthen defined contribution plans as retirement needs continue to evolve.
“Congress recognizes the widespread adoption and popularity of defined contribution plans among private-sector employers and their employees. As these plans have become the cornerstone of retirement security for millions of workers, there is now an opportunity to build upon this system by expanding lifetime income options,” he said.
Witnesses explained that while these plans have allowed employers and workers to successfully build savings for retirement years, many retirees lack a clear, reliable way to turn those savings into a steady retirement paycheck.
“The retirement industry, thanks in no small part to actions taken by Congress, has done an excellent job in promoting and enabling workers to accumulate significant account balances in their 401(k) plans by the time they retire. However, Americans have been left to their own devices to figure out how to ‘decumulate’ – that is, how to use their accumulated assets to provide themselves with enough spending money to live on each year during their retirement without running out of money no matter how long they live,” said Mr. Ken Levine, Executive Director of Global Retirement Strategy at RTX.
Committee Chairman Tim Walberg (R-MI) asked how expanding access to annuities in defined contribution plans will ease workers’ and retirees’ concerns about running out of money in retirement.
“Sixty-four percent of Americans are more worried about running out of money than death…more access…to lifetime income options throughout the retirement plan landscape can…decrease anxiety [about] running out of money,” said Mr. Wayne Chopus, President and Chief Executive Officer at Insured Retirement Institute.
Rep. Virginia Foxx (R-NC) discussed with
Mr. Surya Kolluri, Head of TIAA Institute, the potential need for additional or more flexible payout options within defined contribution plans. “When I’m saving, I have some choices. I could put it in equities; I could put it in fixed income…I get to retirement and…I need to take this lump sum and decide what to do with it on my own….we could provide some options in the same way we had during accumulation…we are finally at the stage of introducing the ‘I’…which stands for income…back into ERISA,” Mr. Kolluri explained.
Bottom line: Committee Republicans want smart policies that allow American workers to maximize their retirement security.
