Senate Special Committee on Aging
Protecting and Strengthening Retirement Savings
Chairman Kohl, Ranking Member Smith, and Members of the Committee, we appreciate the opportunity to testify before you. We are submitting our testimony as a single joint statement because we believe strongly in the need for a common strategy to preserve and expand retirement savings in a manner that transcends ideological and partisan differences.
The topic of the Committee’s hearing today, “Saving Smartly for Retirement: Are Americans Being Encouraged to Break Open the Piggy Bank?”, reflects the dual aspect of this issue. Effective policy needs to focus both on saving -- the accumulation of assets -- and on the preservation of those assets to provide security in retirement. In fact, these two objectives are, to some degree, at odds with one another.
Accordingly, our testimony consists of two parts. First, as the Committee has requested, we address the issue of preservation of savings in 401(k) and similar employer-sponsored retirement plans (pages 2-14, below). Our testimony on this topic seeks to place the issue in a broader, relevant context; briefly summarizes certain recent efforts to limit pension “leakage,” and offers a number of recommendations.
Next we address the need to expand saving by promoting broader participation and coverage (pages 14-28, below). We give special attention to the bipartisan bill introduced by Senator Smith and Senator Bingaman – S. 2167, The Automatic IRA Act, which had its genesis in our joint proposal to expand retirement savings for small business workers. We are pleased by the positive responses the proposal has received and are grateful to you and Senator Bingaman and your other cosponsors in the Senate and the House, for introducing and sponsoring it. We also are grateful to our colleagues, including those in government and in various stakeholder organizations, who have contributed to the proposal.