PRC Supports Senate Committee in Quest to End Retirement Income Crisis

PRC Supports Senate Committee in Quest to End Retirement Income Crisis


By David Brandolph

The Pension Rights Center weighed in last week with the Senate Health, Education, Labor and Pension Committee, stating that both short-term incremental and long-term bold solutions must be considered and implemented if we are to help millions of Americans avoid the hardship of a financially calamitous retirement.    

Committee Chair Bernie Sanders (I-VT) convened a February 28 hearing, titled “Taking a Serious Look at the Retirement Crisis in America: What Can We Do to Expand Defined Benefit Plans for Workers,” citing a need for “immediate attention” to this crisis.   

PRC told the Committee in its written statement that the hearing comes at a propitious time because this year marks the 50th anniversary of the landmark federal private pension law, the Employee Retirement Income Security Act (ERISA), which, because of the protections it gave to workers’ retirement benefits, has been hailed by many as the most important piece of social legislation since Social Security.  

The anniversary provides an opportunity to examine what ERISA did right, what it got wrong, and where we go from here to achieve broad based retirement income security.  It’s also true that, in part due to PRC’s efforts, the national conversation about defined benefit pensions is changing with a renewed demand for guaranteed pensions reverberating across the country. Indeed, one of the union’s top demands during the recent United Auto Workers strike against Detroit’s Big Three automakers was the restoration of a traditional pension. 

As Sanders observed, almost 45 percent of Americans between the ages of 55 and 64 have no savings whatsoever; they have “no idea how they will retire with any shred of dignity and respect.” He quoted a report released by the Committee that found that one in four senior citizens are trying to survive on under $15,000 per year, while more than half are trying to survive on under $30,000.   

Chairman Sanders not only supports increasing Social Security – the nearly universal defined benefit for most Americans – he also wants to advance new plan designs and other ways to encourage employers to offer defined benefit pensions. PRC’s statement supports that important agenda. We recommended in our statement that Congress pursue the following paths to address the retirement income crisis: 

  • Redeploying some of the billions of dollars in tax subsidies for retirement plans from high-income taxpayers to low- and middle-income retirement savers;
  • Promoting defined benefit plans and secure hybrid plans, which reduce financial risk for plan sponsors while retaining defined benefit plan features;
  • Creating new protections for pension plan participants and retirees when a plan sponsor transfers liabilities to an insurance company;
  • Safeguarding plan participants and beneficiaries by providing increased protections for spouses in 401(k)s and ensuring that people get conflict-free retirement investment advice, among other recommendations; and
  • Exploring new structures to expand coverage for the future.

PRC looks forward to participating in the conversation to move this agenda.  

The need for better retirement income avenues was supported by hearing witnesses, including Teresa Ghilarducci, professor of economics and policy analysis at the New School for Social Research in New York. She told the committee that “we can extend wealth building opportunities to all Americans,” pointing to legislation introduced by Sens. John Hickenlooper (D-CO) and Thom Tillis (R-NC) that would expand private sector retirement accounts to all workers who don’t have one. 

Dan Doonan, Executive Director of the National Institute for Retirement Security, Washington, D.C., agreed that companies desiring to attract and retain more high-quality employees should take another look at defined benefit plans, which he said are the “most economically efficient way to deliver retirement benefits to workers.”   

Also testifying was Sara Schambers, one of the union members who went out on strike at Ford Motor Co. last year hoping to procure secure retirement income through a pension. In expressing the fear and anxiety she has in facing an uncertain future, she told the committee that we have many people leaving Ford after a 30-year career with nothing more than a “have a nice day and I hope the stock market doesn’t crash.” 

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