Social Security solvency, the trouble certain multiemployer pension plans face and the success Oregon's state-based automatic IRA program were a few of the topics at a hearing Wednesday by House Ways and Means Committee on retirement security.
Chairman Richard Neal, D-Mass., who called the hearing, said one of his priorities is helping American workers prepare for a financially secure retirement. "So I plan for this hearing to be the first of many conversations on this issue," he said.
Mr. Neal noted that roughly 55 million private sector employees work for an employer that does not offer a retirement plan.
"Increasing opportunities for employees to save through a plan at work could make a huge difference for families – having an employer-sponsored retirement plan is key to preparing for retirement," Mr. Neal said in his opening remarks.
Luke Huffstutter, a small business owner from Portland, Ore., was one of seven witnesses to testify before the committee Wednesday. He told members that he would bring in financial advisers each year to discuss savings options with his employees but only about 1 in 5 started a savings plan. But then, Mr. Huffstutter joined OregonSaves, which was launched in 2017 and enables workers whose employers don't have a retirement plan to invest in a Roth IRA. The program sets an automatic deferral of 5% of pay per year, plus an annual 1% auto escalation until the retirement contribution reaches 10% of pay. Employees can opt out, and they contribute more up to the limits set by Roth IRA rules.
"Every worker who didn't already have an IRA or other savings program has remained in OregonSaves," Mr. Huffstutter said.
With respect to the nation's private retirement savings system, Roger Crandall, chairman, president and CEO of Massachusetts Mutual Life Insurance Co., said there are significant gaps that must be addressed. He suggested broadening retirement plan coverage, especially among small employers; increasing enhanced automatic enrollment; and facilitating guaranteed income for life, which protects retirees from outliving their retirement savings.
On the subject of Social Security, Nancy J. Altman, president of Social Security Works, an organization committed to safeguarding the program, said that although Social Security is popular, it's benefits are "extremely modest by virtually any measure." About 2 in 3 recipients rely on Social Security for their primary income, she added.
The combined reserves of the Social Security trust funds are expected to be depleted in 2034, according to the latest annual report from the Social Security and Medicare Board of Trustees released in June.
On Jan. 29, John B. Larson, D-Conn., and chairman of the Ways and Means Social Security Subcommittee, introduced the "Social Security 2100 Act." The bill aims to shore up Social Security by implementing an across-the-board benefit increase for current and new beneficiaries and improving cost-of-living adjustments, among other provisions. The added benefits would be paid for by gradually increasing the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4%, instead of the 6.2% today, according to the congressman's website.
Representatives on both sides of the aisle offered support for the bill at Wednesday's hearing as well as finding a solution for the multiemployer pension plans in crisis.
A bill that would create a federal loan program for struggling multiemployer plans and allow the Pension Benefit Guaranty Corp. to provide more financial assistance to them was introduced Jan. 9 by Mr. Neal. It has 19 bipartisan co-sponsors and been referred to three committees — Education and Labor, Ways and Means, and Appropriations — for consideration. At the Wednesday hearing, Mr. Neal said there would be "some sort of legislative activity" on the proposal before the end of the year.