Congress should expand lifetime income options in defined contribution plans, bolster access to multiple employer plans, provide emergency savings opportunities and much more to better help Americans save for retirement, a panel of experts told lawmakers Tuesday.
Sen. Patty Murray, D-Wash., chairwoman of the Senate Health, Education, Labor, and Pensions Committee, and Sen. Richard Burr, R-N.C., the committee's ranking member, are working on bipartisan retirement legislation that they are aiming to unveil this spring, Ms. Murray said during a hearing Tuesday titled, "Rise and Shine: Improving Retirement and Enhancing Savings."
The bill would build on the Retirement Improvement and Savings Enhancement Act, or RISE Act, which was introduced in the House in November, with additional proposals focused on improving people's financial security like providing new emergency savings options, auto re-enrollment, helping people find "lost" retirement accounts and improving transparency around fee disclosures, Ms. Murray noted.
It will likely be part of the SECURE 2.0 discussion ramping up in Congress.
"I hope our discussion today will inform and improve these efforts, and our Democratic and Republican colleagues will continue to bring forward ideas over the next few weeks so we can build a good, bipartisan package that helps workers, retirees and families," Ms. Murray said. "Because it is painfully clear we need to do more to strengthen people's emergency savings and retirement security."
In the House, a vote was scheduled for Tuesday on the Securing a Strong Retirement Act of 2021, a bipartisan bill that builds on the Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act, which Congress passed and was signed into law in late 2019.
The panelists, including Doug Chittenden, head of client relationships at TIAA-CREF, offered insights to how Congress could help the retirement security landscape.
Mr. Chittenden said Congress should expand lifetime income options in DC plans. He noted that current regulations discourage employers from including the "most effective" lifetime income products as default options. "Fixed annuities with delayed liquidity features would offer retirees the potential for higher returns and retirement income as a part of a default investment option," he said.
Also, Congress should allow 403(b) plans to participate in multiple employer plans, Mr. Chittenden added.
On emergency savings, Petros Koumantaros, managing director and CEO of Spectrum Pension Consultants, said the economic fallout from the COVID-19 pandemic hit families hard. In plans with which his firm is associated, financial hardship withdrawals increased 280% in 2020 over 2019, Mr. Koumantaros said. He encouraged Congress to pass emergency savings legislation that provides workers with penalty-free access to an emergency savings withdrawal from a retirement plan.
Added Ida Rademacher, a vice president at the Aspen Institute and executive director of the Aspen Financial Security Program, "The concurrent ability to save for emergencies and create that liquid savings is important" for workers. A recent Aspen survey found that 40% of Americans would struggle to come up with $400 in an emergency, Ms. Murray noted.
Cindy Hounsell, president and founder of the non-profit Women's Institute for a Secure Retirement, or WISER, said more needs to be done to help women save for retirement.
"Women have a more difficult time saving for retirement for reasons commonly acknowledged: lower wages, (and) time spent either out of the paid workforce because of caregiving, or working part-time, which is why women make up nearly two-thirds of part-time workers, 64%," Ms. Hounsell said.
She touted a bill reintroduced in July by Ms. Murray and Rep. Lauren Underwood, D-Ill. — the Women's Retirement Protection Act of 2021 — which includes a set of provisions that target some of the challenges that disproportionately affect women as they plan for their financial futures.