The Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing on February 28 to examine how to increase retirement financial security through defined benefit (DB) plans, defined contribution (DC) plans, and Social Security. There was considerable focus on whether the Social Security wage base disproportionately taxes income that makes up the base of Social Security benefits. For example, one witness noted that when Social Security started, the wage base for lower income workers captured 2 percent of income whereas now it now captures 12.4 percent.
Sen. Ted Budd (R-NC) raised the issue of the adverse impact on the Department of Labor’s (DOL’s) proposed fiduciary rule on retirement savings. He said the rule, if finalized, would restrict access, increase consumer costs, limit personalized financial advice, and allow only very basic retirement products. One witness, Eric Stevenson, President of Nationwide Mutual Insurance Company’s Nationwide Retirement Solutions, agreed.
Also discussed was the impact of childcare costs on the ability to save for retirement, the interaction of DC and DB plans on the ability of workers to save for a secure retirement, and the potential that children’s retirement savings accounts could enhance the population’s retirement security. Other ideas that Senators and witnesses explored were an automatic re-enrollment rule (i.e., requiring another opportunity for workers to choose to participate in a retirement savings plan after an initial decision to opt out), the rule in SECURE 2.0 that allows student loan payments to count as matching contributions, and the provision reducing the minimum age for allowing worker participation in a plan from 21 to 18.
Prospects: The committees (including Senate HELP, Senate Finance, House Ways & Means, and House Education & the Workforce) with jurisdiction over retirement savings are collecting ideas for the next generation (SECURE 3.0?) of retirement savings legislation. This hearing is part of that effort. However, action on a new retirement savings bill is not expected this year.
NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.