At Hearing, Senator Portman Highlights Importance of Strengthening Americans’ Retirement Security

Portman Calls for Moving Forward With RESA, But Says We Must Do More, Including Passing the Retirement Security & Savings Act

May 14, 2019

WASHINGTON, DC At a Senate Finance Committee hearing this morning, Senator Rob Portman (R-OH) highlighted the importance of strengthening Americans’ retirement security, including the need to pass the Retirement Enhancement and Savings Act (RESA) as well as new, broader legislation he introduced with Senator Ben Cardin (D-MD) – the Retirement Security & Savings Act – which addresses four major opportunities in the existing retirement system: (1) allowing people who have saved too little to set more aside for their retirement; (2) helping small businesses offer 401(k)s and other retirement plans; (3) expanding access to retirement savings plans for low-income Americans without coverage; and (4) providing more certainty and flexibility during Americans’ retirement years.  The measure includes more than 50 provisions to accomplish these objectives.


Excerpts of his questioning can be found below and a video can be found here:



Portman: “I think that [RESA] is an important first step. I think we ought to move forward with RESA as we passed it, and I hope we can do that. One thing that is in RESA that is also very urgent in fact, the most urgent thing of all, I suppose, we could talk about today is this pension non-discrimination provision that Senator Cardin and I introduced and is now part of RESA. Bottom line is about 430,000 individuals – these are individuals that have a defined benefit plan – are at risk of losing their future benefits by the end of this year. Not many people are focused on it but, boy it’s important and it’s mostly older workers and RESA does address that issue. So, I don’t know Ms. Dudley maybe you want to talk about it for a second.  This passed out of the Finance Committee, as I recall, back at the end of 2016.  And since that time, since 2016 some of these workers now have their retirement at risk already. I want you to talk a little about that and, what should be done about it.”


Lynn D. Dudley, Senior Vice President, Global Retirement & Compensation Policy for American Benefits Council: “Thank you so much for that opportunity. This provision or this issue comes about because a plan makes a change for future participants and so the people that remain in the plan over time become older and longer serviced and so then they violate non-discrimination rules and what the proposal would do would be to provide relief so that companies can continue to provide benefits to those people that are grandfathered in the plan.”


Portman: “Rather than freeze the plan.”


Ms. Dudley: “Rather than freeze the plan and stop providing benefits so that’s how people could lose benefits and have lost benefits. In 2014, we actually did a survey to estimate what the impact could be, and at the time it was hundreds of thousands of employees, potentially millions of employees or in the millions, and over time that has borne fruit. People have lost their benefits because of these rules.  They are not allowed to accrue any further benefits for these older longer service workers and if we don’t do it by the end of this year, it’s a potential as you said another 430,000 employees could lose their benefits and beyond that every year that we don’t fix this, every year, it’s hundreds of thousands more people that could lose their benefits.  And because people are getting older, and they have longer service, more companies are impacted. So it’s an urgent situation.”


Portman: “Well this is another reason for us to move forward with RESA. In the meantime, Senator Cardin and I have also introduced other legislation we’ve talked about today and I appreciate the comments from all of the witnesses about it. This is this broader retirement package. We’re all for RESA. So, we want to get it done. We think we need to go beyond RESA, as the Chairman talked about, and build on that foundation. We have four principal objectives in this plan. It’s addressing the major concerns we now have on our private retirement side. One is to allow people who saved too little to set aside more for their retirement. For instance, we have this new catch-up contribution for those over age 60. That comes because the latest data we have is that 48 percent, about half of Baby Boomers, my generation, have no retirement nest egg at all… We also help small businesses to offer these 401(k)s. We talked a little about that earlier. We talked about the importance of getting RESA passed. This goes beyond RESA to provide an even more generous tax credit to small businesses. Why? Because when you look at the data, about 68 percent of people who work have access to a plan. For small businesses, it’s about 40 percent. And among part-time workers, as Ms. Ruff will tell you, it’s even worse. So we have to get more of these small businesses engaged, so we have a number of provisions to do that. We also have something to expand retirement savings for low-income individuals. If you look at the data on who’s saving and who’s not – lower income individuals – it makes sense.  They don’t have the disposable income, they are not saving for retirement nearly as much as they have to or they should, and so we expand what’s called the Saver’s Credit to do that. And then finally, to provide more certainty and flexibility for people in retirement. A lot of you know about the minimum requirement distribution rules, for instance, when you’re 70 and a half, you have to take your money out of retirement. That was put in place at a time when our longevity tables were a lot different. Now people are living longer. I just talked to someone this morning who is 70 and a half and still working and he didn’t know we had this provision and he was very excited about it, because he didn’t want to have to start taking his money out of retirement. He’s still working! My dad was in that situation, a lot of people are. We also say that if you have under $100,000 in your retirement plan, your 401(k), you don’t have to minimally distribute anything. If you have more than that, we’re going to change the age from age 70 and a half to 75… I want to thank everyone for working with us on that, everyone at the table has been involved in some way.”



Portman: “On the part time workers, Ms. Ruff, can you talk just briefly about that? Why that’s so important and talk about why AARP so strongly supports that provision.”


Joan Ruff, Board Chair of AARP: “Thank you very much. Part-time workers, there are about 27 million part-time workers, and many of them and the majority of them are women, and women generally are the lower waged earners as well. The result is that when they do not have a chance to actually save for retirement, they do not have the retirement resources when the time comes to retire. And at this point 58 percent, that is the amount of the retirement income that most women have compared with men. They also have longer lifespans. A lot of that comes because of lower wages and caregiving. AARP is very concerned about caregiving. The financial and emotional costs of caregiving. And that is one of the reasons that we look at it from the financial and retirement security standpoint.”


Portman: “Well thank you and the number I have is that only 22 percent of part-time workers participate in a plan now. So enormous opportunity here. And just to broaden the eligibility of 401(k)s to include long term part-time workers which would make a big difference in terms of those retirement savings numbers we talked about earlier. I have so many other questions, we have 50 different provisions in this bill and again many of you have been involved in those, we thank you for that, and we want to work with you on getting RESA done, but also expanding what we’re talking about here. And it is the backstop for so many people. Social Security, it’s absolutely essential. It’s the safety net. We have to have it. But it’s tough to live on Social Security alone for a lot of people, so you need to have that private retirement savings as well.”