Former Senator Kent Conrad (D-ND) and James B. Lockhart III testified at a Senate Special Committee on Aging hearing on September 7, 2016, titled, "Securing America's Retirement Future: Examining the Bipartisan Policy Center's (BPC) Recommendations to Boost Savings." Conrad and Lockhart — who has held a number of government positions, including at the Social Security Administration and Pension Benefit Guaranty Corporation — led the BPC's Commission on Retirement Security and Personal Savings, which was established in 2014 and reported its recommendations on June 9, 2016.

Committee Chairman Susan Collins (R-ME) began the hearing by noting parallels between the Commission's recommendations, in the report "Securing Our Financial Future," and the Retirement Security Act (S. 266) she sponsors with Ranking Member Claire McCaskill (D-MO) and Senator Bill Nelson (D-FL). Senator McCaskill also noted the overlap in the Commission report with the bill's provisions addressing multiple employer plans (MEPs).

The bill would direct the Treasury Department to prescribe final regulations to permit employers to participate in multiple employer pension benefit plans and amend ERISA and the Internal Revenue Code to: (1) allow employers to maintain a tax-exempt multiple employer pension benefit plan even if the employers sponsoring the plan share no common interest, (2) modify requirements for secure deferral arrangements with respect to nondiscrimination and employer matching contributions, and (3) allow employers with not more than 100 employees a business-related tax credit to cover increased matching contributions required by the bill.

The Commission report recommends establishing Retirement Security Plans, similar to open MEPs, that would allow employers with fewer than 500 workers to "band together and form well-run, low-cost retirement plans that defuse administrative expenses." In testimony, Conrad said the plans would improve access to workplace retirement savings plans, especially among small businesses which may be challenged by traditional pensions or 401(k) plans. During questioning, Chairman Collins inquired about liberalizing MEPs rules to encourage more small business participation. Conrad said it is one of the report's more important recommendations and responds to stakeholder requests to broaden the availability of MEPs. "It's sort of a no-brainer," he said.

Senator McCaskill challenged the BPC's recommendations with respect to 'reverse mortgages' as a source of retirement security, referring to what she described as 'predatory practices' related to seniors borrowing against their home equity. McCaskill also brought up recent litigation aimed at lowering fees in 401(k) plans, expressing concern about whether participants choosing from a variety of actively-managed funds were paying too much for investment results that more closely approximate an index fund.

Senator Kirsten Gillibrand (D-NY) inquired about the degree to which investments are withdrawn from long-term savings vehicles to address medical emergencies. Conrad agreed that "leakage is a huge problem," and said that probably the most controversial Commission recommendation is to no longer allow the deduction for second mortgages and other lines of credit that reduce home equity before retirement, in order to prevent savings from being "used as a piggy bank." Senator Tim Kaine (D-VA), who returned to Capitol Hill from campaigning as the Democratic vice presidential candidate and attended the hearing, also raised concerns about retirement plan leakage.

Several members, notably Senators Richard Blumenthal (D-CT) and Elizabeth Warren (D-MA), raised issues related to the future of Social Security. The BPC report makes a number of policy recommendations designed to strengthen the long-term solvency of the program, while also enhancing benefits for the bottom twenty percent of earners.

Testimony is attached.

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ATTACHMENT

Conrad Lockhart Testimony