The May 14 Senate Finance Committee hearing on "Challenges in the Retirement System" featured broad bipartisan agreement on the need for Congress to act quickly on the Retirement Enhancement and Savings Act (RESA, S. 972), considered unfinished business from the last Congress, as well as concern regarding the multiemployer pension crisis. The hearing also addressed additional steps that could be taken to increase coverage and economic security.

In an opening statement, Chairman Chuck Grassley (R-IA) said passage of RESA, with its centerpiece provision being the expansion of Open MEPs, remains a top priority and he hopes the House will send its version to the Senate "at some point this month." The House version of the bill, titled the Setting Every Community Up for Retirement Enhancement Act (SECURE Act, H.R. 1994), is the subject of some controversy over a provision to expand Section 529 plans to homeschooling, but could be considered on the House floor soon. "I'll continue to work closely with Senator Wyden and other Committee members to reconcile the differences and get this important bill to the President," Grassley said. The Chairman said he is interested in other proposals to increase coverage, encourage more people to save, and help workers plan, save, and live in retirement.

Ranking Member Ron Wyden (D-OR) emphasized the importance of shoring up Social Security, saying no program had done more for Americans' economic well-being than Social Security. Wyden said Congress should act now on multiemployer pension issues and highlighted the Retirement Parity for Student Loans Act (S. 1428) he introduced May 13, which would allow employers to make "matching" payments into a retirement plan while their employees are making loan payments. The student loan provision is included in new legislation, S. 1431, the Retirement Security and Savings Act, introduced May 13 by Senators Rob Portman (R-OH) and Ben Cardin (D-MD).

Witnesses at the hearing were:

• Joan Tibbetts, Vice President, Retirement, The Principal Financial Group, Des Moines, IA
• Tobias Read, Treasurer, State of Oregon
• Joan Ruff, Board Chair, AARP
• Lynn Dudley, Senior Vice President, Global Retirement & Compensation Policy, American Benefits Council

Tibbetts said, beyond RESA, she recommends a new safe harbor that would require automatic enrollment at 6% of pay and automatic escalation each subsequent year to at least 10% of pay, which is included in the new Portman-Cardin legislation and in legislation introduced by current Ways and Means Committee Chairman Richard Neal (D-MA) in the last Congress. She also voiced support for Senator Wyden's student debt proposal.

Read testified regarding the benefits of the OregonSaves automatic IRA program.

Ruff said AARP supports increasing the automatic enrollment contribution level and changes to the Saver's Credit, including making the credit refundable, increasing income thresholds, and restructuring the credit into a match similar to the matching contribution some employers offer in their retirement savings plans. She also reiterated the organization's long-time view on the importance of paper disclosures.

Dudley expressed support addressing nondiscrimination testing reform, allowing employers to continue to accrue benefits for older, longer-service participants in defined benefit pension plans, and the Portman-Cardin provision to increase the catch-up contribution for participants age 60 or older to $10,000.

Responding to a question from Chairman Grassley about retirement policy priorities beyond RESA, Tibbetts said relieving small plan providers' costs and administrative burdens should be a focus, and said her company is most excited about automatic safe harbors that are workable for small employers. Dudley said removing administrative burdens and barriers to savings are key to giving people a secure retirement.

Chairman Grassley cited analysis that Open MEPs wouldn't significantly improve the number of small businesses offering retirement plans. Tibbetts said small employers juggle multiple roles and are concerned about the burdens of setting up plans, which joining already-established plans helps alleviate.

The Chairman also cited some concerns about a provision in the House SECURE Act allowing part-time employees to participate in 401(k) plans. In response to Grassley's question, Dudley said ABC was "comfortable" with the proposal in the House bill.

Senator Portman spoke about the strain of the multiemployer crisis on the Pension Benefit Guaranty Corporation, with the most endangered plans being those of the mineworkers and Central States' teamsters. We "have to fix that," Portman said, adding that he expects hearings in the retirement subcommittee he chairs, and that last year's select committee on the issue got "close but didn't get there."

Portman said one of the most important things that can be addressed is pension nondiscrimination rules, and the RESA bill modifies the nondiscrimination rules for closed plans to permit existing participants to continue to accrue benefits. Without congressional action, he said, 430,000 employees would lose benefits. He also highlighted the provision in his bill with Senator Cardin to allow catch-up contributions for those over 60.

Under questioning from Senator Cardin about the urgency of the nondiscrimination provision in the RESA bill, Dudley suggested that older, longer-service workers grandfathered in a plan are no longer able to accrue benefits without the plan running afoul of the rules. Senator Cardin has said RESA must be enacted as soon as possible, and then the Committee can mark up additional retirement proposals. Cardin noted the importance of the provision in the Portman-Cardin bill that would make the Saver's Credit for low- and moderate-income individuals refundable.

Senator Mark Warner (D-VA) focused his comments on the changing workforce, including the rise of the gig economy, and the role of retirement benefits. He has contemplated the idea of a universal account at birth. Dudley said RESA's provisions for Open MEPs are very important for the evolving economy because such plans can be easily adapted to help gig workers and part-time employees.

Both Senators James Lankford (R-OK) and Maggie Hassan (D-NH) discussed pension portability issues, and Hassan said she has requested a Government Accountability Office study on the portability of small balances at several companies.

Opening statements and testimony are here.

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