"Modernizing Retirement Policy for Today's Workforce"
House Subcommittee on Health, Employment, Labor, and Pensions
2026-01-07
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Source: Congress.gov
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specifically how retirees draw down their defined contribution plan balances. Congress recognizes the widespread adoption and popularity of defined contribution plans among private sector employers and and their employees, and these plans have become the cornerstone of retirement security for millions of Americans. There is now an opportunity to build upon this system by expanding lifetime income options. This hearing will evaluate whether today's workforce would benefit from additional and more flexible payout options from the defined contribution plans as retirement needs continue to evolve. The retirement industry and Congress can work together to support predictable income streams and help retirees manage longevity risk and market fluctuations during retirement. Maximizing retirement savings is a shared goal. I look forward to discussing how the committee can continue its efforts to protect ERISA plan participants and strengthen their benefit plans. I want to thank our witnesses for joining us today. Each brings a frontline experience helping define contribution plan participants. convert retirement savings into lifetime income. We will hear about how retirees manage their savings in retirement, the products that can help them do that, and an employer plan that has tailored an investment and payout option specifically to provide a lifetime income stream. At the same time, we must remain committed, preserving the ability of retirees to choose how and when their retirement savings are paid out. This hearing will explore whether defined contribution plans should offer lifetime income options and how plans may do so while maintaining flexibility for their participants. With that, I yield to the ranking member for an opening statement.
Thank you, Mr. Chairman. I want to thank all the witnesses for being here. This is a profoundly important issue that may be very dry to a lot of people except for staff who study these issues. But in an era where our working people have more and more stress and less disposable income to invest in anything retirement or their family or health care. This is just a really discussion and I hope we all are mindful that we want everyone to benefit from this. Nothing wrong with private investments. We still need Social Security, of course, because more Americans depend on that than ever. But what's happened with investment is really going to be concerning just generationally. And that's why this is really should be a completely nonpartisan issue about how do we manage these opportunities to help the economy, but make sure it helps for everyone. And as people prepare for retirement and people who aren't preparing for retirement, as we all did most likely when we were in our 20s and thought we would live forever, this is a really important discussion. In 2008, the Department of Labor issued a regulatory safe harbor regarding the selection of annuity products in retirement plans. And then in 2019, Congress took bipartisan action to establish a statutory safe harbor that makes it easier for retirement plans to offer annuity products, makes it much easier. If there is a bipartisan interest in going beyond that, Congress has already done, we must proceed carefully, as I said in my first comments, is these kinds of investments can be costly, opaque, and complex. And we want to be easy for everyone to analyze their risk assessment. But I think it's important for us to take a step back as well and be mindful that we're having this discussion about lifetime income in 401 plans at a time when there are far too many workers, as I said, struggling to earn a decent income over their lifetime. Right now, many workers across the country are struggling to pay their bills and meet basic needs, let alone save for retirement.
It is incredibly hard for workers to save for retirement when, according to the Federal Reserve, such as a simple $400 So unexpected expense like a car repair could force them into a really dire financial situation. I think the numbers from the Fed are more than 40% of Americans are $400 in an unexpected cost and going into a dire financial situation, just a cash flow problem. So it's very important with our failures so far to extend the premium tax credits under the Affordable Care Act or have a meaningful discussion about how do we address that important fixed cost in American household health care. That's going to make it more difficult for those 20 million Americans and in this committee we've had extensive hearings over the last four years about the 120 million Americans who get their health care from employer-based, bad for the employer, bad for the employee. The chair and I have had multiple conversations about how we could work to make sure that both for employers and employees, those health care plans are also addressed because the quality of care and the cost is going up as well. So in all of that context, average Americans trying to decide how much they can contribute to retirement given the pressures on housing costs, healthcare, transportation, education, all the other fixed costs, and the lack of discretionary income makes this a really important long-term discussion that really should be bipartisan in my view, and has been historically in this committee. And I think the chairman and I have worked collaboratively. And I'd like to really thank Dr. Reeve for being here, Go Bears, representing a district that I like to say, if you go up to the Berkeley Hills, I have the pleasure of looking down for my district at Berkeley. So thank you for being here. I have nothing but respect for the Labor Institute, which I've had a lot of interaction with over the years, and your testimony, as well as the other
So we must work to fix these inequities. I've mentioned the ranking member of the full committee, Mr. Scott, and I consistently make the case that retirement security is fundamentally aligned with workers' wages. If you don't make enough and you don't have enough discretionary income to be able to make decisions in investments for retirement, it makes it that much more difficult.
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