Today, the Health, Employment, Labor, and Pensions Subcommittee held a hearing to discuss updates to retirement policies for American workers. The session was led by Subcommittee Chairman Rick Allen (R-GA) and focused on how current retirement systems can be improved to meet the evolving needs of today's workforce.
Chairman Allen began by outlining the scope of employer-sponsored retirement plans in the United States. He noted that there are 837,000 retirement plans sponsored by employers, which collectively hold nearly $10 trillion in assets. Of these plans, 755,000 are defined contribution plans. More than 121 million participants have over $8 trillion in assets invested in these types of plans.
Allen highlighted the partnership between employers and employees in building retirement savings. He stated: "The success of defined contribution plans reflects a strong partnership between employers who voluntarily sponsor and often contribute to these plans, and the employees, who save through them for retirement. Congress has enacted policies to encourage participation and savings in these plans. Today, we turn our attention to what happens when workers retire—specifically, how retirees draw down their defined contribution plan balances."
He emphasized that defined contribution plans have become central to private-sector retirement security and pointed out opportunities for further improvement: "Congress recognizes the widespread adoption and popularity of defined contribution plans among private-sector employers and their employees. As these plans have become the cornerstone of retirement security for millions of workers, 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 or more flexible payout options from defined contribution plans as retirement needs continue to evolve."
Allen also addressed collaboration between lawmakers and industry stakeholders: "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."
During the hearing, witnesses were invited who have experience assisting participants in converting their savings into ongoing income after they retire. Allen said: "I want to thank our witnesses for joining us today. Each brings front-line experience helping defined 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."
Allen concluded with a reminder about maintaining flexibility for retirees: "At the same time, we must remain committed to 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."
