Senator Bob Casey, Chairman of the Special Senate Committee on Aging
Calling the state of retirement security a “critical issue,” Senator Bob Casey (D-PA) on Thursday led a Senate Special Committee on Aging hearing focused on helping those “left behind. for account ”by the system.
Casey, the chairman of the committee, said that while all Americans hope to enjoy their retirement on their own terms, the reality is that “too many seniors are barely making ends meet” as the retirement system allows. for millions of Americans to fall through the cracks.
This reality has ramifications for operators of retirement homes, who depend primarily on private funds from individuals for their income. And this is a reality that operators are increasingly trying to respond to by finding ways to serve the elderly who cannot afford to live in many existing communities.
Protections to strengthen social security – the “bedrock of our retirement system” – and support for home care workers through higher wages, Casey said, are key elements of the Better Care Better Act. Jobs.
Highlighting the flaws in the country’s pension system, witnesses spoke of the effects of career interruption and lack of access to employer-sponsored pension plans. But they also discussed ways to improve the bipartisan Setting Every Community Up for Retirement Enhancement Act, enacted in December 2019. The SECURE Act increased the start-up credit for small employer pension plans, repealed the maximum age. for the traditional individual retirement account. contributions and provisions established to cover long-term part-time employees.
6 areas of political interest
Although the national pension system works well for those with stable jobs, sufficient income and savings opportunities, policymakers should focus on those for whom the system does not work, said Shai Akabas, witness for the hearing, director of the economic policy project at the Bipartisan Policy Center. .
Akabas highlighted six areas of policy intervention: improving access to workplace retirement savings plans, facilitating lifetime income options, enabling the use of home equity for retirement , improve financial capacity, strengthen social security and promote personal savings for short-term needs and preserve retirement savings for the elderly.
Pension security can and should remain a bipartisan issue, he added.
Holistic approach needed
The witness heard Nari Rhee, Ph.D., director of the retirement security program at the University of California at Berkeley Center for Labor Research and Education, said that a holistic policy approach that includes wage policy, reform Social security, tax policy and a universal retirement savings system policy is necessary to ensure financial security for all workers.
The current employer-sponsored retirement savings system, she said, omits many employees, including direct social workers, who work in predominantly low-paying jobs. This reality, Rhee added, poses particular challenges for women, given their disproportionate responsibilities for caring for children and aging parents, due to lack of pay, a lasting wage penalty and a cumulative reduction. significant potential income for life.
“In addition to the gender pay gap, many women find themselves forced to withdraw from the labor market or reduce paid work hours to care for children or aging parents, resulting in careers interrupted or cut short, ”she said. “And an aging population means an increased overall need for care for women. “
Access to work plans absent for many
Workers face various barriers to saving for retirement, including working in small companies, working part-time or in industries with reduced hours, and lack of access to work plans due to the fact that they are not traditional workers, said witness John Scott, director of Retirement Savings. Project at Pew Charitable Trusts.
Unemployment, disability and caregiving responsibilities can also suddenly disrupt workers’ ability to save for retirement, he said.
John Scott relayed several “promising ideas and initiatives” that could have implications for policymakers, including joint employer plans and the state’s automatic listing in individual retirement accounts.
Automatic portability could prevent account “leakage”
The most important improvement needed is to help workers preserve their savings when they change jobs or face career breaks, said Witness J. Spencer Williams, Founder, Chairman and CEO of Retirement Clearinghouse .
More than 30% of all members of employer-sponsored pension plans – and nearly 50% of minority members – cash out their retirement savings when they change jobs, he said, adding that Lost savings amount to approximately $ 100 billion per year.
Senior committee member Tim Scott (R-SC) called this ‘leak’ – when employees cash in or lose their accumulated retirement savings, leaving them with less money when they need it most. .
Williams has advocated for automatic portability, a technology that allows a person’s account to automatically follow them from one employer plan to another. The Employee Benefit Research Institute estimates that auto portability could save an additional $ 1.5 trillion in retirement savings over a generation, he said.