Scott, Aging Committee Members Hold Hearing on Retirement Security
WASHINGTON – Today, U.S. Senate Special Committee on Aging Ranking Member Tim Scott (R-S.C.), along with Chairman Bob Casey (D-Pa.), held a hearing titled “A Financially Secure Future: Building a Stronger Retirement System for All Americans.” Throughout the hearing, witnesses discussed current trends and gaps in the retirement system, along with ways it can be improved.
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Click to watch Ranking Member Scott’s opening remarks
On his new retirement security report … “Having spent 25 years in the insurance and financial services industry, one of the things I realize is that we don’t talk often enough about the importance of retirement security. …
“Today, I am releasing a report entitled ‘The American Dream in our Golden Years: Improving Retirement Security and Building Independence.’ The report reviews the current trends and gaps in retirement savings, recent reforms, and proposals to strengthen America’s retirement system.”
On the Retirement Earnings Test … “[A] key area my report examines is the complicated and confusing rules seniors face when deciding when to collect Social Security. This rule, known as the Retirement Earnings Test, or RET, confuses retirees and disincentivizes work because it is viewed as a tax. That’s why, today, I introduced the Senior Citizens’ Freedom to Work Act of 2021 to remove the RET and simplify the decision-making process for seniors. I look forward to discussing these reforms and more so we can ensure that all Americans have the tools necessary to retire with dignity and independence during their golden years.”
Providing testimony was Mr. J. Spencer Williams, president and CEO of Retirement Clearinghouse, a financial technology (“fintech”) company focused on retirement savings.
Click to watch witness J. Spencer Williams’s testimony
On the need for auto-portability … “Getting people to save is job one. But right after that, the most important improvement we can make is to help those [retirement savings] participants preserve their savings when switching jobs or facing career disruptions. Today, more than 30 percent of all participants, and nearly 50 percent of minority participants, cash out their retirement savings when they change jobs. The savings lost to cash-outs adds up to about $100 billion each year, which means that, each year, millions of people are cashing out their savings and putting their retirement at risk.
“That is why we created auto-portability. Based on our work with a very large employer, we set out to fix the cash-out problem and help preserve savings for America’s mobile workforce — in particular for low-income workers. Auto-portability is a simple concept. It’s a technology that allows a person’s account to automatically follow them from one employer’s plan to the next. The idea is that if we make it easy and automatic, more people will keep their savings in a plan rather than cashing out.”
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