U.S. Labor Secretary Hilda Solis says she would like to support bipartisan efforts to help workers convert retirement savings into retirement income streams.
Solis talked about consumer retirement income literacy programs Wednesday at a U.S. Department of Labor review organized by the House Education and the Workforce Committee.
In opening remarks, Solis noted that the Labor Department’s Employee Benefits Security Administration (EBSA) arm oversees 708,000 private-sector retirement plans and that the PBGC provides pension insurance for about 40 million plan participants.
The Obama administration’s fiscal year 2012 budget proposal “would give the PBGC board the authority to adjust premiums and directs PBGC to take into account the risks that different sponsors pose to their retirees and to PBGC,” Solis said. “This will both encourage companies to fully fund their pension benefits and ensure the continued financial soundness of PBGC.”
Lawmakers at the hearing focused mainly on issues such as job creation and workers safety in hearing comments.
Rep. Rush Holt, D-N.J., and Rep. Judy Biggert, R-Ill., were the two lawmakers at the hearing who asked about retirement-related issues.
Holt recently teamed with Rep. Tom Petri, R-Wis., to introduce the House version of the Lifetime Income Disclosure Act bill. The bill, which has also been introduced in the Senate, would require 401(k) plans to tell participants how much monthly income their accounts might generate at retirement. The statements would be similar to the annual statements that the Social Security Administration sends out, bill supporters say.
Holt asked how members of Congress can work with
Solis on the worker education issue.
“We’re very interested in working with you,” Solis said.
Financial education “is so deeply important,” she said. “It’s something we care very much about.”
Biggert raised questions about EBSA’s effort to update the Labor Department’s 35-year-old definition of “fiduciary.” The current definition is very narrow and leaves out many advisors who clearly seem to be fiduciaries, department officials have argued.
Biggert said updating the definition could hurt workers, by increasing advisors’ potential liability, increasing the cost of retirement services, and decreasing choice.
The U.S. Securities and Exchange Commission (SEC) is working on a fiduciary standard project of its own, Biggert said.
“I really think it would make sense to coordinate efforts with the SEC,” Biggert said.
Otherwise, Biggert said, the Labor Department and the SEC could end up with conflicting standards,