Retirement and Pensions

The Health, Employment, Labor, and Pensions Subcommittee of the House Education and Labor Committee held a hearing on Wednesday, April 22 on legislation that will provide American workers with clear and complete information about Wall Street fees taken from their 401(k)-style accounts.

The 401(k) Fair Disclosure for Retirement Security Act of 2009 will help workers shop around for the best retirement options by requiring simple fee disclosure on the investment options contained in their employer’s 401(k) plan. Current law does not require all fees workers pay to be disclosed; and even for information that is available, it can be difficult for workers to find and evaluate.

The bill was introduced on Tuesday, April 21, 2009 by Rep. George Miller (D-CA), chairman of the full committee, and Rep. Rob Andrews (D-NJ), chairman of the subcommittee.

Hidden 401(k) fees were the subject of Sunday’s 60 Minutes and featured an interview with Rep. Miller. To watch the segment, click here.

Myth: H.R. 1984 will require too much disclosure and will confuse 401(k) participants.

Fact: H.R. 1984 would require clear and simple fee disclosure so that workers can make sound investment decisions for themselves. The biggest problem currently facing workers with 401(k) plans is that there is too little disclosure of fees, not too much. Plan participants should be presented with the facts and then be allowed to make their own decisions.

Myth: Fees on 401(k)s are already adequately disclosed.

Fact: There is no one place that 401(k) plan participants can go to find out about the fees they are paying. Information that is available is difficult to find and difficult to read. As a result, a 2007 survey by the AARP found that roughly 80 percent of plan participants were not aware how much in fees were taken out of their 401(k)s.

WASHINGTON, DC – Leading House Democrats on 401(k) issues introduced legislation today that will provide American workers with clear and complete information about Wall Street fees taken from their 401(k)-style accounts. The Health, Employment, Labor, and Pensions Subcommittee of the House Education and Labor Committee will hold a hearing on the legislation Wednesday.

A majority of American workers rely on 401(k)-style plans to finance their retirements. According an AARP survey, the vast majority of account holders report that they do not know how much Wall Street middle men are taking from their retirement accounts.

These hidden fees can greatly reduce workers’ retirement account balances. In fact, just a 1-percentage-point in excessive fees can reduce a worker’s 401(k) account balance by as much as 20 percent or more over a career. Especially during these difficult economic times, workers need simple and complete information in order to make better educated decisions about their retirement plans.  

Workers should have the right to know how much Wall Street middle men siphon off from their savings. The 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984) will provide workers with clear and complete information about the fees they are paying to help them make the best investment decisions for their future retirement security.  (Click here to view the bill text) Specifically, H.R. 1984:

The Health, Employment, Labor, and Pensions Subcommittee will hold a hearing on Wednesday, April 22 on legislation that will provide American workers with clear and complete information about Wall Street fees taken from their 401(k)-style accounts.

The 401(k) Fair Disclosure for Retirement Security Act of 2009 will help workers shop around for the best retirement options by requiring simple fee disclosure on the investment options contained in their employer’s 401(k) plan. Current law does not require all fees workers pay to be disclosed; and even for information that is available, it can be difficult for workers to find and evaluate.

The bill is expected to be introduced today by Rep. George Miller, chairman of the full committee, and Rep. Rob Andrews, chairman of the subcommittee.

Hidden 401(k) fees were the subject of Sunday’s 60 Minutes and featured an interview with Rep. Miller. To watch the segment, click here.

Steve Kroft's story about retirement insecurity, especially among those 55-65 years old, ran on 60 Minutes last night. Mr. Kroft highlighted some of the concerns about 401(k)s as the primary source of retirement income. In doing so he interviewed Chairman Miller about the hidden fees in many 401(k) programs.

"There clearly has been a raid on these funds by the people of Wall Street. And it's cost the savers and the future retirees a lot of money that would otherwise be in their account, independent of the financial collapse," Rep. George Miller [D-CA] said.

Congressman Miller is chairman of the House Committee on Education and Labor, and a staunch critic of the 401(k) industry, especially its practice of deducting more than a dozen undisclosed fees from its clients' 401(k) accounts.

"Now you got a bunch of economic wizards jumping in and taking money out of your retirement plan, and they don't wanna tell you how much, you can't decipher it in simple English, and they're not interested in disclosing it, or having any transparency about it," Miller told Kroft.

"And most of the people that look at their 401(k)s have no idea that these fees are being taken out?" Kroft asked.

"No. Where would you find it? Where would you find these fees in this prospectus? You can look on any page you want, and when you're all done reading it, and you will find some of the fees and the commissions here, but you won't find them all, and I'll bet you won't find half of 'em," Miller said.

There are legal fees, trustee fees, transactional fees, stewardship fees, bookkeeping fees, finder's fees. The list goes on and on.

Miller's committee has heard testimony that they can eat up half the income in some 401(k) plans over a 30-year span. But he has not been able to stop it.

"We tried to just put in some disclosure and transparency in these fees. And we felt the full fury of that financial lobby," he said.

David Wray, a lobbyist for the 401(k) industry, says he favors disclosing the fees, but his partners in the financial industry don't.

Asked if he thinks most people know these fees exist, Wray said, "I think they know that there are fees. They don't know exactly how large they are."

"Why do you think the financial services industry is opposed to fee transparency?" Kroft asked.

"I don't know that they're opposed to it. I think the issue is that…," Wray replied.

"You don't think they're opposed to it?" Kroft asked. "You're a lobbyist in Washington, right? You know they're opposed to it. …George Miller hasn't been able to get a bill to the floor."

"I think they want to keep the systems as simple and not make changes. They like the way things are. And whenever you push people out of their comfort zones, you know, it's an issue," Wray replied.

"I mean, they're comfortable with the situation because they're making a ton of money or they have made a ton of money," Kroft said.

"Well, and their systems are set up in certain ways. You know, this is gonna be a big change," Wray replied.

Watch the entire 14-minute segment below:

This Sunday, 60 Minutes will air a segment on how the economic crisis is affecting workers’ 401(k)s and retirement security, featuring an interview with Chairman George Miller. 60 Minutes airs on CBS at 7 pm eastern.

View the brief clip previewing the segment below.

Rep. George Miller (D-Calif.) believes the many fees extracted from 401(k) accounts are adding insult to injury for millions of Americans whose accounts have been decimated by stock losses and whose retirements are now in jeopardy.

Miller talks to 60 Minutes correspondent Steve Kroft for a report on how the recession is affecting 401(k) retirement plans to be broadcast this Sunday, April 17, 2009.

"There clearly has been a raid on these funds by the people of Wall Street and it has cost the savers - and the future retirees - a lot of money that would otherwise be in their accounts, independent of the financial collapse," says Miller, the chairman of the House Committee on Education and Labor. The chairman also dislikes the hidden nature of the more-than-a-dozen fees that most Americans are not fully aware are being skimmed off their 401(k)s. "And I'll bet you won't find half of them here," he tells Kroft, holding out a prospectus from a popular mutual fund found in many 401(k) portfolios.

The various fees can include legal fees, trustee fees, transactional fees, stewardship fees, bookkeeping fees, sales fees, asset management fees, investment management fees, investment advisor fees, finder's fees and many more.

Miller has been trying to curb what he considers excessive fees. "We tried to just put in some disclosure and transparency in these fees and we felt the full fury of the financial lobby," he says. (From CBSNews.com)

Preserving and strengthening 401(k)s is nothing new for Chairman Miller and the Education and Labor Committee. In 2007, the Committee passed the 401(k) Fair Disclosure for Retirement Security Act of 2007 (H.R.3185). In late 2008, the Committee helped suspend a tax penalty for seniors who did not take a minimum withdrawal from their depleted retirement accounts in 2009, and in February held a hearing regarding how to strengthen worker retirement security.

Many of the issues Chairman Miller discusses in the 60 Minutes segment will be discussed at the Health, Employment, Labor, and Pensions Subcommittee hearing regarding the 401(k) Fair Disclosure for Retirement Security Act of 2009 at 10:30 AM on April 22, 2009.

You will be able to watch the live webcast here.

The Health, Employment, Labor and Pensions Subcommittee of the House Education and Labor Committee will hold a hearing on the importance of ensuring that if workers receive investment advice, that it be independent and free of financial conflicts of interest.

In the last days of the Bush administration, the Department of Labor proposed to allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts. For more information on this proposal, click here.

The Obama administration has slowed the consideration of this midnight rule.

The Health, Employment, Labor and Pensions Subcommittee will hold a hearing on Tuesday, March 24 on the importance of ensuring that if workers receive investment advice, it be independent and free of financial conflicts of interest.

In the last days of the Bush administration, the Department of Labor proposed to allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts. For more information on this proposal, click here.

The Obama administration has slowed the consideration of this midnight rule.

WASHINGTON, D.C. – The economic collapse has uncovered problems in our nation’s retirement systems that must be addressed to ensure that Americans can enjoy a safe and secure retirement, witnesses told the House Education and Labor Committee today.

“The current economic crisis has exposed deep flaws in our nation’s retirement system,” said U.S. Rep. George Miller (D-CA), chairman of the committee. “For too many Americans, 401(k) plans have become little more than a high stakes crap shoot. If you didn’t take your retirement savings out of the market before the crash, you are likely to take years to recoup your losses, if at all.”

In light of the current financial crisis, on Tuesday, February 24, the House Education and Labor Committee will begin a series of hearings to explore the shortcomings of our nation’s retirement system and look at solutions to ensure that Americans can enjoy a safe and secure retirement after a lifetime of hard work.

The first hearing will examine how the current economic crisis has highlighted existing weaknesses in the 401(k) retirement savings system.  As a result of economic conditions, older workers are putting off retirement plans, retirees are thinking about going back to work, current workers are reducing 401(k) contributions, and more are borrowing from their retirement savings to pay for basic necessities.

WASHINGTON, DC -- U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, and Rep. Rob Andrews (D-NJ),  issued the following statement on final regulations issued by the U.S. Department of Labor today that may undermine retirement savings plans of millions of Americans. It will allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts.

WASHINGTON, DC -- President Bush signed bipartisan legislation today to temporarily suspend a tax penalty for seniors who do not take a minimum withdrawal from their depleted retirement accounts in 2009, such as 401(k)s.

The Worker, Retiree and Employer Recovery Act (H.R. 7327), introduced by U.S. Reps. George Miller (D-CA), Charles B. Rangel (D-NY), Howard P. “Buck” McKeon (R-CA), and Jim McCrery (R-LA), suspends an Internal Revenue Service requirement for one year that account holders of 401(k)-style plans must withdraw a minimum amount of money every year after they reach 70 ½ years old.  This suspension would be available to everyone regardless of their retirement account balances.

WASHINGTON, DC -- The U.S. House of Representatives approved bipartisan legislation today that would temporarily suspend a tax penalty for seniors who do not take a minimum withdrawal from their depleted retirement accounts, such as 401(k)s.

The Worker, Retiree and Employer Recovery Act (H.R. 7327), suspends for one year an Internal Revenue Service requirement that account holders of 401(k)-style plans must withdraw a minimum amount of money every year after they reach 70 ½ years old.  This suspension would be available to everyone regardless of their retirement account balances.

WASHINGTON, DC -- Today, a Wall Street Journal editorial further perpetuated an active campaign that is blatantly misrepresenting Democratic efforts to preserve and strengthen Americans' retirement security. In light of these ongoing distortions, U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, reiterated the committee's legislative priorities in preparation for the next Congress' efforts to help Americans enjoy a secure retirement.

The U.S. Pension Benefit Guaranty Corporation’s investment losses now total almost $5 billion in fiscal year 2008, according to information released at a Committee hearing today.

Earlier this week, the PBGC reported a $3.1 billion loss in equity investment in the first 11 months of fiscal year 2008. The September loss of $1.7 billion in stocks increased PBGC’s total losses for the fiscal year to $4.8 billion.

Today, I chaired a U.S. House Committee on Education and Labor hearing in San Francisco where we examined how the current financial crisis is affecting retirement savings.  Witnesses told us that after a lifetime of planning and saving, a growing number of retirees are facing shrinking 401(k)s and increasing insecurity as a result of the ongoing financial crisis.  While this crisis may have started on Wall Street, it's Main Street that stands to suffer the most. More than ever before, there is an urgent need to help Americans strengthen their retirement savings.

Chairman George Miller announced at a hearing today in San Francisco that the U.S. Pension Benefit Guaranty Corporation lost at least $3 billion in stock investments during the last fiscal year through August, and invested a significant portion of its funds in mortgage-backed securities. The losses were only partially offset by modest gains in other investment classes. It is likely that losses will be substantially worse after September results are reported.

This hearing, held in San Francisco, CA, further examined how the current financial crisis is impacting pension funds and workers’ directed retirement accounts, such as 401(k) plans.

On Wednesday, October 22, the Committee will hold a field hearing in San Francisco, California to further examine how the current financial crisis is impacting Americans’ retirement security, including pension funds and workers’ directed retirement accounts like 401(k) plans.   The Committee held a hearing on this topic on October 7 as part of a series of hearings House Democrats are conducting to look at the causes of the financial crisis and appropriate responses to it.

"The Impact of the Financial Crisis on Workers’ Retirement Security"
Scheduled on at 9:30 a.m. Pacific Time on Wednesday, October 22, 2008 in the San Francisco Board of Supervisors Legislative Chamber, Room 250, 1 Dr. Carlton B. Goodlett Place, San Francisco, CA.  Chairman George Miller will lead the hearing.

American workers have lost as much as $2 trillion in retirement savings over the last year – highlighting the devastating toll that the nation’s financial crisis is taking on their retirement plans, witnesses told the Committee today. Today’s hearing was one of several that House Democrats scheduled to investigate the causes of the financial crisis and what additional steps should be taken to protect taxpayers, homeowners, workers, and families.

“Unlike Wall Street executives, American families don’t have a golden parachute to fall back on,” said Chairman George Miller. “It’s clear that Americans’ retirement security may be one of the greatest casualties of this financial crisis.”

This statement was made today by Chairman George Miller at the House Education and Labor Committee's hearing on the "Impact of the Financial Crisis on Workers' Retirement Security."

Good afternoon.

Last week, Congress approved an emergency rescue plan in response to the worst financial crisis our country has seen since the Great Depression. We know that this plan alone will not magically turn the economy around. But we are confident that without it we will not have the chance to move forward.

We insisted that the plan include strong protections for taxpayers and tough accountability – neither of which was included in the President’s original request to Congress.

This hearing examined how the current financial crisis is impacting pension funds and workers’ directed retirement accounts, such as 401(k) plans. According to a recent poll by the Associated Press, more than half of all Americans are worried that the ongoing financial crisis will force them to postpone retirement.

The Committee today will hold a hearing to examine how the current financial crisis is impacting pension funds and workers’ directed retirement accounts, such as 401(k) plans. According to a recent poll by the Associated Press, more than half of all Americans are worried that the ongoing financial crisis will force them to postpone retirement.

"The Impact of the Financial Crisis on Workers' Retirement Security"
Scheduled at 1:00 p.m. on Tuesday, October 7, 2008, in room 2175 Rayburn H.O.B.

Stronger protections in federal law are needed to ensure that companies deliver on their promise to provide health care to retired workers, witnesses told the full committee today.  With insurance premiums skyrocketing and companies looking to cut expenses, an increasing number of companies have been rolling back or eliminating promised retiree health benefits. The Kaiser Family Foundation estimates that the share of large firms offering retiree health coverage fell by half between 1988 and 2005, from 66 percent to 33 percent.

This hearing explored options to safeguard promised retiree health benefits. With insurance premiums skyrocketing and companies looking to cut expenses, an increasing number of companies have been rolling back or eliminating promised retiree health benefits.

On Thursday, September 25, the full committee will hold a hearing to explore options to safeguard promised retiree health benefits. With insurance premiums skyrocketing and companies looking to cut expenses, an increasing number of companies have been rolling back or eliminating promised retiree health benefits.

“Safeguarding Retiree Health Benefits”
Thursday, September 25, 2008, 10:00 a.m. ET