[Senate Hearing 112-591]
[From the U.S. Government Publishing Office]
S. Hrg. 112-591
ENHANCING WOMEN'S RETIREMENT SECURITY
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
JULY 25, 2012
__________
Serial No. 112-21
Printed for the use of the Special Committee on Aging
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon BOB CORKER, Tennessee
BILL NELSON, Florida SUSAN COLLINS, Maine
BOB CASEY, Pennsylvania ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri MARK KIRK III, Illinois
SHELDON WHITEHOUSE, Rhode Island DEAN HELLER, Nevada
MARK UDALL, Colorado JERRY MORAN, Kansas
MICHAEL BENNET, Colorado RONALD H. JOHNSON, Wisconsin
KIRSTEN GILLIBRAND, New York RICHARD SHELBY, Alabama
JOE MANCHIN III, West Virginia LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut SAXBY CHAMBLISS, Georgia
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Chad Metzler, Majority Staff Director
Michael Bassett, Ranking Member Staff Director
CONTENTS
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Page
Opening Statement of Senator Herb Kohl........................... 1
Statement of Senator Bob Corker.................................. 2
PANEL OF WITNESSES
Barbara D. Bovbjerg, Managing Director, Education, Workforce, and
Income Security Issues, Government Accountability Office,
Washington, DC................................................. 3
LaTina Burse Greene, Assistant Deputy Commissioner for Retirement
and Disability Policy, Social Security Administration,
Baltimore, MD.................................................. 5
Kelly O'Donnell, Vice President, Financial Engines, Boston, MA... 6
Sabrina L. Schaeffer, Executive Director, Independent Women's
Forum, Washington, DC.......................................... 8
Joan Entmacher, Vice President and Director, Family Economic
Survey, National Women's Law Center, Washington, DC............ 10
APPENDIX
Witness Statements for the Record
Barbara Bovbjerg, Managing Director, Education, Workforce, and
Income Security Issues, U.S. Government Accountability Office,
Washington, DC................................................. 24
LaTina Burse Greene, Assistant Deputy Commissioner, Retirement
and Disability Policy, Social Security Administration,
Baltimore, MD.................................................. 36
Kelly O'Donnell, Vice President, Financial Engines, Boston, MA... 45
Sabrina Schaeffer, Executive Director, Independent Women's Forum,
Washington, DC................................................. 50
Joan Entmacher, Vice President and Director, Family Economic
Security, National Women's Law Center, Washington, DC.......... 55
Additional Information by Witnesses for the Record
``Retirement Security: Women Still Face Challenges,'' U.S.
Government Accountability Office............................... 66
``Trends in Early Benefit Claiming,'' Social Security
Administration................................................. 162
Letter regarding long-term care employment, National Women's Law
Center......................................................... 166
Additional Statements Submitted for the Record
American Council of Life Insurers, Washington, DC................ 167
Employee Benefit Research Institute, Washington, DC.............. 174
Human Rights Campaign, New York, NY.............................. 184
ENHANCING WOMEN'S RETIREMENT SECURITY
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WEDNESDAY, JULY 25, 2012
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 2:04 p.m., in
Room SD-562, Dirksen Senate Office Building, Hon. Herb Kohl,
chairman of the committee, presiding.
Present: Senators Kohl [presiding], Blumenthal, and Corker.
OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN
The Chairman. Good afternoon, everybody. We'd like to thank
our witnesses and welcome all the rest of you to today's
hearing. Today we are here to examine the challenges women face
in working to achieve retirement security. In 2010, women over
65 were nearly twice as likely to live in poverty as men.
Reasons for this are many. On average, women live longer than
men, they make less money than men, and they are more likely to
move in and out of the workforce to care for family members,
which reduces their opportunities to contribute to a pension
plan or Social Security.
This committee asked the Government Accountability Office
and other interested parties to explore this problem and
recommend ways to reduce the risk many women have of outliving
their savings and falling into poverty. The most popular answer
involved improving Social Security benefits, which women
disproportionately depend on for their retirement income. This
means that as Congress addresses Social Security's pending
insolvency, we must also work to modernize the program to
ensure it remains a safety net for those most in need.
The GAO report explores many of these options and we'll
hear from several witnesses about possible changes. One
bipartisan solution that should be included in any reform
package is to enhance the special minimum benefit. This can be
done at a reasonable cost and it would help ensure that career
low wage earners who have little opportunity to save on their
own can avoid being stuck in poverty throughout their
retirements.
But what about women who are close to retirement now? For
them, the GAO report recommends one decision that many perhaps
do not even consider, namely waiting to claim these retirement
benefits. Deciding when to take Social Security benefits is one
of the most important financial decisions a person can or will
make in retirement.
Currently the majority of women claim benefits at 62, the
earliest age possible. Only 18 percent wait until their normal
retirement age of 66 or later. This option is not for everyone.
Some have health concerns and others may be unemployed or have
very little money that they've saved. However, if you can delay
and you don't, you will be leaving a lot of money on the table.
A woman who might be expected to get $1,000 a month at 66 gives
up $250 every month for the rest of her life if she files to
take the benefits, not at 66, but at 62.
On the other hand, if she waits until she's 70, then she'll
be looking at a monthly benefit of $1320. That would be an
additional $570 for the rest of her life if she delays her
benefit from 62 to 70. A recent study from the Center for
Retirement Research called this strategy to delay benefits
``the best deal in town.''
SSA has a responsibility to educate people about their
options and it needs to make sure people understand just how
much money they are losing when they take their benefits sooner
rather than later. We'll be asking SSA today about its approach
and its overall efforts to educate the public about their
options.
We thank you all again for being here. We'd like to give a
special thank-you to the various aging and women's
organizations that have been sharing their insights with our
committee on ways to improve women's retirement security.
We turn now to the ranking member, Senator Corker, for his
remarks.
STATEMENT OF SENATOR BOB CORKER
Senator Corker. Thank you, Mr. Chairman, for calling this
hearing, and to all of you as witnesses for being here.
I do think it's a very, very important issue. As I travel
around the country and my own State, I worry about people being
prepared for retirement, especially women, who in many cases,
for lots of reasons, haven't focused as much on it as should be
the case.
I think we're going to have an opportunity, Mr. Chairman,
to deal with this special minimum benefit, I really do, and I
think there is bipartisan support for something like that, and
I appreciate your bringing it up. I hope as part of any
package, budget package or fiscal reform package that we deal
with over the course of the next six months, year and a half--I
hope it's on the front end of that--I do think that Social
Security reform should be a part of that and hopefully will be
a part of that. And my sense is the special minimum benefit
that you're talking about very much should be a part of that
also. So I appreciate your bringing that up.
One of the most responsible things that we could do here is
actually do those things to make Social Security solvent for
the long haul. But I think making people aware of the options
that exist and certainly the ones you pointed out about
deferral until a later age, but also hopefully causing people
throughout our society, in this case especially women, to focus
on the standard of living that one's going to have without
focusing on this, and hopefully moving people towards this
particular issue.
So I thank you very much. I've got--we've got a little
LIBOR issue that's cropped up over the last couple weeks and
I've got a conflict with one of my other committee
responsibilities and I will not be here for the entire hearing,
but our committee staff is here. We thank you for being here.
We certainly have read your testimony or will read portions
that we haven't seen yet. Again, thank you.
The Chairman. Thank you. Thank you, Senator Corker.
Introducing our witnesses, the first witness today will be
Barbara Bovbjerg, Managing Director of Education, Workforce,
and Income Security Issues at the U.S. Government
Accountability Office.
Next we'll be hearing from LaTina Burse Green, Assistant
Deputy Commissioner in the Social Security Administration
Office of Retirement and Disability Policy.
Then we'll be hearing from Kelly O'Donnell, Vice President
of Financial Engines, the Nation's largest registered
investment adviser, helping more than 600,000 workers manage
their 401(k) accounts.
Next we'll be hearing from Sabrina Schaeffer, Executive
Director at the Independent Women's Forum, a nonprofit aimed at
promoting limited government and free markets.
Finally, we'll be hearing from Joan Entmacher, Vice
President for Family Economic Security at the National Women's
Law Center. She directs the nonprofit's program to improve
policies affecting the economic security of low income women.
Thank you all for being here. Barbara, we'll start with
you.
STATEMENT OF BARBARA D. BOVBJERG, MANAGING DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, GOVERNMENT
ACCOUNTABILITY OFFICE, WASHINGTON, DC
Ms. Bovbjerg. Thank you, Mr. Chairman, Senator Corker. I'm
pleased to be here today to discuss the challenges women face
in attaining a secure retirement. I'm especially pleased to be
here in advance of your own retirement, Mr. Chairman, later
this year so that I can thank you for your leadership on issues
affecting older Americans. This committee has achieved a great
deal under your leadership----
The Chairman. Thank you.
Ms. Bovbjerg [continuing]. And we'll miss you.
The Chairman. Thank you.
Ms. Bovbjerg. My testimony today will present the results
of our work for this committee on women's retirement security.
Our analysis examines four aspects of the topic: women's access
to and participation in employer-sponsored pensions; the
retirement income women receive and its sources; how later in
life events may affect women's retirement; and the policy
options available to help. Our report, which is being released
today, uses a variety of Federal data sources and models that
we developed.
First, women's access to pensions. Over the last decade,
working women's access to and participation in employer-
sponsored pension plans improved. In fact, women even surpassed
men in their likelihood of working for an employer who offers
such benefits, although this results in part from a
simultaneous decline in men's pension coverage.
Despite women's greater likelihood of having access to a
pension, they were slightly less likely than men to participate
in such plans, although the gap between men's and women's
participation has narrowed. Differences in men's and women's
earnings are thought to play a significant role in these
continuing participation disparities.
As for women's retirement income levels and composition, in
the last ten years women age 65 and over consistently had less
retirement income and higher poverty rates than men. Groups of
the lowest median incomes and highest poverty rates included
single women, women over the age of 80, and non-white women.
Still, the composition of women's retirement income has been
fairly stable, largely because women are likely to receive
income from Social Security and from defined benefit pension
plans, and these have been shielded from market fluctuations.
Although stability is a good thing, in the end women still have
significant fewer resources later in life than men.
So let me now turn to late in life events and their
differential effects on men and women. Divorce, the death of a
spouse, health decline, and unemployment all had detrimental
effects on wealth and income for both men and women nearing or
in retirement. Divorce and widowhood, however, have more
pronounced effects on women. Our analysis shows that after
divorce or separation, women's household income fell by 41
percent on average, almost twice the 23 percent decline for men
in the same situation. Widowhood has a similar disparity, with
women's income falling by 37 percent and men's by 22 percent.
What options are available to address these disparities?
Well, experts we interviewed identified 22 policy options that
could address some of the challenges older women face.
Generally, these included tax incentives to save, improved
Social Security benefits, strengthened spousal protections, and
encouragement to save longer and retire later, among other
strategies.
But these options bring difficult choices. For one, all
have cost implications that would need to be considered, and
many of those costs would fall on the Federal Government,
although some are also spread across workers and their
employers. Although all the options would aid women in
retirement, many would aid men as well by focusing on income
security more than on gender, which is not a bad thing.
Retirement security continues to be a national dilemma that
by and large transcends gender. Recent economic volatility,
coupled with the continued shift toward defined contribution
plans, exposes all workers to more financial risk than in
previous generations. And women's gains relative to men were
aided in part by men's loss of retirement security over the
last several years. So clearly this is a problem for all
Americans.
But our work highlights that women face a unique set of
circumstances that warrant special attention. In particular,
divorce or widowhood occurring late in life can be
disproportionately devastating to women's retirement security.
Efforts to improve retirement prospects for women will almost
necessarily need to focus on a response to such events. Our
work offers various options that could help address this
problem, a problem that will become increasingly urgent in our
aging society.
That concludes my testimony. I'd be happy to answer any
questions you have.
The Chairman. Thank you very much.
LaTina Burse Greene.
STATEMENT OF LATINA BURSE GREENE, ASSISTANT DEPUTY COMMISSIONER
FOR RETIREMENT AND DISABILITY POLICY, SOCIAL SECURITY
ADMINISTRATION, BALTIMORE, MD
Ms. Burse Greene. Chairman Kohl, Ranking Member Corker, and
members of the committee: I appreciate this opportunity to
speak to you about the importance of the Social Security
retirement decision and how it affects women. We take our
responsibility to provide complete, relevant, and
understandable information about benefit options very
seriously. Our role is to help ensure that the American people
have the information they need to make informed decisions about
retirement.
Social Security is particularly important to women for
several reasons, as you've already mentioned. First, women tend
to live longer than men. Second, they generally have lower
lifetime earnings. And third, women often retire with smaller
income from other retirement programs and personal savings.
Although individuals with identical earning histories
receive the same benefits, some elements of our program are
specifically helpful for women. For example, the Social
Security benefit formula helps women because it is structured
to more fully replace the earnings of lower wage earners.
Women's greater life expectancy makes the automatic cost of
living adjustment especially important.
Our program also provides benefits for family members of
retired, disabled, and deceased workers. Thus, in addition to
benefits as a retired or disabled worker, women may receive
higher benefits as a spouse, divorced spouse, or widow due to
their lower lifetime earnings.
Choosing when to retire will determine the amount of Social
Security benefits a person will receive for the rest of his or
her life and also can affect the benefits paid to his or her
spouse. Our policy is to provide complete and accurate
information--not advice--to assist claimants with making a
personal decision on when to retire without influencing them in
any particular direction. Regardless of how a person chooses to
file for retirement, be it face to face, telephone, or
Internet, we offer the same pertinent information. We provide
information about the monthly benefit amounts payable at
various ages, such as the earliest possible month of
entitlement, at age 62, at full-retirement age, at age 70, or
any other age the person requests. We inform them how earnings
can affect their benefits. We also explain other benefits that
may be available, such as benefits that could be payable to a
spouse or to a child.
When people ask us, what is the best age to start receiving
retirement benefits, we tell them there is no ``single best
age'' and that ultimately it is their choice. It is a personal
decision that should be based on a number of factors, such as
their cash needs, their health and family longevity, whether
they plan to earn employment income in retirement, whether they
have other retirement income, whether others are financially
dependent on them, and of course the amounts of their future
Social Security benefits.
We are proud of the online tools we have developed to help
people navigate the complexities of their retirement decision.
The Social Security Statement, available online since May 1st,
provides projections and estimates of retirement, disability,
and family and survivor benefits. Our retirement estimator is a
calculator that provides immediate and personalized retirement
benefit estimates. Our life expectancy calculator is another
simple but important tool to assist the public with retirement
planning.
We also make available a number of print resources aimed at
helping women with their Social Security decisions, including a
fact sheet entitled ``Social Security Is Important to Women.''
Publications such as ``What Every Woman Should Know'' and
``Understanding the Benefits'' are also available. These
publications are available through our 800 number, in our field
offices, and can also be downloaded from our web page at
www.socialsecurity.gov/women.
Our financial literacy, retirement security, and education
initiatives to encourage saving are useful to women who are
planning for retirement now. We participate in pre-retirement
seminars and other forms to provide information targeted
towards women. For example, this coming Saturday we will be
participating in a public program in Chicago hosted by the
Department of Labor that will include panel discussions on how
women can better manage and protect retirement savings and what
to look for in the retirement marketplace. We will continue to
help the public make well-informed retirement decisions.
In closing, Chairman Kohl, we are especially grateful for
your leadership and your many years of support of our program.
Thank you again for inviting me to testify today and I look
forward to answering any questions you may have.
The Chairman. Thank you very much.
Kelly O'Donnell.
STATEMENT OF KELLY O'DONNELL, VICE PRESIDENT, FINANCIAL
ENGINES, BOSTON, MA
Ms. O'Donnell. Good afternoon. I'd like to thank the Senate
Special Committee on Aging for this opportunity to provide
testimony. My name is Kelly O'Donnell and I am a Vice President
at Financial Engines. Co-founded in 1996 by Nobel Laureate Bill
Sharpe, Financial Engines works with America's leading
employers and retirement plan providers to make retirement help
available to over 8 million 401(k) plan participants. We are
not a fund manager, nor do we offer any investment products. We
are an independent provider of investment advice and
discretionary asset management services.
The median 401(k) account balance we serve is $41,000. Our
newest offering, Income+, helps retirees turn their 401(k)
account into flexible but steady payouts that can last for
life.
Women and retirement security is a very personal topic for
me. My father unexpectedly passed away last November and
helping my mother plan for steady income for the rest of her
life has been complex and challenging, even for a financial
professional like myself.
In my testimony today, I will focus on three key points:
First, helping individuals, especially women, maximize their
income in retirement is imperative. For most individuals, it is
hard enough to save and invest in the years before retirement.
It is even more difficult to know how to draw down the assets
so you don't run out of money in retirement. Employers are
slowly beginning to offer retirement income solutions within
401(k) plans to help. The range of 401(k) income solutions
available today includes annuities as well as managed account
services, such as Income+. Exhibit 1 provides an overview of
these solutions and their utilization.
We developed Income+ to help all individuals, but the
biggest need is among women. Not only are life expectancies
longer for women, but women typically have accumulated much
less when they reach retirement age. Among our clients age 60
or older, the median 401(k) account balance for men is $82,000,
yet only $46,000 for women. Clearly, more needs to be done to
help women. Income solutions that merely annuitize retirement
accounts will not be sufficient.
My second point is that for women the financial impact from
optimal Social Security decisions can exceed 401(k) savings.
Women uniquely benefit from good Social Security decisions
since life expectancy for women is greater than for men. When
claiming is maximized, it can significantly increase the amount
of income a woman will have in retirement. For married women,
optimal household Social Security strategies result in a much
higher benefit for the surviving spouse, in some cases 76
percent higher. Since the surviving spouse is more likely to be
a woman, maximizing Social Security plays a major role in
creating income security for women. Based on our analyses,
optimal Social Security decisions can in many cases create more
retirement income wealth than a woman has accumulated in her
401(k) account.
My last point is deferring Social Security is often the
best way to make a big impact with a small 401(k). However, for
women to realize these benefits they need more help. Employer
involvement is critical. The challenges in getting individuals
to defer Social Security are formidable. There are awareness
and behavioral challenges, and figuring out an optimal strategy
is complicated and personal.
However, deferral challenges can be overcome if there is
help with how to use a 401(k) or IRA as an income bridge. For
many, this may be the best use of a small retirement account. I
have been involved personally in testing with employers and
participants the application of Income+ so that 401(k) payouts
are higher in the early years of retirement, thereby allowing
Social Security deferral. We are very encouraged at the
reaction we are getting from both groups.
Employers are crucial to bringing this type of help to the
broadest number of people. Aside from Social Security, 401(k)
plans represent the largest source of potential retirement
income for millions of American workers. The scale economics of
401(k) plans make it not only possible to bring institutionally
priced products and advice to participants, but also sponsors'
fiduciary oversight to help ensure participant interests are
protected.
In conclusion, we urge more to be done to encourage
employers to provide retirement income help, including help
with Social Security strategies, for their employees. Every day
tens of thousands retire. More than half are women. Most over
62 will start taking Social Security within two months of
leaving the workforce, a decision that is irrevocable. Women
stand the most to gain by better Social Security decisions and
more help with maximizing their retirement accounts.
I would like to once again thank the committee for this
opportunity to provide testimony.
The Chairman. Thank you very much.
Sabrina Schaeffer.
STATEMENT OF SABRINA L. SCHAEFFER, EXECUTIVE DIRECTOR,
INDEPENDENT WOMEN'S FORUM, WASHINGTON, DC
Ms. Schaeffer. Thank you, Chairman Kohl and Senator Corker.
I appreciate you reaching out to the Independent Women's Forum
and inviting me today to appear before you to testify on an
issue that is so important to the country and so critical to
both men and women. I'm Sabrina Schaeffer, the Executive
Director of the Independent Women's Forum, the only women's
think tank focused entirely on economic liberty. Our mission is
to expand the number of women who understand and value the
benefits of limited government, free markets, and personal
responsibility.
My interest in Social Security stems from research I
conducted in graduate school at the University of Virginia and
has continued throughout the last 12 years I've been here in
Washington.
I think we all agree that we need to make certain that any
new system that is put in place preserves Social Security's
promise and protects the most vulnerable members of society,
many of whom are women. Clearly that means protecting the
benefits of current seniors and those approaching retirement.
It also means protecting the benefits of low income workers so
that Social Security fulfills its promise of keeping seniors
out of poverty.
But we need to think seriously not only about how the
system will affect those of us working today, but also how it
will impact the workers of tomorrow. Today I want to discuss
some of the problems with the current system, specifically the
challenges it poses for women.
Women are a particularly disadvantaged group as a result of
the program's antiquated defined benefit system. The fact is
Social Security's benefits structure has remained largely
unchanged since it was established in 1935, but the same, of
course, cannot be said for women's role in society. Social
Security's benefit formula is a relic of an era when many more
Americans were part of a traditional single-earner family in
which the husband was the breadwinner and women worked solely
within the home. Today, however, a minority of Americans lives
in this family structure. Most women, married and unmarried,
work outside the home. Many women are putting off marriage and
childbearing until much later in life. Others never marry and
divorce, unfortunately, is far more common.
At its core, the current benefit structure remains highly
regressive. As a result, many women lose out under Social
Security's calculations. Consider, for instance, the problem of
the outdated dual-entitlement rule. The architects of Social
Security designed the program so that at the time of retirement
the spouse with the lower lifetime earnings, usually the wife,
would receive either a benefit equal to her own earnings or
half of her spouse's benefits. At a time when far fewer women
worked outside of the home, this may have made sense, but today
this means that the stay-at-home spouses who are not
contributing financially to Social Security are benefiting at
the expense of women working outside of the home, who continue
to be required to pay Social Security taxes but don't
necessarily receive any additional benefits.
In 1935 divorce was far less common than it is today.
Still, the structure of the program has not kept pace. Divorced
women then and now must have been married for ten years in
order to receive Social Security benefits based on their former
husband's earnings. Again, this may have seemed generous in the
1930s, but today millions of women who find themselves in bad
marriages are penalized by this policy.
Social Security also fails many single women. A single mom,
for example, who has paid Social Security taxes her whole life
will leave her adult children only Social Security's paltry
$255 death benefit. So her years of work and thousands put into
the system will have been for nothing.
Single working women and men without children who die
prematurely receive the harshest punishment of all: The state
reclaims all of their contributions to Social Security without
the option to leave savings to other relatives, friends, or
charity.
So at a time when women outperform men academically, are
soaring to the top of nearly every professional arena, and are
increasingly becoming the breadwinners, we need to recognize
that the antiquated view of Social Security is not the best we
can do for women, and the fact is gender imbalance is a serious
liability of the current system.
Where IWF differs from many other women's organizations is
that the solution for women is not more wealth distribution.
Rather, women need a retirement plan that reflects the changing
roles of women and the American family in the 21st century.
There are several different options for helping to make the
current system sustainable, but making the current Social
Security system sustainable shouldn't be the only goal of
reform. Ultimately, policymakers must consider how to move
toward a system that allows people, both men and women, to save
and invest on their own and gives them the greatest
flexibility.
It's wonderful to hear what's happening in the private
sector to help individuals save for retirement. When it comes
to the Social Security system, I think individual retirement
accounts are still one more way that we may consider how men
and women can own and control their savings, bringing much
higher rates of return that they can pass on to family or to
charity.
In the end, it's important to remember that women want what
we all want today, the freedom to save and invest in a way that
reflects the needs of their individual family and plans for the
future.
The Chairman. Thank you very much.
Joan Entmacher.
STATEMENT OF JOAN ENTMACHER, VICE PRESIDENT AND DIRECTOR,
FAMILY ECONOMIC SURVEY, NATIONAL WOMEN'S LAW CENTER,
WASHINGTON, DC
Ms. Entmacher. Chairman Kohl, thank you for inviting me to
testify on behalf of the National Women's Law Center and for
your leadership throughout the years on issues affecting older
women. It's a pleasure to have the opportunity to talk about
ways to make Social Security, the foundation of women's
retirement security, even better.
But before I talk about possible enhancements, I would say:
First, do no harm. It's disturbing that Social Security is on
the table in deficit reduction talks and that cuts have been
proposed to benefits that average just $12,100 a year for women
65 and older. The Bowles-Simpson plan, for example, includes
three painful cuts to Social Security. It would reduce the
annual cost of living adjustment by switching to the chained
CPI. A COLA cut gets deeper every year, so it hits women, who
generally live longer, harder. It would raise the retirement
age to 69 and every year added to the retirement age represents
a 7 percent across-the-board benefit cut. Third, it would
change the benefit formula. The formula cuts would be deepest
for middle and upper income workers, so they've sometimes been
called progressive, but in fact they would affect workers with
average earnings as low as $10,000 a year.
Now for improvements. I'll be outlining four proposals to
enhance Social Security. I'll also talk about reforms to
Supplemental Security Income, SSI, our existing safety net
program for poor elders that is in desperate need of
modernization.
One important Social Security reform is to improve the
special minimum benefit. I was delighted to hear the bipartisan
interest in that benefit improvement. I would simply point to
my written testimony, which identifies specific ways of doing
that, but add this caution, that if that improvement is simply
a way to mitigate cuts such as those that are in some plans
like the Bowles-Simpson plan, it might end up mitigating the
harm, but not really making people better off, which should be
the goal of enhancing this benefit.
Second, provide credit for caregiving. As you've mentioned,
as have other witnesses, women are still more likely to take
time out of the labor force for caregiving. Social Security
doesn't directly credit those years. It recognizes it only
indirectly through the benefits for wives and widows, and
that's an imperfect way of doing it. So one proposal would give
workers up to five years of credit for caregiving, computed at
50 percent of the average wage.
Third, create an alternative benefit for widows and
widowers. Make it equal to 75 percent of the couple's combined
worker benefits, instead of simply the higher benefit of
either. This would improve both the adequacy of benefits for a
surviving spouse and the equity of benefits between single-
earner and dual-earner couples. It could be capped to target
the proposal to low and moderate income earners and reduce the
cost.
Fourth, use the Consumer Price Index for the Elderly to
determine the COLA for Social Security and SSI. The CPI-E is a
more accurate measure of inflation for the elderly because it
takes account of their spending patterns, which are twice as
high on health care costs, where inflation is much higher than
for costs generally.
Because of the focus of this hearing, I've highlighted
improvements to Social Security retirement benefits that are
especially important for women. But a complete reform package
should consider other issues, such as improving benefits for
people with disabilities, restoring and improving the student
benefit, ending discrimination against same-sex couples, and
increasing benefits broadly to improve retirement security for
many Americans who have increased--are at increased risk.
Finally, turning to SSI, this means-tested program provides
basic income support to the elderly poor and children and
adults with disabilities. Two-thirds of all SSI beneficiaries
65 and older are women. Congress needs to consider SSI when it
thinks about retirement security for women to ensure that the
poorest beneficiaries, who get benefits from both programs,
actually are made better off by improvements to Social Security
benefits and are not made worse off because they lose Medicaid
eligibility.
More generally, SSI urgently needs to be updated. For
example, it includes a $20 a month disregard for Social
Security benefits. This means that for every dollar in Social
Security benefits above $20 a month, they lose a dollar in SSI
benefits. This $20 disregard has not been changed in the 40
years since SSI was created. People are ineligible for SSI if
they have more than $2,000 in assets for an individual or
$3,000 for a couple. This limit is nearly 30 years old.
Since Social Security was created 75 years ago, it's been
improved several times by Congress to make it better for women.
I'm glad this committee is considering continuing that proud
tradition, and thank you again for this opportunity to testify.
The Chairman. Thank you very much.
Ms. Entmacher. Thank you.
The Chairman. We'll start with you, Ms. Bovbjerg. You
recommend in your report that SSA educate people about the
advantages of waiting to file for benefits. But are there
people for whom waiting is a bad idea? What is the benefit for
the rest of the population?
Ms. Bovbjerg. We've reported in earlier work that we've
done that many, many people would benefit from waiting, from
delaying claiming for Social Security benefits, particularly in
the context that we're speaking about today. Single women would
benefit tremendously. We don't think they always know that this
is something they should do.
If people are in ill health, which does affect a
significant percentage of people over 65, they might want to
claim early because they think that they won't live long enough
to benefit from the increased benefit earned by waiting until
age 70. People who are low earner spouses might not benefit as
much. But nearly everyone else does and should at least
consider it.
A concern that we have had for quite some time is that the
government does not speak with one voice on the advantages of
working longer and claiming later, and we've spoken about this
frequently before this committee. We've made recommendations
that the government should think more generally about the
signals that we send. For example, we have different claiming
and eligibility ages for different programs--Medicare, Social
Security, pension withdrawal requirements. But if you really
look at Social Security, which has the biggest platform in some
ways, Social Security does have an opportunity to get the word
out to people, make the information more readily available. We
think that if we frame the issue perhaps a little differently
so that it's more focused on age 70 and less on the so-called
full retirement age, that that could make a difference.
I think it would also be important that Social Security
consider what do they want to say, how are they going to say
it, and how can it be said consistently across field offices,
800 number operators, and the web site, where people are
increasingly claiming electronically. We think these things
would go a long way.
If I could, just while I have the floor for a minute, I
just would like to talk about the importance of the opportunity
of the Social Security statement, which is a way that we once
reached every American over the age of 25. And now we are only
sending to people over age 60 and people when they turn 25, on
or around their birthday. Others can obtain it on line, but
many people won't do that. That is an opportunity to educate
people.
We have called in the past for a redesign of the statement
to make it more accessible to people and to really explain some
of these things more clearly; we also believe that it should be
more widely available, and we're saddened that it's not. We
think it's an opportunity that's being lost.
The Chairman. Thank you so much.
LaTina Greene, we've heard from GAO and many people are
asking the question, and I'm sure you can provide some cogent
observations, why doesn't SSA do more to educate people about
the consequences of delaying benefits? You state and we
recognize that you don't want to be people's financial
advisers. But for many people, especially those who depend
largely on Social Security, SSA is where they get the
information. Don't you feel that you, we, the country, owes it
to these people to at least be certain that they are fully
familiar with the ramifications of beginning the benefits at 62
or 66 or 70?
Ms. Burse Greene. Absolutely we agree, absolutely. I don't
think that there is a disagreement there. Our position is that,
regardless of the service channel that a claimant chooses to
file for retirement benefits, we provide the same information
to them. We provide them information as to their monthly
benefit amounts at age 70, at the full retirement age, at age
62, at their earliest month of entitlement, or at any other
month they choose.
We make them aware of the fact that if they decide to claim
early, they will have a reduction of between 25 and 30 percent
of the benefit that they would be entitled to at full-
retirement age. We explain to them that if, in fact, they delay
retirement after the full retirement age, that they will
receive an 8 percent increase in their monthly benefit amount
each year thereafter. We explain to them exactly how earnings
will affect their benefits and how their personal decision will
affect their spouses and their surviving spouses and so forth.
So I think that, regardless of the service channel, we
provide all of that relevant information. We have publications
available online. We have various calculators and tools
available online for them to be able to make informed
decisions, might I add very personal decisions, about when it's
best to retire.
But I think from my opinion we've been here before. In 2008
we were influencing individuals, admittedly, to retire at age
62. We've recognized the error of our ways. We've adopted a
more neutral position by providing them with the facts,
complete, objective, neutral facts, so that they can make
sound, informed decisions. And I think we're going backwards if
in fact, instead of influencing them to retire early, now we're
going to be influencing them to retire later. I think our
position is the right position to take and that is to just
provide the facts and rely on the experts, like the financial
advisers and professionals, to basically delve into their
financial portfolios, to ask them questions about their health
and family longevity, to ask them questions about their other
streams of income.
Our technicians are not financial advisers, as you
mentioned and to be quite honest with you, the time that we
spend delving into their financial portfolios could be spent
working on other mission-critical work that we have to do.
The Chairman. All right. Well, we'll come back to that. I
think it's a crucial point, at least for our discussion.
Kelly O'Donnell, what kind of knowledge do consumers have
about Social Security and when they come to you do they know
about the advantages of delaying benefits?
Ms. O'Donnell. Based on our work with employers and 401(k)
participants, I would say generally they're not aware. One of
the things we have found with the roll-out of our retirement
income service Income+, which is based on the 401(k), it
immediately started bringing up more questions about the
retirement income puzzle, so things like Social Security,
Medicare, DB pensions, how all those things fit together.
Social Security has generally been a surprise in terms of
the benefit that can be obtained for both employers and
participants, a pleasant surprise, but a surprise.
To Ms. Green's remarks, I do believe that what we find is
that--and this has been typical of what we've seen in the
401(k)--is that education can provide a baseline of knowledge.
We've seen that informing people and educating people about how
to save and invest in their 401(k) has provided success to a
point. However, when we really want someone to make an impact
and to make the right financial decisions, that's where we find
personal advice is really helpful. And I think the same
situation is here, where individuals need to talk to someone,
to really understand all the different and consider all the
different points in their personal situation before making
those decisions.
The Chairman. Given the advantages of waiting to take their
benefits, why do you think so few women in fact do wait?
Ms. O'Donnell. I think some are just ill informed in terms
of not understanding. I think some people--based on our
research, we find that generally inertia is one of the biggest
attitudes and behaviors. So inertia would say just to take it
at 62 because that's what everyone else does. There's also
uncertainty. There can be uncertainty about the stability of
the Social Security System, and so some may feel that a bird in
hand is better, even if it's not.
I think that they have not had the benefit of financial
professionals really explaining to them the true benefits of
deferral.
The Chairman. So you also feel that to some considerable
extent the reason more women don't defer is because they don't
fully understand the ramifications?
Ms. O'Donnell. Definitely.
The Chairman. Do you feel that way, Ms. Bovbjerg?
Ms. Bovbjerg. I do, and I would just like to point out that
46 percent of unmarried people are relying nearly entirely on
Social Security, 23 percent of couples. Those are a lot of
people who are not going to have financial advisers, number
one; and number two, they're really looking to Social Security
for help. SSA's all they have available to them in retirement.
So I really think that it is important that we use the
Social Security platform to try to reach people. I don't
disagree on getting employers more informed and certainly
having employers help people when they consider their
retirement options. But I think that it's really fundamental
that SSA step in.
The Chairman. Without being critical or personal here, but
what I hear you saying is that this population of women would
be better served if they had better information on the
ramifications of when to start taking Social Security. And I
think I hear you saying--and I'd like to hear you comment on
that, LaTina--that, while Social Security should not--SSA
should not be responsible for making those judgments, there is
a question about whether or not SSA would be serving this
population more fully if they were not given more information,
a more clear understanding of the ramifications.
That's not suggesting that there's anything being done
wrong right now, just how we can make it better. I guess I'd be
interested in your opinion.
Ms. Burse Greene. We completely understand your concerns.
We would be willing to sit down with you and your staff to try
to look at your suggestions on how we can frame retirement
options in a way so that we're not influencing them and not
advising them on which decision to make. So I think we welcome
that discussion, but again we have to do it in such a way that
we're not influencing them in a particular direction.
Ms. Entmacher. Senator Kohl.
The Chairman. Yes?
Ms. Entmacher. If I could just add something to the
conversation here. We do some education through webinars with
women and I certainly agree that better understanding of the
consequences of the decisions people make about claiming Social
Security, the consequences of a spouse's decision, is very much
needed and would be very helpful.
But there are quite a number of women and men who really
don't have a choice, particularly in the last few years with
prolonged periods of unemployment for many older workers who
have lost their jobs, who can't get back into the workforce. We
hear from women who say, you know: I'm 61 years old, I've been
looking for work and looking for work. They know their benefits
are going to be cut, but they don't know what they're going to
live on. They don't have $100,000 in an IRA that they can use
to tide them through, and they're really struggling and, quite
frankly, taking Social Security may be better than charging a
lot on a credit card just to make ends meet.
I know in some of the other bills you've introduced you've
recognized some of the employment challenges that older workers
face. So there certainly are people out there for whom
realistically waiting is not an option, and we have to address
the broader picture of economic challenges.
The Chairman. Yes, very good.
Ms. Schaeffer, in your testimony you've referred to the
idea of moving the retirement age possibly back. Yet GAO has
previously reported to us about the unintended consequences of
such an action, an increase, for example, in disability claims
and a cut in benefits for those whose physical health or taxing
jobs are forcing them to retire early.
So how do we move back the age while still protecting these
people who need the benefits the most at an earlier age?
Ms. Schaeffer. Well, I think the first thing that we're all
sort of recognizing is that there are some serious challenges
to a defined benefit system, and that, while we're talking
about all of these benefits they don't come without a cost, and
that we have to remember that the current system is currently
financially unsustainable.
So there are going to be winners and losers in the way that
it's reformed, but we have to do something because currently
future workers aren't going to be seeing any of their money. So
I think that the biggest point that I could make here is the
importance in having a system that allows for flexibility,
control, and ownership, so that people can plan and can design
a retirement system that fits the needs of their family and
their health, considers their health needs, their employment
prospects, and allows them the greatest ability to be flexible
throughout their time that they're in the workplace or at home.
I think that you're pointing out a very important issue
about the age at which we retire, but I think that we need to
be very clear that in 1940 a man who reached age 65 was
expected to live only 12.7 more years, a woman only 14.7 more
years, but by 1990 the 65-year-old man is expected to live 15.3
years and a woman 19.6 years. That's 2.5 more years of payments
for the man and 5 more years of payments for the woman. That's
wonderful that our life expectancy is increasing, but we again
have to recognize the real actuarial cost that this means for
all of us in terms of taxpayers.
The Chairman. Thank you.
Ms. Entmacher, as we know, we have a special minimum
benefit today. But we understand that it was not really
reaching people it was intended to cover. In many cases it is
not. Can you tell us why that is and what are some of the ways
we can fix this benefit to ensure that it protects the very
poorest of the poor?
Ms. Entmacher. Well, there are several reasons why it's not
working. Just to illustrate how dramatically it's not working,
about 40 percent of women workers receive a Social Security
benefit that isn't enough to bring them out of poverty, whereas
the special minimum benefit helps just over one-tenth of one
percent of all beneficiaries. So it clearly is not reaching
people that it was intended to.
There are several reasons for that. One is that, while the
regular Social Security benefit formula keeps pace with--is
wage indexed, it keeps pace with increases in the standard of
living, the special minimum benefit is not. It's indexed to
poverty, so it shrinks every year.
The second problem with it is that it requires a very
substantial level of earnings to get a single year of credit
toward the special minimum. For example, you must earn $12,280
a year to get one year of credit toward the special minimum. To
get a year of credit toward regular Social Security is $4530.
And if you fall even a dollar short of that $12,280, you don't
get any credit.
That may not seem--$12,000 may not seem like a lot to some
of the people in this room, but if you're working for minimum
wage that's virtually full time, year-round minimum wage work.
The nature of the low wage labor market is that low wage
workers often can't get steady work. It's a seasonal labor
market, jobs are temporary. Low wage workers have more
struggles to pay for caregiving, so they may lose time out of
the labor force when they can't go to work. They don't get paid
time off to care for a child. They're more prone to
disabilities.
So that you've got a concentration of people who have
interruptions in their work histories, as well as the nature of
the labor market, that people often don't have that kind of
steady work. So it's hard to qualify for benefits.
The amount that we give people under the special minimum
isn't enough to bring them out of poverty even if they have 30
years of these earnings. And we don't give any credit for
caregiving.
So those are four ways that I've suggested to improve the
special minimum: first of all, to make sure that it gives
people at least 125 percent of poverty; to lower the amount
needed to qualify for a year of credit; to index benefits to
wages instead of prices, the way regular benefits are indexed;
and to give eight years of caregiving credit, and that would
make it much more effective.
The Chairman. Good.
Ms. Entmacher. Thank you.
The Chairman. Other comments from the panel?
[No response.]
I am encouraged with the thought that we can work together,
Ms. Greene, with you and your agency to be sure that we get as
close to 100 percent as possible of information and
understanding out there to women who are approaching 62 on some
of the benefits of waiting until 66 or 70. I think we all feel
that can make a big--really advantage the system, advantage the
situations of these women who so clearly would be in a better
situation and a better benefit if they waited.
Who else wants to make comment? Yes, Barbara, go ahead.
Ms. Bovbjerg. I just did want to say that I thought that
what I just heard about framing the issue is so important. We
heard that when we spoke to our experts about different policy
options over and over, that how we talk about it is really
important. We've long thought that we need to be more
consistent across government, and I think that what you're
suggesting is a really great start.
The Chairman. And your point also that this huge gap
between age 25 and age 60 when not enough information is
getting out, so that when it gets out maybe at age 60 it's a
little too late in some cases for them to have made their plans
and they didn't understand the ramifications at an earlier time
in their lives. We can do a better job with that also.
How did it occur that we stopped sending out that
information annually, do you know?
Ms. Burse Greene. Yes. In March or April of 2011, furloughs
were imminent at the time. We were spending $70 million a year
in postage and mailing costs for the Statement. At that time,
to be quite honest with you--and it was a very difficult
decision to make--we had to figure out how we could continue to
have adequate staff available to fulfill our mission-critical
work, our mission-critical activities, be it processing claims,
program integrity work, and so forth.
The bottom line is that a decision was made that we would
suspend mailing the statements so that we could take that $70
million--for fiscal year 2011 it was actually $30 million--and
divert that to keep staff on duty in order to perform our
mission-critical work. Since that time, as you know, we've
developed online Statement that is available 24-7. We resumed
mailing the Statement for individuals 60 and over who are not
currently receiving benefits.
On Monday we resumed mailing a one-time Statement to
individuals turning age 25. As part of the President's fiscal
year 2013 budget, there are sufficient funds for us to resume
mailing the Statement to everyone who is not currently
receiving benefits. But, of course, it depends on what the
actual appropriation will be, that will determine the tough
decisions we're going to have to make going forward. We will
continue to evaluate our options.
The Chairman. Did I hear you just say that there are plans
afoot to resume those mailings?
Ms. Burse Greene. There are sufficient funds in the
President's fiscal year 2013 budget that is correct. But it
remains to be seen whether or not we actually receive that
budget.
The Chairman. Did you refer also to the cost involved?
Ms. Burse Greene. Correct. It costs $70 million a year.
The Chairman. 7-0.
Ms. Burse Greene. 70 that is correct, 7-0, for postage and
mailing costs.
The Chairman. Were we to resume an annual mailing to
everyone?
Ms. Burse Greene. That is correct.
The Chairman. $70 million per year?
Ms. Burse Greene. That is correct.
The Chairman. All right, thank you.
Senator Blumenthal, we've been waiting for you and your
expertise.
Senator Blumenthal. Thank you.
Let me thank all of you for being here today. I apologize
that I was delayed at another event, another meeting, and I
just really want to thank you all for contributing so
importantly to the work that we're doing here, and thank our
chairman, Chairman Kohl, for having this hearing on an issue
that is so critically important, enhancing retirement security.
Let me begin, Ms. Greene, if I may, by asking you what we
can do and what your plans are to enhance the on-line tools? I
know you've talked a little bit about it. Since the tools have
been available, have you seen women retiring later and taking
more advantage of on-line tools?
Ms. Burse Greene. If I may just kind of bifurcate the two
questions, I believe.
Senator Blumenthal. Sure.
Ms. Burse Greene. I think your first question deals with
whether or not we've seen any trends in terms of claiming
behavior of women. There has been some recent research by the
Urban Institute--that study was actually funded by Social
Security--that concluded that there has been a downward trend
when you look at cohort behavior and claiming behavior. So,
there has been a decrease in claiming at age 62 over the last
10 years or so.
There was a spike, I want to say, around 2008, 2009, but I
think thus far that downward trend will likely continue over
the next several years. My recollection, and I can confirm this
for the record, is I don't recall there being any distinction
between claiming by men and women. But again, I can go back and
verify that for the record.
Senator Blumenthal. And by downward you mean lower
retirement age?
Ms. Burse Greene. People are delaying their claiming
decisions until later ages. So they're not all claiming at age
62, but maybe at 63 or 64. Again, we can go back and look at
the data itself and provide more specifics for the record.
There is a downward trend.
Senator Blumenthal. I'd be interested in that. And you
rightly bifurcated the two questions. You have seen essentially
higher age retirement, a trend toward higher age retirement, is
that fair to say? Is that what you ----
Ms. Burse Greene. There has been a downward trend in
claiming at age 62. So I believe at one point in time, when you
look at cohort data, 53 percent of the beneficiary population
was retiring at age 62. I think now it's maybe 50 percent of
the beneficiary population, when you look at cohort data
specifically, are now retiring at age 62. So there has been a
downward trend, and again I would prefer to provide more
information for the record.
Senator Blumenthal. I'd be very interested in those
numbers. Then to take the second part of the question, use of
on-line tools, any trends there?
Ms. Burse Greene. Well, specifically for the online
Statement, in a two-month period, we've had about 1.1 million
individuals successfully register for our online Statement. Of
those who successfully registered, 35 percent are within the 60
to 69 age category, another 33 percent are within the 50-59 age
category.
So we're pleased with the results that we've seen so far
and the interest in our online Statement. We will continue to
use traditional and non-traditional means of communicating with
individuals about online Statement availability.
Senator Blumenthal. Let me ask you--and I would open this
question to any of the others who are testifying today--
increasing the eligibility age; do you have an opinion as to
whether that step would increase the number of women living in
poverty? For you or anyone else who might want to answer.
Ms. Entmacher. Well, I will take a stab at that, Senator.
I'm Joan Entmacher. I'm testifying on behalf of the National
Women's Law Center. We are concerned that it would, because
raising the retirement age is really a benefit cut. It's nearly
7 percent a year for every additional year. As I said earlier
to Senator Kohl, there are people who don't have the option of
waiting. They may not have sufficient financial resources to
cover them until they claim Social Security. They may have
worked in a low-paying job most of their life, have very little
saved and be unable to find a job.
Obviously, it's particularly hard today. Duration spells of
unemployment are particularly hard for the elderly. Even before
the recession, it was very hard for many older workers to get
back into the labor force. They just weren't that attractive to
some employers.
So what this does is simply reduce the Social Security
benefit for people whose benefits are already particularly
likely to be low. The people who claim early are
disproportionately lower income workers. So it is a problem.
Doing something that doesn't involve raising the retirement
age, but that does talk about different ages in a different
way, that encourages people who can wait to do so, instead of
saying 66 is the full retirement age, say 70 is the highest
benefit age, and encourage people to think about these years
differently, that could be positive. I don't know what the best
words are and we'd have to check messages, but that's very
different from actually changing the retirement age and
lowering benefits for people who claim before that older age.
Senator Blumenthal. Are there reliable studies on whether
it's more difficult for men or women to get back into the
workforce at certain ages?
Ms. Entmacher. We can get back to you with some more
studies. The National Women's Law Center has been looking at
duration of spells of unemployment for older women and men. The
numbers have jumped around a little bit. For a period of months
it'll be longer for women and then you'll look a few months
later and it will be even longer spells for older men. All I
can say is it's very long for both older men and older women,
and their unemployment rates are lower, but their duration of
their periods of unemployment are higher, and it's true for
both men and women. But I don't want to have a competition
because it's really tough for both.
Senator Blumenthal. If you could provide any studies that
you think would be helpful or enlightening.
Ms. Entmacher. I would be happy to do that, Senator. Thank
you.
Senator Blumenthal. Great.
Let me ask Ms. O'Donnell, can you talk a little about what
we can do, what government can do, to make sure that there is
better information and more information about what people, what
women need to do in saving for retirement?
Ms. O'Donnell. From our perspective and where our expertise
lies, we're really about working with employers as part of
their 401(k) plan and benefit plans. I think having the
government urge more employers to help individuals and their
employees with retirement income solutions, providing help with
retirement--with Social Security strategies, would be very
helpful.
The 401(k) is unique in that next to Social Security it's
the largest source of retirement income for many workers, and
it also has the benefit of providing an environment with lower
fees, fiduciary oversight from the plan sponsor. So there is
more of a protected environment from the employer. So anything
the government can do to encourage employers to offer more
retirement income help through their 401(k) plans and to
include Social Security as part of what they should be
providing help on we believe will be very impactful.
I've been doing work with very large employers and their
employees and we believe that one of the things employers are
most excited about is looking at Social Security optimization
and specifically deferring Social Security, because it's
something that is not well known and they realize that it's
probably the biggest impact later in life that one can have on
their retirement income.
Senator Blumenthal. Have you noticed any scams or other
kinds of improper schemes preying on this area of retirement
plans, and have you noticed any trends, either increasing
numbers or anything that might be helpful to us?
Ms. O'Donnell. Yes. I don't have specific studies. There
are not a lot of studies on scams, I guess. But what we do hear
from our employers--and they're very large employers--because
of the demographics of the number of people retiring right now,
there are different types of unscrupulous investment advisers
who basically wait for people to retire, to have the lump sum.
They circle the parking lots, they put flyers on the
windshields of the cars, and they're waiting for people. Then
typically what happens then is that they are selling them
higher-priced investment products that may or may not be in
their best interest.
So that is one of the things that we feel is so beneficial
about the 401(k) system, is that it provides that protection
for the individual. And typically, because of the large scale
and the number of assets that are in a 401(k) plan, the
employer is able to get lower priced investment services and
products available.
Senator Blumenthal. Do you think that there's sufficient
enforcement against these kinds of scams?
Ms. O'Donnell. I'm unsure about--that's something I
probably shouldn't comment on. I don't really understand that.
I do know that it is an employer concern and that they--because
we are an independent fiduciary to the employer, it's something
that--having our services is something that they want because
they do not want others--their employees looking to outside of
the plan for help that may not be in their best interests.
Senator Blumenthal. They want you so that someone
unscrupulous isn't the one taking advantage of their employees.
Ms. O'Donnell. Right.
Senator Blumenthal. But do you know whether they report
these kinds of problems when they see them?
Ms. O'Donnell. I'm unsure. I know that they talk about them
anecdotally, but I'm not sure whether they report them to the
government or any agencies.
Senator Blumenthal. Let me ask you and any of the others
who are here whether you are concerned about elder abuse, of
women in particular, elder financial abuse. Elder abuse is
normally associated with physical abuse, but one of my
interests is in abuse financially, by caretakers, by financial
advisers, the spectrum of people who are in positions of trust
vis-a-vis the elderly. And it affects women as well as men,
obviously. So I'd be interested in any perspective you can
offer.
Ms. Bovbjerg. If I may, Senator. GAO has some work under
way for this committee on elder abuse and financial
exploitation. I was just checking to see when we're releasing
it. It looks like it won't be before Thanksgiving.
Senator Blumenthal. Before Thanksgiving?
Ms. Bovbjerg. Yes. Yes. I can't tell you anything about it
now. It's coming in November, but it is work we have under way.
Senator Blumenthal. Okay. Well, thank you. That will be
very helpful and very important. I don't know whether you ever
offer previews of coming attractions.
Ms. Bovbjerg. Usually not in a hearing environment, but we
would be happy to come and speak with you.
Senator Blumenthal. Well, I was going to suggest if you
could talk to us I would appreciate it.
Ms. Bovbjerg. If the committee is interested, we could
arrange to have a briefing.
Senator Blumenthal. Thank you.
Any other perspectives or thoughts about that issue, elder
financial abuse?
[No response.]
Well, I want to really thank all of you for being here
today.
Thank you very much, Mr. Chairman, it's been very important
and useful, and I will be very interested in the additional
information that you may be able to get us. Thank you.
The Chairman. Thank you very much, Senator Blumenthal.
We thank you all for being here today. You have cast light
on an important subject and so your taking the time to come has
been more than worthwhile.
This hearing is adjourned.
[Whereupon, at 3:14 p.m., the hearing was adjourned.]
APPENDIX
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