From iPod Generation to Baby Boomers, Workers Need Better Retirement Savings Tools

by Sen. Enzi (ranking Member of the Senate Health, Education, Labor & Pensions (HELP) Committee) in The Hill's Congress Blog. American workers and retirees have nearly $2.3 trillion in 401(k) and related accounts, making it more important than ever for Americans to invest that money wisely in light of what’s occurring in our current capital markets.Today in the Senate Health, Education, Labor and Pensions Committee, we held a hearing, titled “401(k) Fee Disclosure: Helping Workers Save for Retirement,” focusing on this challenge. Anyone who has been watching the news knows that some of our financial institutions have forgotten or ignored the two principal foundations of sound investing: diversify your investments and limit your risks. We need to follow these lessons as we save for our golden years. We cannot afford to squander our retirement savings through poor investment decisions. Workers and retirees need to have the right information about their retirement plans and to have the tools and technology to manage that information and make the best decisions for themselves and their families. If the so-called ‘Genius’ software that’s capturing the imagination of the iPod generation by taking a single song and creating a whole playlist of music suited to your likes and dislikes, technology should be able to help you predict your financial needs in retirement - and help you manage your savings. Under the Pension Protection Act, which Congress passed two years ago, we have made great strides in reducing the hurdles for companies to establish auto-enrollment 401(k) plans. However, the nation still lags behind in the number of small businesses offering retirement benefit plans. According the Congressional Research Service, only 26 percent of employers with fewer than 25 employees have retirement plans. This compares to 65 percent of all large companies that have pension plans. Anything that we do with respect to 401(k) fee disclosure and investor education should not place disproportionate burdens on small entities nor should it saddle them with additional liability.