PROspective Vol I No IV April 2010
Chuck Miller: Senator, a review of your legislative history shows great concern with the effectiveness of retirement plans. Why are you so concerned?
Kohl: I believe that Americans who work hard throughout their lives, and who take care to put money toward their retirement savings, deserve to retire with security and dignity. They should have the guarantee that their retirement plan is working in their best interests and will serve their retirement needs.
CM: Do you think employees get good, meaningful information from employers or investment managers? Are the current rules about disclosure enough?
Kohl: No. Adequate disclosure is a problem. I’ve introduced S. 401 to require 401(k) fee disclosure to both participants and employees. I’ve also introduced the Lifetime Income Disclosure Act, which would provide information about how 401(k) savings could translate into a lifetime income stream for participants.
Finally, the Aging Committee has found the regulation of target date funds severely lacking, both in terms of composition, transparency and fiduciary responsibility. For example, even investment experts at Morningstar testified they were having trouble figuring out the composition of some target date funds.
CM: Last year your committee conducted hearings about target-date funds… what did you learn?
Kohl: We learned that there is really no standard definition of what a target date fund should be, and that there are huge differences in investment strategy, risk, fees, and so forth that can have a huge impact on one’s savings.
CM: What are your feelings about the future of Social Security?
As Social Security nears its 75th anniversary, it is time to take a fresh look at the retirement program to ensure that it will be just as strong in another 75 years. The changes and shifts that have taken place in our society should be mirrored in the type of benefits Social Security provides, and in the way we raise revenue. And we should place a particular focus on making sure that the most vulnerable in our society are not left behind as we examine ways to strengthen benefits.
Because Social Security is absolutely critical to the retirement security of hard working Americans, I am concerned about those who are clamoring to cut benefits under the guise of reducing our deficit. Social Security has never contributed a single penny to our national deficit and is prevented by law from ever doing so. Social Security must remain strong and its solvency can easily be strengthened with small common sense changes.
CM: How soon should we begin fixing the system?
Kohl: The sooner we can enact changes, the better. Since last summer, the Aging Committee has been preparing to help ensure that a debate on Social Security reform is an informed discussion and not a partisan one. We have gathered reports, reform proposals, and analysis from policy experts, many of whom agree that Social Security can be strengthened, benefits for those who need them most can be increased, and long-term solvency can be ensured with just a few common-sense changes.
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