KOHL COMMENDS EFFORTS OF THE MIDDLE CLASS TASK FORCE
WASHINGTON, D.C. - U.S. Senator Herb Kohl, Chairman of the Senate Special Committee on Aging, released the following statement commending the efforts of the administration's Middle Class Task Force:
"I applaud the Middle Class Task Force for recognizing the importance of helping Americans plan for a secure retirement. From strengthening the nation's 401(k) system to easing the financial burden of caring for an aging loved one, these are key issues that affect every American family."
Following a year of work under the direction of Vice President Joe Biden, the Middle Class Task Force today released a number of recommendations on topics ranging from helping families manage the costs associated with raising children and caring for aging family members, making changes to federal student loans, and making it easier for Americans to save for retirement.
A number of proposals mirror initiatives championed by Senator Kohl, including:
• S. 401, which would require 401(k) fee disclosure. Under ERISA, there are currently no requirements to clearly disclose the record keeping and investment fees charged for managing a 401(k) account. Yet a small difference in fees, when compounded annually, has a significant negative effect on one's retirement savings. If passed, this legislation would drastically increase overall retirement security - with no cost to taxpayers.
• The Lifetime Income Disclosure Act (S. 2832), which would enable participants to better understand how their 401(k) savings can last during their retirement by requiring benefit statements to include the annuity equivalent of an employee's benefit. An annuity equivalent would be the monthly annuity payment that would be made if the employee's total account balance were used to buy a life annuity that commenced payments at the plan's normal retirement age - generally 65. The statement would be required to show the monthly annuity payments under both a single life annuity and a qualified joint and survivor annuity (i.e., an annuity with survivor benefits payable for life to the employee's spouse).
• Efforts to increase the transparency and regulation of target date funds, including a bill to require target date fund managers to take on a fiduciary responsibility in order for such funds to be eligible for the designation of Qualified Default Investment Alternative (QDIA). Target date funds, sometimes called lifecycle funds, are a type of mutual fund that is supposed to automatically rebalance to a more conservative asset allocation as the participant approaches their target retirement date. As it stands, target date products operate under less stringent fiduciary responsibility guidelines, which can lead to high fees, excessive risk, and underperforming portfolio funds. This bill would ensure that automatic enrollees benefit from the same fiduciary protections as other investors.
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