U.S. GOVERNMENT PUBLISHING OFFICE

25–401 PDF WASHINGTON : 2018

REGULATORY BARRIERS FACING WORKERS AND 

FAMILIES SAVING FOR RETIREMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH, 

EMPLOYMENT, LABOR, AND PENSIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, MAY 18, 2017 

Serial No. 115–15 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: www.govinfo.gov 

or 

Committee address: http://edworkforce.house.gov 

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COMMITTEE ON EDUCATION AND THE WORKFORCE 

VIRGINIA FOXX, North Carolina, Chairwoman 

Joe Wilson, South Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn ‘‘GT’’ Thompson, Pennsylvania 

Tim Walberg, Michigan 

Brett Guthrie, Kentucky 

Todd Rokita, Indiana 

Lou Barletta, Pennsylvania 

Luke Messer, Indiana 

Bradley Byrne, Alabama 

David Brat, Virginia 

Glenn Grothman, Wisconsin 

Elise Stefanik, New York 

Rick W. Allen, Georgia 

Jason Lewis, Minnesota 

Francis Rooney, Florida 

Paul Mitchell, Michigan 

Tom Garrett, Jr., Virginia 

Lloyd K. Smucker, Pennsylvania 

A. Drew Ferguson, IV, Georgia 

Ron Estes, Kansas 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Ranking Member 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Mark Takano, California 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Donald Norcross, New Jersey 

Lisa Blunt Rochester, Delaware 

Raja Krishnamoorthi, Illinois 

Carol Shea-Porter, New Hampshire 

Adriano Espaillat, New York 

Brandon Renz, Staff Director 

Denise Forte, Minority Staff Director 

SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS 

TIM WALBERG, Michigan, Chairman 

Joe Wilson, South Carolina 

David P. Roe, Tennessee 

Todd Rokita, Indiana 

Lou Barletta, Pennsylvania 

Rick W. Allen, Georgia 

Jason Lewis, Minnesota 

Francis Rooney, Florida 

Paul Mitchell, Michigan 

Lloyd K. Smucker, Pennsylvania 

A. Drew Ferguson, IV, Georgia 

Ron Estes, Kansas 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Ranking Member 

Frederica S. Wilson, Florida 

Donald Norcross, New Jersey 

Lisa Blunt Rochester, Delaware 

Carol Shea-Porter, New Hampshire 

Adriano Espaillat, New York 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Suzanne Bonamici, Oregon 

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C O N T E N T S 

Page 

Hearing held on May 18, 2017 ............................................................................... 1 

Statement of Members: 

Sablan, Hon. Gregorio Kilili Camacho, Ranking Member, Subcommittee 

on Health, Employment, Labor, and Pensions ........................................... 6 

Prepared statement of ............................................................................... 7 

Walberg, Hon. Tim, Chairman, Subcommittee on Health, Employment, 

Labor, and Pensions ..................................................................................... 1 

Prepared statement of ............................................................................... 3 

Statement of Witnesses: 

Campbell, Mr. Bradford P., Esq., Partner, Drinker Biddle and Reath ........ 67 

Prepared statement of ............................................................................... 69 

Furman, Mr. Jason, Senior Fellow, Peterson Institute for International 

Economics ...................................................................................................... 56 

Prepared statement of ............................................................................... 58 

Kais, Mr. James, Senior Vice President and National Retirement Practice 

Leader, Transamerica ................................................................................... 32 

Prepared statement of ............................................................................... 35 

Sossa, Mr. Erik, Vice President, Global Benefits and Wellness, PepsiCo, 

Inc. ................................................................................................................. 41 

Prepared statement of ............................................................................... 43 

Additional Submissions: 

Roe, Hon. David P., a Representative in Congress from the State of 

Tennessee: 

Letter dated May 18, 2017, from The SPARK Institute, Inc. ................ 29 

Letter dated June 4, 2017, from The SPARK Institute, Inc. ................. 31 

Chairman Walberg: 

Prepared statement of the American Council of Life Insurers (ACLI) . 9 

Letter dated May 17, 2017, from Chamber of Commerce ...................... 15 

Prepared statement of MetLife, Inc. ........................................................ 17 

Letter dated May 18, 2017, from Save Our Savings Coalition .............. 25 

Prepared statement of Sessions, Hon. Pete, a Representative in Congress from the State of Texas ............................................................... 27 

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REGULATORY BARRIERS FACING WORKERS 

AND FAMILIES SAVING FOR RETIREMENT 

Thursday, May 18, 2017 

House of Representatives 

Committee on Education and the Workforce, 

Subcommittee on Health, Employment, Labor, and Pensions 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2175, Rayburn House Office Building, Hon. Tim Walberg [chairman of the subcommittee] presiding. 

Present: Representatives Walberg, Wilson of South Carolina, 

Roe, Allen, Lewis, Mitchell, Smucker, Ferguson, Estes, Sablan, Wilson of Florida, Norcross, Blunt Rochester, Espaillat, Courtney, 

Fudge, and Bonamici. 

Also Present: Representatives Foxx, Scott, and Krishnamoorthi. 

Staff Present: Bethany Aronhalt, Press Secretary; Andrew 

Banducci, Workforce Policy Counsel; Courtney Butcher, Director of 

Member Services and Coalitions; Ed Gilroy, Director of Workforce 

Policy; Jessica Goodman, Legislative Assistant; Callie Harman, 

Legislative Assistant; Nancy Locke, Chief Clerk; Dominique 

McKay, Deputy Press Secretary; James Mullen, Director of Information Technology; Krisann Pearce, General Counsel; Lauren 

Reddington, Deputy Press Secretary; Molly McLaughlin Salmi, 

Deputy Director of Workforce Policy; Olivia Voslow, Staff Assistant; 

Joseph Wheeler, Professional Staff Member; Tylease Alli, Minority 

Clerk/Intern and Fellow Coordinator; Denise Forte, Minority Staff 

Director; Christine Godinez, Minority Staff Assistant; Carolyn 

Hughes, Minority Director of Health Policy/Senior Labor Policy Advisor; Stephanie Lalle, Minority Press Assistant; Kevin McDermott, 

Minority Senior Labor Policy Advisor; Veronique Pluviose, Minority 

General Counsel; and Elizabeth Watson, Minority Director of Labor 

Policy. 

Chairman WALBERG. A quorum being present, the Subcommittee 

on Health, Employment, Labor, and Pensions will come to order. 

Good morning. A delight to begin by welcoming our witnesses. 

Thanks for being here. We appreciate having a table full of witnesses that have some expertise it can share with us as opposed 

to just listening to ourselves. 

After decades of hard work, every American should be able to retire with dignity and peace of mind, but unfortunately, too many 

Americans are struggling to save for their retirement years. Now 

more than ever we need policies that empower workers to put 

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money aside for retirement. These policies should include strong 

protections for workers. 

I was proud to champion a resolution to close a regulatory loophole that would have resulted in countless individuals losing their 

retirement protections they have long been afforded under Federal 

law. This loophole was put in place by the Obama administration 

to allow states to force workers into a government run IRA system. 

The answer to our nation’s retirement challenges is not more 

government. Part of the answer is getting the economy to grow 

faster. The sluggish economic growth, weak job creation, and stagnant wages we have seen in recent years certainly have not made 

it easy for people to save for retirement. 

After all, the most important step toward a strong and secure retirement is a good paying job. Working families are also in desperate need of health care relief. With health insurance premiums 

increasing faster than wages, something has to give. For many individuals that means saving less for the future. 

That is why the committee has advanced free-market health care 

reforms that lower costs. We have also played an important role in 

delivering regulatory relief to help create jobs and grow the economy. 

I say all this because truly tackling the issue of retirement security is going to require a holistic approach. We can start by removing regulatory barriers facing retirement savers. 

For years, this committee has led the fight against the flawed fiduciary rule. According to one report, this rule was the most expensive regulatory action of 2016, and will impose more than $46 billion in costs on retirement savers. Let me repeat that, $46 billion. 

That is real money even around here. 

Now, we all agree that investment professionals should act in the 

best interests of their clients. In fact, this committee advanced bipartisan legislation increasing protections for retirement savers. 

However, the last thing working families need is to lose access 

to their trusted financial advisors. Unfortunately, that may be the 

case for low and middle-income families if the flawed fiduciary rule 

takes effect. Already, we are seeing the types of services those with 

fewer savings depend on begin to diminish. 

As this trend continues, many individuals will no longer be able 

to afford retirement advice. They will be left with robo-advisors or 

forced to fend for themselves, and even worse, maybe to do nothing 

at all. 

It should come as no surprise that the robo-advice industry has 

come out in full force in defense of the fiduciary rule. An executive 

of one of the industry’s largest firms recently told the press, and 

I quote, ‘‘An expansion of the fiduciary rule would be nice for our 

business.’’ Another robo-advisor said, and I quote again, ‘‘They are 

sad that it looks like the rule might go away.’’ There was even a 

national ad campaign urging the Trump administration to keep 

this flawed rule in place. 

We have nothing against robo-advisors, but people should have 

choices and access to retirement advice in all forms. However, 

many individuals prefer to choose personal financial advice, but as 

we have warned all along, that choice may soon be out of the reach 

for those who can no longer afford it. 

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3 

We have also warned of the impact on small businesses. Many 

rely on financial advisors as they set up retirement plans for their 

employees, but as one Indiana small business owner testified before the committee, this rule, and I quote, ‘‘Puts all of that in jeopardy.’’ 

What we should be doing is making it easier for small businesses 

to offer retirement plans to their employees. According to a recent 

survey, 37 percent of small businesses cite ‘‘set up expenses’’ as the 

key reason for not offering retirement benefits. One way small 

businesses could provide retirement plans to workers at a more affordable cost is through multiple employer plans or MEPs. 

Unfortunately, these plans are currently restricted by the federal 

government. With roughly 58 million American small business employees, it is time to change that. We should empower small businesses to band together through MEPs, an idea that has received 

bipartisan support over the years. 

Additionally, we need to reduce red tape. We can file taxes online 

and students can receive information about their federal student 

loans online. Yet, the federal government limits the ability of workers and retirees to receive information about their retirement accounts in anything but a hard copy. Simply allowing employers to 

provide information about retirement benefits electronically would 

reduce the cost of administering retirement plans by an estimated 

36 percent. 

All of the solutions I outlined have one thing in common. They 

would all empower workers and families to save more for retirement. Many in this room likely have other ideas as well, and that 

is exactly why we are here, to have a thoughtful dialogue on how 

we can strengthen retirement security for all Americans. 

I look forward to our discussion, and I will now yield to my 

friend, Ranking Member Sablan, for his opening remarks. 

[The statement of Mr. Walberg follows:] 

Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on 

Health, Employment, Labor and Pensions 

Retirement security is a leading priority for this committee, and one that crosses 

party lines. After decades of hard work, every American should be able to retire 

with dignity and peace of mind. Unfortunately, too many Americans are struggling 

to save for their retirement years. Now more than ever, we need policies that empower workers to put money aside for retirement. 

Those policies should include strong protections for workers. I was proud to champion a resolution to close a regulatory loophole that would have resulted in countless 

individuals losing the retirement protections they have long been afforded under 

federal law. This loophole was put in place by the Obama administration to allow 

states to force workers into government-run IRAs. 

The answer to our nation’s retirement challenges isn’t more government. Part of 

the answer is getting the economy to grow faster. The sluggish economic growth, 

weak job creation, and stagnant wages we’ve seen in recent years certainly haven’t 

made it easy for people to save for retirement. After all, the most important step 

toward a strong and secure retirement is a good-paying job. 

Working families are also in desperate need of health care relief. With health insurance premiums increasing faster than wages, something has to give. For many 

individuals, that means saving less for the future. That’s why the committee has 

advanced free-market health care reforms that lower costs. We’ve also played an important role in delivering regulatory relief to help create jobs and grow the economy. 

I say all this because truly tackling the issue of retirement security is going to 

require a holistic approach. We can start by removing regulatory barriers facing retirement savers. 

CEWDOCROOM with DISTILLER

4 

For years, this committee has led the fight against the flawed fiduciary rule. According to one report, this rule was the most expensive regulatory action of 2016 

and will impose more than $46 billion in costs on retirement savers. Let me repeat 

that. $46 billion. Now, we all agree that investment professionals should act in the 

best interests of their clients. In fact, this committee advanced bipartisan legislation 

increasing protections for retirement savers. 

However, the last thing working families need is to lose access to their trusted 

financial advisors. Unfortunately, that may be the case for low- and middle-income 

families if the flawed fiduciary rule takes effect. Already, we are seeing the types 

of services those with fewer savings depend on begin to diminish. As this trend continues, many individuals will no longer be able to afford retirement advice. They’ll 

be left with robo-advisors or forced to fend for themselves. 

It should come as no surprise that the robo-advice industry has come out in full 

force in defense of the fiduciary rule. An executive of one of the industry’s largest 

firms recently told the press, ‘‘An expansion of the fiduciary rule would be nice for 

our business.’’ Another robo-adviser said they ‘‘are sad that it looks like ... the rule 

might go away.’’ There was even a national ad campaign urging the Trump administration to keep this flawed rule in place. 

We have nothing against robo-advisers. People should have choices and access to 

retirement advice in all forms. However, many individuals prefer to choose personal 

financial advice. But as we’ve warned all along, that choice may soon be out of reach 

for those who can no longer afford it. 

We’ve also warned of the impact on small businesses. Many rely on financial advisors as they set up retirement plans for their employees. But as one Indiana small 

business owner testified before the committee, this rule ‘‘puts all of that in jeopardy.’’ 

What we should be doing is making it easier for small businesses to offer retirement plans to their employees. According to a recent survey, 37 percent of small 

businesses cite ‘‘set up expenses’’ as the key reason for not offering retirement benefits. One way small businesses could provide retirement plans to workers at a more 

affordable cost is through multiple employer plans, or MEPs. 

Unfortunately, these plans are currently restricted by the federal government. 

With roughly 58 million American small business employees, it’s time to change 

that. We should empower small businesses to band together through MEPs—an idea 

that has received bipartisan support over the years. 

Additionally, we need to reduce red tape. We can file taxes online and students 

can receive information about their federal student loans online. Yet the federal government limits the ability of workers and retirees to receive information about their 

retirement accounts in anything but a hardcopy. Simply allowing employers to provide information about retirement benefits electronically would reduce the cost of 

administering retirement plans by an estimated 36 percent. 

All of the solutions I outlined have one thing in common. They would all empower 

workers and families to save more for retirement. Many in this room likely have 

other ideas as well, and that’s exactly why we’re here—to have a thoughtful dialogue on how we can strengthen retirement security for all Americans. 

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Mr. SABLAN. Thank you very much, Chairman Walberg, and good 

morning, everyone, and to our witnesses who have traveled here to 

join us this morning. 

Thank you, Chairman. I appreciate you convening today’s hearing. We are in the midst of a retirement savings crisis. Tens of millions of Americans who work in the private sector lack access to a 

retirement savings plan at their jobs. This problem is particularly 

acute for people of color, as only 54 percent of African American 

and Asian employees, and 38 percent of Latino employees work for 

an employer that sponsors a retirement plan. 

We know that many middle and low-income workers lack the resources to save for their own retirement, and that studies have 

shown that African American and Hispanic families are far behind 

white families in retirement savings, and that is deeply concerning. 

I look forward to today’s discussion on how to ensure that everyone is planning and saving for retirement, and can get the investment advice that is in their best interests. I hope we can explore 

bipartisan ideas such as open MEPs aimed at incentivizing small 

businesses to offer retirement savings plans, and allowing those 

that do not to automatically enroll workers into the electronic delivery of disclosures and other retirement plan documents. 

Last Congress, I was a co-sponsor of H.R. 2656 authored by Dr. 

Roe and Congressman Polis, to allow for this kind of automatic enrollment of retirement plan communications. 

According to AARP, having access to a workplace retirement plan 

makes workers 15 times more likely to save, so we should be discussing ways to encourage or require employer sponsorship of retirement vehicles and automatic IRA legislation. 

We should also be examining ideas that address issues associated 

with job changes, rollovers, and default investments that could better maximize employees’ returns. And recognizing that Social Security is the primary source of retirement income, we must work to 

preserve and modernize it, and consider the impact of taxation of 

benefits on their retirees. 

Mr. Chairman, I have to note that bipartisan ideas are unfortunately not the place from which we started this Congress or with 

the Trump administration. Instead, one of the first items of business was to nullify two Obama administration rules aimed at helping states and eligible municipalities to expand working people’s 

access to retirement savings programs. 

For instance, California passed a law and established a program 

that is estimated to provide 6.8 million workers access to a retirement savings plan. In Illinois, more than one million people are expected to benefit from the state’s retirement savings plan. 

These initiatives automatically enroll employees who are not offered a workplace savings plan and enable them to establish an 

IRA through a payroll deduction. State-based programs allow employees to opt out if they do not wish to participate, and fewer administrative burdens are imposed on employers. 

These rules were intended to ensure that these state initiatives 

did not run afoul of federal law. It is unfortunate that Congressional Republicans and the Trump administration worked together 

to nullify them. 

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7 

As our full committee Ranking Member Scott has said, the Congress should not be in the business of destabilizing efforts that increase workers’ ability to save for retirement, and we should not 

go out of our way to undermine states’ rights to implement their 

own innovative solutions. I strongly agree with that. 

Additionally, the House passed what is known as an age tax, 

which would force Americans age 50 to 64 to pay premiums five 

times higher than what others pay for coverage. AARP strongly opposes this provision, and estimates it would add an average of 

$3,200 annually to premiums for adults age 60 or older. 

I am concerned that if TrumpCare ever becomes law, just when 

Americans are at or approaching retirement age, they would be facing skyrocketing premiums and wondering if they will ever be able 

to retire. 

Mr. Chairman, my Democratic colleagues and I look forward to 

working with you on bipartisan ideas to help families save for retirement. Thank you again, Mr. Chairman, for convening this hearing. I look forward to the witnesses’ testimony, and I yield back the 

balance of my time. Thank you, sir. 

[The statement of Mr. Sablan follows:] 

Prepared Statement of Hon. Gregorio Kilili Camacho Sablan, Ranking 

Member, Subcommittee on Health, Employment, Labor and Pensions 

Thank you, Chairman Walberg. I appreciate you convening today’s hearing. 

We are in the midst of a retirement savings crisis. Tens of millions Americans 

who work in the private sector lack access to a retirement savings plan at their jobs. 

This problem is particularly acute for people of color, as only 54 percent of AfricanAmerican and Asian employees and 38 percent of Latino employees work for an employer that sponsors a retirement plan. 

And we know that many middle and lower income workers lack the resources to 

save enough on their own for retirement and that studies have shown that AfricanAmerican and Hispanic families are far behind white families in retirement savings. 

That’s deeply concerning. 

I look forward to today’s discussion on how to ensure that everyone is planning 

and saving for retirement and can get the investment advice that’s in their best interest. 

I hope that we explore bipartisan ideas, such as Open MEPs, aimed at 

incentivizing small business to offer retirement savings plans, and allowing those 

that do offer plans to automatically enroll workers into the electronic delivery of disclosures and other retirement plan documents. Last Congress, I was a co-sponsor 

of H.R. 2656, authored by Dr. Roe and Congressman Polis to allow for this kind of 

automatic enrollment of retirement plan communications. 

According to AARP, having access to a workplace retirement plan makes workers 

15 times more likely to save, so we should be discussing ways to encourage or require employer sponsorship of retirement vehicles, such as automatic IRA legislation. 

We should also be examining ideas that address issues associated with job 

changes, rollovers and default investments that could better maximize employees’ 

returns. And, recognizing Social Security as the primary source of retirement income, we must work to preserve and modernize and consider the impact of taxation 

of benefits on our retirees. 

Instead, one of the first items of business was to nullify two Obama Administration rules aimed at helping states and eligible municipalities expand working people’s access to retirement savings programs. 

For instance, California passed a law and established a program that is estimated 

to provide 6.8 million workers access to a retirement savings plan. In Illinois, more 

than 1 million people are expected to benefit from the state’s retirement savings 

program. 

These initiatives automatically enroll employees who are not offered a workplace 

savings plan and enable them to establish an IRA through a payroll deduction. 

State-based programs allow employees to opt-out if they do not wish to participate; 

and minimal administrative burdens are imposed on employers. 

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8 

These rules were simply intended to ensure that these state initiatives did not 

inadvertently run afoul of federal law. It is unfortunate that Congressional Republicans and the Trump Administration worked together to nullify them. 

As our full Committee Ranking Member, Mr. Scott, has said – Congress should 

not be in the business of destabilizing efforts that increase workers’ ability to save 

for retirement. And we should not go out of our way to undermine states’ rights to 

implement their own innovative solutions. I strongly agree with that. 

Additionally, the House passed Trumpcare that includes which is known as an 

‘‘age tax’’ which would force Americans ages 50–64 to pay premiums five times higher than what others pay for coverage. AARP strongly opposes this provision and estimates it will would add an average of $3,200 annually to premiums for adults age 

60 or older. 

I am concerned that if Trumpcare ever became law, just when Americans are at 

or approaching retirement age, they’d be facing skyrocketing premiums and wondering if they will ever be able to retire. 

Mr. Chairman, my Democratic colleagues and I look forward to working with you 

on bipartisan ideas to help families save for retirement. 

Thank you again, Mr. Chairman, for convening this hearing. I look forward to the 

witnesses’ testimony. I yield back the balance of my time. 

Chairman WALBERG. I thank the gentleman. Pursuant to Committee Rule 7(c), all members will be permitted to submit written 

statements to be included in the permanent hearing record. Without objection, the hearing record will remain open for 14 days to 

allow such statements and other extraneous material referenced 

during the hearing to be submitted for the official hearing record. 

[The information follows:] 

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Chairman WALBERG. It is now my pleasure to introduce our distinguished panel of witnesses. Mr. James Kais is the Senior Vice 

President and National Retirement Practice Leader at Transamerica. He leads the firm’s sales, strategy, and client development 

effort in the MEP Taft Hartley/Davis Bacon prevailing wage and 

infinity markets. Welcome. 

Mr. Erik Sossa is Vice President of Global Benefits & Wellness 

at PepsiCo, Inc. He is responsible for the design, administration, 

and compliance of PepsiCo’s benefits programs around the world. 

Welcome. 

Dr. Jason Furman is a Senior Fellow with the Peterson Institute 

for International Economics. Previously, he was a top economic advisor to President Obama, serving as the 28th chair of the Council 

of Economic Advisors. Welcome. 

The Honorable Bradford Campbell is a partner at Drinker Biddle 

& Reath. From 2007 through 2009, he served as Assistant Secretary of Labor for the Employee Benefits Security Administration. 

Welcome. 

I will now ask our witnesses to raise your right hand. 

[Witnesses sworn.] 

Chairman WALBERG. Let the record reflect the witnesses answered all in the affirmative. 

Before I recognize you to provide your testimony, let me just 

briefly explain our lighting system, which is not difficult to explain. 

Traffic light there. When it is green, you have five minutes of testimony. When it hits yellow, do not slide to a stop but start considering it, you have one minute left. When the red hits, try to finish 

your key thought as quickly as possible. I am sure a lot of what 

you would have said would be asked of you in questioning as well. 

We will ask our colleagues here as well to follow that same requirement in the five minutes of questioning. 

Now, let me recognize Mr. Kais for his opening statement. 

TESTIMONY OF JAMES KAIS, SENIOR VICE PRESIDENT AND 

NATIONAL RETIREMENT PRACTICE LEADER, TRANSAMERICA 

Mr. KAIS. Thank you. I’m Jim Kais, Transamerica Senior Vice 

President and Managing Director of our Retirement Practice. 

Transamerica is focused on helping customers achieve a lifetime of 

financial security. Of the 28,000 retirement plans we serve today, 

306 are MEPs, which have been adopted by over 12,000 employers, 

many of them small businesses, including 770,000 participants. 

According to the Small Business Administration, the number of 

small businesses in the U.S. has increased 49 percent since 1982. 

Small businesses represent 99.9 percent of the total firms and 48 

percent of the private sector workforce. 

In addition, research from non-profit Transamerica Center for 

Retirement Studies in 2016 shows that 89 percent of workers who 

are offered a 401(k) or similar arrangement for retirement compared to just 47 percent of workers are not offered such a plan. 

Therefore, expanding retirement plan coverage amongst small 

businesses is critical to enhancing America’s retirement security. 

My testimony will focus on three main points. Number one, we 

need to encourage small employers to provide plans through reforms that address the primary reasons that employers do not offer 

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33 

plans, which are costs, complexity, and concern about fiduciary liability. 

Under a multiple employer plan, many small businesses can join 

together to achieve economies of scale and avoid the administrative 

burden and liability of running the plan. 

Adopting employers delegate fiduciary and administrative services, such as the selection of the investment menu lined up for the 

plan, and share in the cost of the services. 

MEPs are a great way to provide coverage. 2016 research found 

that 22 percent of companies that do not offer a 401(k) or similar 

plan and are not likely to offer one in the next two years would 

be likely to consider joining an MEP, or multiple employer plan. 

In order to facilitate the adoption of a MEP, Transamerica actively supports two essential reforms. First, compliant employers in 

an MEP should be protected from liability for a non-compliant act 

or omissions of other employers in the MEP, and resulting disqualification of the entire plan, the so-called ‘‘one bad apple rule.’’ 

Second, the requirement that only employers with a nexus can 

join in a multiple employer plan should be eliminated. Permitting 

open MEPs will increase the number of small employers to provide 

a retirement plan for their employees. 

These reforms have long been advocated by both Republican and 

Democratic members in the House of Congress. In addition, the 

House Republican Task Force on Poverty, Opportunity, and Upward Mobility also called for open MEPs in its blueprint. 

Number two, Transamerica has consistently supported the spirit 

of the fiduciary rule that financial professionals adhere to the best 

interest standard when providing investment advice. 

Transamerica strongly supported the Roe-Neal and Roskam-Neal 

fiduciary bills that were passed last year by this Committee and by 

the Ways and Means Committee, which established a workable 

best interest standard. 

Transamerica also has steadfastly maintained that the DOL fiduciary rule is not workable in its current form. The fiduciary rule 

must be delayed beyond the upcoming June 9 date to give the DOL 

sufficient time to review the current rule and is impact on retirement savings without further disruption to the market and harm 

to individuals. 

In addition, DOL must work with the Securities and Exchange 

Commission and the states in implementing a harmonized, manageable, and well defined best interest standard across product 

lines and distribution channels. 

Without significant reform, the fiduciary rule has and will likely 

to continue to negatively impact access to investment advice primarily by those less effluent customers who need it the most. 

In 2016, Transamerica’s sale of annuities, a product that helps 

individuals manage their retirement savings to last a lifetime, fell 

by approximately 50 percent from the previous year. This figure 

translates to 35,000 fewer Americans who are not counseled to consider them a solution that would provide them with guaranteed income in their retirement. 

The fiduciary rule also significantly impacts small employers who 

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taining a workforce retirement plan that is tailored to the workforce. 

Due to the onerous nature of the fiduciary rule’s documentation 

requirements, limitation on advice given with respect to plan investment options and exposure to class action liability, many professionals specializing in the small employer market have indicated 

they are limiting or discontinuing their services in this area. 

Number three, in addition to the points above, more can and 

should be done to encourage employers of all sizes to adopt plans 

and increase worker participation, as well as the ability to manage 

their savings to last a lifetime. 

Congress is encouraged to enact widely supported bipartisan proposals from the bill unanimously approved last year by the Senate 

Finance Committee, including open MEPs, to increase coverage by 

encouraging and facilitating the establishment of workplace retirement plans and the participation by employees in those firms. 

Transamerica commends Chair Walberg, Ranking Member 

Sablan, and other members of the subcommittee on their consideration of the important issue of multiple employer plans and employer plan coverage in general. 

We appreciate the opportunity to present our views on the particular challenges faced by small businesses in offering plans and 

our suggested approach to solutions. Thank you. 

[The statement of Mr. Kais follows:] 

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Chairman WALBERG. Thank you. I now recognize Mr. Sossa for 

his five minutes of testimony. 

TESTIMONY OF ERIK SOSSA, VICE PRESIDENT, GLOBAL BENEFITS & WELLNESS, PEPSICO, INC., ON BEHALF OF THE ERISA 

INDUSTRY COMMITTEE 

Mr. SOSSA. Good morning, everyone. It’s an honor to testify 

today. My name is Erik Sossa. I’m Vice President of Global Benefits for PepsiCo, and thank you for your important efforts to reduce 

regulatory burdens that can adversely impact retirement savings. 

I appear on behalf of the ERISA Industry Committee, also known 

as ‘‘ERIC,’’ so, yes, Erik is testifying on behalf of ERIC. 

ERIC is the only national association that advocates exclusively 

for large employers on employee benefit matters at the federal, 

state, and local levels. We are unique because we offer the sole perspective of companies providing benefits to tens of millions of workers and families across the country. My company alone covers over 

140,000 participants in its retirement plans. 

ERIC’s members voluntarily provide benefits and financial 

wellness programs that are essential for Americans’ retirement security. Our plans offer security retirement savings opportunity, far 

better than anything employees could find on their own. 

We can all agree that retirement savings should be encouraged, 

and that the resources employers set aside to fund and manage retirement benefits should be used as efficiently and as effectively as 

possible. 

Today, I want to discuss four ways to support these goals and address the unnecessary burdens posed on retirement plans. 

First, electronic disclosures. Labor Department rules that hinder 

electronic communications with plan participants should be modernized. These rules were created 15 years ago. While printing and 

mailing communications to plan participants made sense in 2002, 

it should no longer be the default requirement in 2017. It should 

be an option that participants can choose at any time. 

It costs PepsiCo hundreds of thousands of dollars each year to 

print and mail required disclosures. For some companies, these 

costs are passed through to plan participants, which can decrease 

participant savings over time. 

Our written testimony proposes a common sense approach that 

will save employers and employees money, and more importantly, 

enhance the quality and effectiveness of employee communications. 

Second, efforts to locate missing participants. The lack of clear 

guidance from regulators combined with stepped up enforcement 

creates confusion and adds needless costs to retirement plans. Employers need clear guidance on reasonable and cost effective measures to find participants who through no fault of the employer cannot be located. Employers need to know when the reasonable effort 

standard has been met. 

Third, preemption. I cannot stress enough the success and importance of ERISA federal preemption. Without it, companies like 

mine could not provide benefits to families and workers effectively 

across the country. PepsiCo, like many ERIC members, has employees who live or work in every state. Being governed by a single 

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Federal law rather than a patchwork or state and local laws is critical. 

ERIC supported the congressional resolutions to disapprove 

Labor Department, state, and local retirement plan regulations. 

While we support enhancing retirement savings opportunities for 

all Americans, we were concerned that the state and localities 

would seek to regulate retirement plans subject to ERISA. 

We see it with Oregon which announced imposing requirements 

on private employer plans. Employers providing benefits and complying with federal law should not face additional obligations imposed by state law. We urge Congress and the Labor Department 

to ensure that employers’ retirement plans continue to be subject 

to uniform federal rules and not through a patchwork of state and 

local requirements. 

Finally, we ask for consideration on the impact of new policies 

on plan sponsors. Given the complexities of ERISA, new regulations or legislation, no matter how well intentioned, pose a risk of 

unintended and unnecessary costs on employers and plan sponsors 

that add little to no benefits to participants. 

We have a lot of experience administering retirement plans, and 

we gladly work with policy makers to help solve the intended problems while avoiding needless burdens. 

For example, the prior administration had pending litigation intended to encourage the use of annuities or other lifetime income 

options. The approach mandates that plan sponsors calculate and 

print onto 401(k) statements how each participant’s retirement 

plan balance would translate into an annuity. 

However, this approach does not take into account that most 

plans do not offer annuity options, so the information is not meaningful, and confusing to plan participants. 

Another example is the fiduciary rule, which leaves plan sponsors uncertain about the exact measures that they must take to 

monitor recordkeepers of their plans. 

I hope these examples illustrate the opportunities that Congress 

and the new administration have to improve retirement savings 

and address the regulatory barriers affecting workers and families 

saving for retirement. 

Thank you again for this opportunity. I look forward to answering your questions. 

[The testimony of Mr. Sossa follows:] 

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Chairman WALBERG. Thank you. Dr. Furman, I recognize you for 

five minutes. 

TESTIMONY OF JASON FURMAN, SENIOR FELLOW, PETERSON 

INSTITUTE FOR INTERNATIONAL ECONOMICS 

Mr. FURMAN. Thank you, Mr. Chairman, Ranking Member 

Sablan, and members of the committee for inviting me to testify on 

this important topic. 

I’d like to make six points that step back and provide a big economic picture and context, and then get to some of the specific policy issues. 

The first point is that in the last decades we’ve seen a transformation of our retirement savings system from one that 70 percent of people who participated in had the defined benefit plan to 

one that is now down to 30 percent and 70 percent instead have 

a defined contribution plan. 

My second point is at the same time, we have seen an increase 

in retirement insecurity. There are different measures that range 

from about one-quarter to one-half of households that are unprepared for retirement. In either of those cases, it’s tens of millions, 

disproportionately younger, lower income and minority households, 

and that retirement insecurity has grown over time. 

My third point is that defined contribution plans offer a number 

of benefits in terms of transparency and portability that have made 

them attractive and are part of the reason for this shift, but they 

also come with two sets of risks. 

The first set of risks is the risk of losing your money in a down 

market. That risk is inherent to it, and the flip side of the higher 

returns. The second set of risks is the risk that participants will 

make bad choices, something that is not a problem in the defined 

benefit context in the same way. That risk is something that rules 

can help to ameliorate, and in doing that, help families save for retirement and increase their confidence in the retirement system. 

My fourth point is one of the bad choices that people can make 

is not to participate in our retirement system. They can do that because they work for an employer that offers them a 401(k) and they 

forget to sign up for it, or because they don’t even work for an employer and don’t take advantage of IRAs and the other tax advantage options that people have for savings. 

Congress helped to remedy this issue for people who work for 

employers who offer a 401(k) through the Pension Protection Act of 

2006, as a result of which many more employers have shifted to 

auto enrollment, a system that has a 50 percentage point increase 

in plan participation. 

For people who don’t have a plan and offer from their employer, 

they are left without this. A decade ago, the Heritage Foundation 

came together with the Brookings Institution to come up with a bipartisan plan that would require employers to offer a payroll deduction, give a tax credit to employers to offset the administrative 

costs associated with offering that, and let employees opt out of the 

plan. 

This is something that would not impose any burden on businesses, and would give employees a choice whether they wanted to 

save or not. It would just set the default. 

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The federal legislation to pass this never happened. A number of 

states are moving forward for experimentation. The rules under the 

Obama administration were intended to enable those states to experiment. Preventing them from doing so will not just interfere 

with the retirement security of those households, it will also interfere with our ability to learn from the experience of those states, 

which could help guide federal legislation in the future. 

My fifth point is that another mistake people make is to invest 

in low return/high fee funds. This is a mistake that is driven in 

part by the conflicted advice they get from retirement advisors who 

are in many cases well meaning, but in some cases are steering 

them to funds because they get higher returns from them. 

The Council of Economic Advisors, we estimate this conflicted advice cost $17 billion a year. Another way to think about that is you 

will run out of your retirement savings five years earlier or the typical household will lose $12,000 on rolling over. 

The rules that our administration finalized on this were ones 

that took into account the input of industry, created a best interest 

exemption, and made it easier for people to get better advice, saving households tens of billions of dollars. 

My last point, which I am happy to discuss more in the questions 

and answers, is retirement security depends not just on the specific 

features of the retirement system, but the overall economic context, 

not just growth and wages, as you correctly said, Mr. Chairman, 

but also, for example, the health system, and if people lack health 

insurance, that would make it harder for them to save for their retirement. 

Thank you. 

[The testimony of Mr. Furman follows:] 

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Chairman WALBERG. Thank you. I now recognize Mr. Campbell 

for your five minutes of testimony. 

TESTIMONY OF BRADFORD P. CAMPBELL, PARTNER, DRINKER 

BIDDLE & REATH 

Mr. CAMPBELL. Thank you, Chairman Walberg, the ranking 

member, and the rest of the members of the committee, for the opportunity to testify today regarding the regulatory barriers that we 

have in our system that face American workers and their families 

while they are saving for retirement. 

I want to stress that the views that I express today are my own. 

They’re not necessarily the views of my clients or my firm. I’m here 

representing myself in my personal capacity. 

All of us here today share the goal of ensuring that American 

workers can retire with dignity and security, and in order to 

achieve that goal, we need to ensure that the regulations governing 

our retirement system are functioning efficiently, and they are 

achieving their intended purposes. 

As this committee knows well, ours is a voluntary system of employee benefits. Private sector employers generally are not required 

to offer retirement plans, but they do so because of the value that 

both employers and workers derive from their plans. 

That makes it all the more important that the regulatory environment that governs this voluntary system functions efficiently, 

ensuring worker protections while not imposing unnecessary costs 

and administrative requirements. 

Put simply, inefficient regulation, no matter how well intentioned 

the goal of that regulation, imposes a direct cost on the very workers the regulation is intended to help, and that cost can be quite 

significant. Workers can lose access to workplace plans as excessive 

and burdensome regulations stifles plan formation. Fewer workers 

will be covered by retirement plans at all if employers find the 

costs and complexity and the legal risk of administering the plan 

outweigh the benefits of offering it. 

This is already a significant concern for small employers in particular who are significantly less likely to offer plans than large 

employers. 

There are a variety of ways we can assist those small plans, but 

to help those small business workers, who really are best served by 

saving for retirement in ERISA plans, we can reduce the regulatory 

burden without sacrificing those worker protections by using multiple employer plans. Those would allow many small businesses to 

utilize a common, professionally managed and administered plan, 

without having to recreate that administrative wheel inside each 

separate employer. 

Inefficient regulation is also preventing plans from better serving 

the needs of their participants. As the retirement landscape shifted 

from defined benefit to defined contribution plans, participants increasingly need help in making decisions about their participation, 

their contribution amounts, and their investment allocations. 

Now, Congress did efficiently and the Labor Department did efficiently address some of these issues 10 years ago in the Pension 

Protection Act with automatic enrollment in the Department of Labor’s qualified default investment alternative regulation, and plans 

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adopting these auto enrollment strategies have seen significant increases in participation, and therefore, ultimately, in retirement 

outcomes for those workers. 

Unfortunately, we are poised to do the opposite next month. On 

June 9, the Department of Labor’s flawed fiduciary regulation is 

scheduled to become applicable. Although well intentioned, this 

rule is in my opinion the poster child for inefficient regulation that 

will hurt the very people it is intended to help. 

The problem is not in the concept of ensuring quality retirement 

advice and assistance. It’s in the execution of the rule itself. This 

incredibly broad and far reaching rule makes the Labor Department a primary regulator of the conduct and compensation of financial professionals to roughly $15 trillion in IRA and retirement 

plan assets, effectively trumping the traditional rule of other more 

experienced financial regulators like the SEC and State Insurance 

Commissioners. 

It creates massive new class action liability risks resulting in enforcement by litigation, which is perhaps the most inefficient 

means possible, as it siphons money out of the retirement system 

and into lawyers’ pockets. 

All these changes are resulting not just in one time transitional 

costs but in ongoing costs and risks that will be borne ultimately 

by those retirement investors. 

The Obama administration predicted significantly positive benefits from this rule, and these rosy academic projections largely dismissed what are now proving to be real costs and real problems in 

the real world. 

President Trump has ordered the Labor Department to review 

the effects of the rule to determine what it would do to access to 

advice and if it would increase the cost of advice for retirement investors, and as part of that the rule was delayed until June 9, and 

also additional information was requested about the actual effects 

now that we have 12 months of real world experience in compliance 

efforts with the rule. 

This new empirical evidence based on actual experience shows 

that the academic predictions that dismissed the rule’s harmful effects were wrong. Advisors and financial institutions are reporting 

increasing minimum asset requirements for advisory accounts, a 

shift from commission based accounts to more expensive fee based 

accounts, reduce the investment product offerings, increase litigation costs, increase liability insurance costs and others. 

More troubling, the Investment Company Institute surveyed its 

members, the mutual fund companies, and found the number of orphan accounts, the accounts that used to have an advisor but no 

longer do, have increased significantly, and the average balance of 

those accounts was just $17,000, the small investors who are losing 

out as a result of this rule. 

I look forward to answering your questions. I would simply state 

that based on the evidence we’ve seen so far, it’s imperative that 

the Department of Labor further delay the fiduciary rules applicability date until it has completed its review of this new information. 

Thank you, sir. 

[The testimony of Mr. Campbell follows:] 

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Chairman WALBERG. Thank you, and I thank each of the witnesses for your testimony. You have given us plenty range to ask 

further questions. Thank you. 

I now recognize the chairwoman of the full committee, Dr. Foxx, 

for her five minutes of questioning. 

Mrs. FOXX. Thank you very much, Mr. Chairman. Mr. Kais, the 

Obama administration issued guidance in 2015 relating to the 

state run MEPs. In doing this, the DOL exempted the state run 

MEPs from the employer-based nexus requirement, declaring that 

a state has a ‘‘unique representational interest between itself and 

its citizens.’’ 

Can you explain why it is troubling for states to receive special 

treatment in this regard while private sector MEPs have this bureaucratic requirement? 

Mr. KAIS. Yes, thank you for your question. It’s been very frustrating to comply with commonality requirements in the private 

sector. We work with cooperatives, trade associations, and there is 

a battery of tests they need to pass effectively to offer a multiple 

employer plan that’s closed. That not existing in the public sector 

creates an uneven playing field, and it also makes the cooperatives 

and the trade organizations hesitant to put a MEP together because they’re afraid they might trip a rule or law that does not 

exist on the public sector side today. 

Despite that, we’ve still been somewhat successful helping those 

organizations, but it’s only the tip of the iceberg. If we had an even 

playing field, if both types of plans were covered by ERISA and 

they were voluntary, I think that would create more innovation 

and allow us to reach more of the constituents you want to reach, 

which is the small business community and their employees. 

Mrs. FOXX. Thank you very much. The federal government has 

not done a fantastic job of investing Social Security payments over 

the years. I know many, many state governments, in fact, I think 

just about every state in the country, has tremendous unfunded liabilities right now in terms of their retirement plans. 

So, our governments do not have great histories of helping people 

invest their money over the years. So, encouraging more of that at 

the state and federal level, it does not seem to be a really smart 

thing to be doing. 

Thank you. Mr. Campbell, I appreciate very much. I was going 

to ask some questions related to the last part of your testimony, 

and I do thank you for talking about the potential cost of the regulation, and the fact that the President has asked for a study of the 

rules. Thank you very much for bringing that up. 

The committee has written DOL twice in the last two months 

urging the Department not to allow the fiduciary rule to go into effect until the Department’s new economic and legal analysis of the 

flawed rule is complete, which we hope will be conducted in accordance with the memo from the President. 

Can you speculate on what information might come to light as 

a result of the analysis that could justify significant revision of the 

rule? 

Mr. CAMPBELL. I think we’ve already seen some very important 

again real world data from the last 12 months roughly, 12 to 13 

months of experience, in trying to comply with the rule. 

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It was in April of 2016 that the administration promulgated this 

fiduciary rule, and it was at that time based, of course, on prospective predictions about the future based on academic studies. There 

has been a great deal of criticism about those studies and what 

they adequately considered and what they didn’t. 

In part, now that we have actual real world experience, we’ve 

now seen how did companies respond to the new requirements, 

what happened. What we have seen is that it is becoming more difficult for small account balance savers to be able to get access to 

advice. 

We also know, by the way, one thing that I think is worth pointing out, that a lack of access to advice itself has a significant cost. 

The Labor Department back in 2011 estimated what’s the cost of 

lack of advice to people in plans and IRAs, and they calculated it 

at over $100 billion a year. That’s a significant issue that needs to 

be balanced, in the new economic analysis. 

Mrs. FOXX. Do we not just love it that academics can make predictions, and the real world comes to play, and we get such different results. Thank you very much. I want to thank all of our 

panelists for being here today. Thank you, Mr. Chairman. I yield 

back. 

Chairman WALBERG. I thank the gentlelady. I am pleased to recognize the gentleman from Virginia, our ranking member on the 

full committee, Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. Dr. Furman, your fifth 

point says that a poor decision is to get into higher fee, lower return investments. How is it legal for an investment advisor to put 

someone into a higher fee, lower return investment for a retirement account, and is the standard for advice different with the 

SEC and Department of Labor? 

Mr. FURMAN. The issue is that when you move from the 401(k) 

world, where people generally do get good advice, into the IRA 

world, you make this really critical decision of how to roll your 

funds over. You do this decision once in your lifetime. It’s a really 

complicated one. You don’t realize that all of a sudden the rules 

have shifted, that your advisor doesn’t have to act in your best interest. 

There has been a lot of evidence here. The academic evidence on 

this is very clear, very strong, very bipartisan. The report we did 

was reviewed by both outside Republican and Democratic economists, all of whom agreed with it, and we can talk a little bit if 

you want later about what the real experience has borne on this 

topic as well. 

Mr. SCOTT. How are the state plans that were sabotaged different from what the Heritage and Brookings had recommended? 

Mr. FURMAN. A lot of those states are in the process of setting 

up plans and haven’t fully set them up yet and figured out all of 

the details, but the basic idea is to make sure for people who are 

falling through the cracks in our current system that they have an 

opportunity to save. That was in the Heritage/Brookings’ plan, and 

that is a central feature of the state plans. None of them require 

anyone to save who doesn’t want to. In all of these cases, it’s an 

option, an option that anyone could easily opt out of. 

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Mr. SCOTT. There is a difference between participation when you 

have to opt out as to opt in. Can you comment on that? 

Mr. FURMAN. There is a very big difference in participation. The 

one thing that Mr. Campbell and I agreed on was the Pension Protection Act has extended to employers auto enrollment, and I think 

that’s widely viewed as a very good thing. It’s increased enrollment 

in employer plans, and most of the evidence is it’s increasing enrollment for people that it really made sense for, and are happy 

that choice was made easier for them. 

Mr. SCOTT. Thank you. Mr. Campbell, you mentioned the multiemployer plans. What are the challenges in getting people to join 

a multi-employer plan, to have new plans come in? Is this a last 

man standing rule? Can you comment on whether or not that prevents people from coming into plans? 

Mr. CAMPBELL. Yes, there are several barriers currently to multiple employer plans functioning as we would hope they would. 

That’s one of the concerns. There is the kind of one bad apple issue, 

the other is the DOL commonality regulations historically. 

I assisted a client in setting up a bona fide trade association 

MEP, and that process was one of the more frustrating I had gone 

through, in trying to figure out exactly where the contours of all 

the rules worked together. 

I think it’s a great example of whether it’s through DOL regulation or congressional legislation, there is a real opportunity to improve the availability of plans by addressing those problems. 

Mr. SCOTT. Many of the multi-employer plans are close to or in 

fact are insolvent. That challenge can be addressed if more would 

actually come into a plan, you could probably get through the 

short-term insolvency. 

I think the things you have suggested would support expanding 

the ability to get into these plans. Can you say how that would affect insolvency of some of the plans going on now? 

Mr. CAMPBELL. Well, I apologize if I misunderstood your question, sir. We have all these fun terminology, the multiple employer 

plan, the multi-employer plan. I apologize. I thought you were referring to the multiple employer plans. 

On the multi-employer plan situation, as you have suggested, 

there is a significant concern about insolvency, particularly among 

certain plans. I think there is a lot of active consideration in Congress as to which are the best approaches to address that, whether 

it’s expanding those to new entrants, which does, of course, run the 

risk of ensnarling more people in a troubled plan, although that 

could also, as you said, address the solvency. 

I think one of the areas there we ought to look at is looking at 

the Treasury and PBGC abilities to look at those plans and figure 

out what the best way to either unwind them or find an alternative 

solution. 

Unfortunately, there’s not an easy answer to that. I think the solution depends in fact on which multi-employer plan you are looking at, how badly underfunded it is, and which industry it’s in, to 

really assess whether it is reasonable salvageable. 

Mr. SCOTT. Thank you. Thank you, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. Mr. Wilson is recognized for five minutes. 

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Mr. WILSON. This is for Secretary Campbell. American families 

should look forward to retirement. Yet, too many find themselves 

without the financial security they need to retire. Congress should 

support initiatives to place retirement decisions in the hands of 

American families, yet today we have a 1,000 page ridiculous regulation which increases barriers, which is insulting, I think, to financial advisors and to the people that I represent, where the regulations have been determined that the people I represent are not 

intelligent enough to know how to make choices. 

We need to make a change. That is why in January there was 

legislation introduced, H.R. 355, the Protect the American Families 

Retirement Advice Act, which would delay for two years the rule for 

further analysis. 

In February, the President announced in a memorandum asking 

for further analysis. However, the Department of Labor has indicated they may move forward with the June 9 date even if the 

analysis is incomplete. 

Mr. Secretary, you have already cited real world, not academic 

concerns, but it is important again that the American people know 

what harm is being done. If the Department of Labor does not 

move and change the June 9 date before completing the analysis, 

what would be the effect on the American families? 

Mr. CAMPBELL. Unfortunately, I think many of the harmful effects that have already begun in part as companies have positioned 

themselves for compliance will continue. Unfortunately, in delaying 

the deadline by 60 days, they didn’t change any of the underlying 

problems with the actual text of the fiduciary rule. 

I’ll give you an example. Unless the Trump administration does 

a change to the regulation, beginning January 1, 2018, there will 

be no way for an insurance agent to recommend to you a fixed 

index annuity, because they are compensation, the commission 

they would earn in the normal course of selling an annuity would 

become illegal, and there is no exemption currently constituted that 

works for an insurance licensed only entity who is an independent 

agent, because there is no financial institution that represents 

them. 

That’s something that the prior administration started to address 

with a class exemption, but it’s an example that this regulation 

isn’t fully baked, and has a significant number of operational problems and execution problems that haven’t been addressed yet. 

So, I would hope that the Trump administration does delay it 

further in an effort to evaluate the rule as well as to fix some of 

those operational concerns. 

Mr. WILSON. Well, your input is very helpful. Mr. Kais, the 

former Department of Labor seemed to argue that robo-advisors 

and other types of low, expensive, passive investment options are 

best to fill the void of this burdensome and expensive regulation. 

Now, robo-advisors, as I understand, and you can correct me, are 

automated websites that people access on the Internet with minimum human interaction. Goodness gracious, that is ridiculous. 

Please. People make a difference, particularly financial advisors 

who are of the highest integrity. 

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gate the programs, the ability to appropriately translate the data 

on their specific retirement plan and assets? If not, is it not difficult to suggest that robo-advisors are capable of filling the gap 

left by this overreaching ridiculous regulation? 

Mr. KAIS. Thank you for the question. In actuality, what happens 

in business is even if an employee self-services into an online 

mechanism, they are generally making their call to somebody else 

to make sure, is this right, did I do it right. Even if they go into 

the web, they still need some guidance and some reassurance that 

it is done. 

A problem with that, if you walk into a human resources representative of your firm and you ask did I do the right thing, does 

this look right to you, that H.R. representative could trip the fiduciary regs by just giving casual advice to that employee to try to 

help them along. I think that is problematic. 

LIMRA also published a study recently that 80 percent of people 

seek advice from someone when doing a rollover. Out of that group, 

58 percent obtained a professional advisor’s financial advice during 

a rollover. 

As much as we would like to think people self-service into the online system, that’s not generally true, and when they do, they generally call to make sure they’re doing it right. 

Mr. WILSON. Thank you very much. 

Chairman WALBERG. I thank the gentleman. I recognize the gentleman from New Jersey, Mr. Norcross. He has left the room. I recognize the gentlelady from Ohio, Ms. Fudge. 

Ms. FUDGE. Thank you very much, Mr. Chairman. Thank you all 

for being here today. Mr. Furman, in your testimony, you indicate 

that tens of millions of Americans are at risk of having an insecure 

retirement. 

What in your opinion are the most significant barriers to saving 

for retirement, and the second part of that question is when so 

many families have not had a raise in so long, and they are trying 

to figure out where to spend those resources, what are the most 

significant steps Congress can take to help working families save 

for retirement? 

Mr. FURMAN. Thank you for that question. The barriers are onethird of households who don’t have any retirement plan offered to 

them face a very large barrier. A second is people who have a plan 

offered to them and don’t participate. A third barrier is people who 

get lower returns. A lot that is not in the 401(k) phase, but often 

when they roll their money over into an IRA, and their returns get 

eaten away by these really large fees that are associated with this 

advice. 

None of these advice people are doing this free. People aren’t 

doing this advice out of the goodness of their heart. They’re doing 

this advice because they are going to be paid, and they are being 

paid through a set of commissions which come out of in a nontransparent way these households. 

Improving this, I think, involves both the retirement system 

itself, remedying things like the tax incentives in the retirement 

system are disproportionately for high income households rather 

than low and moderate income households. It also involves the 

broader economic issues of what can be done to raise the incomes, 

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especially low and moderate income households, like minimum 

wage and health insurance, that this committee has championed. 

Ms. FUDGE. Thank you. It just seems as though it just goes along 

with what happens here every day, find a way to give rich money 

more and make poor people just be poor. 

Additionally, Mr. Furman, you mentioned that TrumpCare is 

perhaps the most consequential policy issue for retirement savers 

this Congress has considered thus far. 

Can you elaborate on that and discuss the overall effect of rising 

health care costs on people’s ability to save? 

Mr. FURMAN. Sure. The CBO analysis of the original American 

Health Care Act, which is the only analysis I’m aware of, said that 

for households that were older, it would result in higher after tax 

premiums, and for households that were lower income, it would result in higher after tax incomes. 

These are precisely the households for whom it’s most important 

to save and are at the most risk for retirement, so if they are paying, and under the CBO analysis, some of these households are 

paying an extra $12,000 a year, that is $12,000 a year less they 

could devote to a range of things, including retirement savings. 

The other thing is the analysis showed those plans would result 

in higher deductibles and higher out-of-pocket payments. Again, 

that’s another place where your health costs would be competing 

with your retirement savings. 

Overall, if you have a health bill that is subtracting money from 

the health system and using that money to pay for tax cuts for 

high income households or for any other purpose for that matter, 

it’s likely to increase retirement and security. 

Ms. FUDGE. We are very clear that TrumpCare really is a plan 

that benefits the young, the healthy, and the wealthy, and sort of 

punishes significantly the sick, the poor, and the elderly. So, we do 

indeed know it is going to affect their retirement. 

Last question for you, Mr. Furman. I am glad you talked about 

the fact that these advisors are not doing this out of the kindness 

of their hearts, but in fact, they do get paid. 

If you could just talk a bit about the fiduciary rule, and why it 

is winning in the courts, as a matter of fact, even though it is so 

significantly flawed, as I keep hearing, and the ramifications for 

not allowing the rule to go forward. 

Mr. FURMAN. Sure, thank you for that question. Academic evidence helped inform the rule, an extensive consultation process, 

that was about as extensive as any I have witnessed in my eight 

years in the Obama administration, where we talked a lot to industry, to all stakeholders, which helped inform it, too. 

To be clear, the rule has costs and benefits. It has both. We documented both. I don’t disagree with the costs. Those costs are largely borne by parts of the financial industry that were benefitting at 

the expense of middle class households, and those benefits go to 

middle class households. 

So, I’m not surprised that there is opposition to it. Many of those 

costs, by the way, as Mr. Campbell said, have already been incurred, so if you reverse the rule at this stage, you’d be left with 

all the costs, and you wouldn’t get many of the benefits that households would get, and those benefits are they would continue to get 

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advice, as they have in Australia, the U.K., and other countries 

that have done more far reaching rules, they get better advice, 

have more retirement savings, and the system as a whole would 

benefit as a result. 

Ms. FUDGE. Thank you very much. Mr. Chairman, I yield back. 

Chairman WALBERG. I thank the gentlelady. I am pleased to recognize the gentleman freshly back from a great honeymoon, and we 

congratulate you and recognize the fact you even joined us in our 

field hearing event out in San Francisco on your honeymoon. That 

is dedication. 

Mr. ROE. I took one for the team. 

Chairman WALBERG. I am pleased to introduce Dr. Roe. 

Mr. ROE. Thank you very much, Mr. Chairman. I have had a 

passion since I began my medical practice in 1977 for retirement 

savings. We started a retirement plan as a small business with 

four doctors and 12 employees. We now have 450 employees and 

120 providers in our practice. 

I also served as the Mayor of Johnson City, Tennessee where we 

provided retirement benefits for the teachers and the city employees. 

I have had extensive experience in starting a pension plan, and 

now seeing people in my practice that have benefitted from it for 

40 years. I can assure you that the investment advisors that we 

started with were not fiduciaries, they helped us set up a plan that 

we could afford and put money in for people. 

One of those first 12 employees still works for my practice, and 

has multiple, six figures, in her retirement plan. She is a medical 

assistant. I am very, very proud of that fact. I have seen other people retire and have that. 

To assume that people because they are investment advisors are 

there just to take your money is offensive to me. My investment advisor has been with me for 25, maybe now 30 years. They are just 

like my doctor, my attorney, part of my family. 

I think we should start saving at birth. Mr. Polis and I have a 

bill that we are going to introduce this year that will do just that. 

I agree that we do not start saving enough or soon enough. We are 

going to start trying to put a plan in where you do that. 

The fiduciary rule, in my opinion—this is just someone who has 

done a pension plan, I believe it does deter and prevent people in 

small business. 

Mr. Sossa, I want to get to you and just ask you about the current regulations that establish different requirements for electronic 

delivery depending on the type of disclosure being provided to a 

plan participant. Could you just deal with that a little bit? 

By the way, I apologize for having a Diet Coke up here. 

Mr. SOSSA. Your question was with the lifetime disclosure regulations? 

Mr. ROE. Yes, sir, if you could. 

Mr. SOSSA. I can’t really think of many acts that come out that 

really we are opposed to in their intent. We were trying to help employees. We fully agree. We have been providing financial education since 2008. The challenge is we’d like to have that discussion 

with employees, but not in the context of a statement that’s really 

taken out of context. 

CEWDOCROOM with DISTILLER

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Most of our front-line employees are in defined benefit pension 

plans. They are active and live. So, that is only one part of their 

retirement. 

I would prefer to have that dialogue in a much more comprehensive financial education discussion rather than a sheet of paper 

which all I can guarantee you is that number is going to be wrong. 

The assumptions that go into that, interest rates, mortality, when 

someone is going to retire, that number is not going to be accurate. 

With the 85 percent of our workforce blue collar, I know in three 

to five years, someone is going to come back and ask for that number, and I’m not going to be able to explain what it is and how it 

fits into their retirement. 

Mr. ROE. Secretary Campbell, could you also discuss, and I know 

you have in some detail, about the effects of the fiduciary rule, 

which I was very involved in the last Congress and this one also. 

Mr. CAMPBELL. I apologize, sir. 

Mr. ROE. On the fiduciary rule, could you delve into that a little 

bit, the effects of it? 

Mr. CAMPBELL. Yes, sir. Again, I think it’s not that it’s a bad concept. I think it truly is the execution that the Labor Department 

has gone through in trying to implement this. 

What the Labor Department has done is equated the way an advisor gets paid with whether or not the advice is of the sufficient 

level of quality. So, you end up with these very odd results, where 

as I mentioned before, because of the way they do the exemptions, 

which allow you to potentially get paid for a form of payment they 

don’t approve of, if you follow all the special conditions, not all of 

those conditions are in place, so there are in fact advisors, particularly insurance agents in the current environment, who come January won’t be able to give advice on a variety of products, even if 

that advice is in your best interest. 

So, those are some of the odd outcomes that result from a rule 

that’s been poorly executed, and a lot of that, I think, does have 

to do with Labor Department’s overreach. 

Something Dr. Furman said that I think is worth mentioning, he 

talked about the extensive consultation with the financial services 

industry, and in his testimony, he alluded to changes in the BIC 

exemption that addressed those. I think it is important to note that 

what happened with the BIC exemption is it went from a proposal 

that was literally unworkable to a final regulation that is merely 

terrible in how it works. 

I think that’s a modest improvement but not one that I think we 

should be proud of. 

Mr. ROE. Just for the record, Mr. Chairman, I know the CBO estimated that the ACA shop would have 4 million people in, now it 

has 250,000 being shut down, the CBO estimated there would be 

24 million people getting their insurance through the ACA and the 

individual market, less than 12. 

I would ask unanimous consent that we submit these two documents for the record. 

Chairman WALBERG. Without objection. Hearing none, they will 

be submitted. 

Mr. ROE. Thank you, Mr. Chairman. 

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Chairman WALBERG. I thank the gentleman. I am pleased to recognize the gentlelady originally from Michigan and now impacting 

in Oregon in a great way, Ms. Bonamici. 

Ms. BONAMICI. Thank you very much, Mr. Chairman, and thank 

you to all the witnesses for this important conversation today. 

Retirement security is an issue that comes up no matter where 

I am in Northwest Oregon, and we know working families across 

the country should be able to retire with security and dignity, and 

unfortunately, that is still not the reality for too many people. A 

lot of people still struggling to make ends meet and cover emergency medical bills or a car accident. There are millions of private 

sector workers who do not have access to retirement savings plans 

at their jobs. 

I really see that as a role for Congress, something we can be 

doing to help those families who are facing retirement without that 

security. 

I want to ask a question, but I just want to make a statement 

about the fiduciary rule. I sat in many long hearings in this very 

room listening to people from the industry and from the Department of Labor talk about that. Everybody from the industry agreed 

there should be a fiduciary standard, in this room. 

I just want to echo Dr. Furman’s comment, this rule took a lot 

of time, they went back to the drawing board, they took a lot of 

input from industry when they crafted that rule and made a lot of 

changes in large part because of concerns they had raised. 

I am certainly glad to hear all of you echo that investment decisions should be made in the best interest of the consumer. 

Mr. Kais? Did I say your name right? 

Mr. KAIS. It’s Kais. Close enough. 

Ms. BONAMICI. I noted in your testimony, you said Transamerica 

supported the joint resolution, and I know Mr. Sossa did as well, 

nullifying the prior administration’s rule allowing states, like my 

state of Oregon, to establish workplace retirement savings programs for private sector workers who do not have access to one. 

I have, of course, followed that process in Oregon quite closely. 

Your footnote in your testimony states ‘‘We supported the rescission because the state-based IRAs would have undermined the 

adoption and maintenance of plans subject to ERISA, which provide far greater benefits and protections than the state IRAs.’’ 

I noted on Transamerica’s Web site that you offered a Transamerica IRA, which I understand is basically a traditional IRA or 

a Roth IRA. Now, those may be great for retirement savings, but 

they are not ERISA plans. 

I am a little curious about how Transamerica can oppose state 

efforts like Oregon’s, which is essentially a Roth IRA, how can they 

do that, when Oregon has tried to expand access to retirement programs. You oppose it because it would not be subject to ERISA, but 

then simultaneously, you are offering products that are not subject 

to ERISA. 

I want to note before you answer that the Oregon program was 

set up again with a lot of input, especially a lot of small employers 

who welcomed this opportunity. It is a Roth IRA, which is what 

you offer. In our state, it stays with the worker from job to job. PeoCEWDOCROOM with DISTILLER

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ple who do not need to participate, they can easily opt out at any 

time if they do not want to be in. 

It is overseen by a board, underneath the State Treasurer. It is 

managed by a private firm that was selected through a competitive 

bid process, and the safe harbor rule only applied if certain conditions were met. 

I am a little curious, it seems inconsistent that you offer a Roth 

IRA and then you are saying Oregon cannot do that under these 

circumstances. 

Mr. KAIS. Yes, we offer a Roth IRA and IRA as you do. I think 

the confusing part for us is when there is a mandate to automatically enroll into that IRA, that is to us what would trigger ERISA 

coverage. 

I think it’s fine. We support the state offering programs that 

could cover more employees. If it’s a qualified plan, we believe 

those employees deserve the protection of ERISA. If it’s an IRA and 

there is a mandate, those plans often have no employer matching 

contribution. They have lower contribution limits than a qualified 

plan. There has been no economic analysis on the cost and ability 

for states to manage those plans. 

Ms. BONAMICI. Before my time runs out, I just wanted to mention there is a great book on behavioral economics by Cass 

Sunstein and Richard Thaler called ‘‘Nudge.’’ Encouraging people 

to take steps that are beneficial to them. This might come down to 

the definition of ‘‘mandate’’ versus ‘‘voluntary.’’ People are going to 

opt out of this at any time easily. I do not see that as a mandate. 

Today, I am introducing the Preserved Rights of States and Political Subdivisions to encourage the Retirement Savings Act, which 

is the Freedom to Prosper Act also being introduced in the Senate, 

that would codify the Obama administration’s actions to remove 

the barriers—that is what we are talking about today—removing 

barriers that prevent workers from saving for retirement. 

I really see a role for Congress to help get people into these products that help them save for retirement, and I hope we can have 

further conversations about how to do that. 

I am out of time, and I yield back. Thank you, Mr. Chairman. 

Chairman WALBERG. I thank the gentlelady. I am confident we 

will have further conversations. Now, I am pleased to recognize my 

good friend and colleague from Michigan, Mr. Mitchell. 

Mr. MITCHELL. Thank you, Mr. Chairman. Let’s start with you, 

Mr. Kais. I will give you a little time to talk about these private 

sector MEP programs administered by the state, and all of the long 

discussion that occurred about their value, exempting them from 

the requirements. 

Was there some kind of sound public policy reason why they 

were exempted other than political expediency? Can you explain 

that to me? 

Mr. KAIS. I have no idea. It doesn’t make sense to me. I think 

if we are talking about protecting workers, I think ERISA provides 

a lot of protection. I think we should want that wherever we are 

providing a retirement solution, whether it’s public or in the private sector. 

Mr. MITCHELL. Mr. Campbell, can you shed light on where the 

sound public policy is for making those exemptions? 

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Mr. CAMPBELL. I share the same question that you have. If you 

look at the history of how the Department of Labor has interpreted 

multiple employer arrangements and what the commonality nexus 

needs to be, I think that’s been based more on a creation of their 

own policy than it is on the underlying law. 

When the issue came up in the guidance, in the Interpretative 

Bulletin dealing with state sponsored MEPs, they basically determined that without really a whole lot of analysis other than well, 

states represent the people, therefore, states can do this, and they 

have an inherent interest that is different than private employers. 

Personally, I think the DOL position historically has been wrong, 

and there shouldn’t be a barrier to open MEPs, and that is something I think the DOL could change. During the Obama administration in one of the budget submissions, it indicated it would 

change. That just never happened. 

Mr. MITCHELL. I am entertained by policy guidance rather than 

actually issuing regulations, but that is a whole other separate conversation that we will have in OGR. 

Mr. Sossa, I can ask you this question that I cannot ask the 

other two because of their fiduciary responsibilities. If I told you 

there was a plan I was considering investing in, their funded liability had fallen to 37 percent, that their unfunded liability was $130 

billion, but hey, it sounded like a heck of a deal to me. 

As a friend, we are out having a beer on the golf course or something, would you tell me that is a great idea? 

Mr. SOSSA. I will not speak on behalf of ERIC. 

Mr. MITCHELL. That is why I asked as a friend. 

Mr. SOSSA. As someone who has been 20 years in benefits, no. 

We typically look for plans that are funded much better than that. 

We typically look at benefits accrued, at least funded to what your 

accrued liability is, whether your benefits earn today, at least funded to those, and some margin towards your benefits accrued toward 

the future. 

Mr. MITCHELL. I generally do, too, so I was shocked when one of 

my colleagues raised up the state of Illinois as being an incredible 

place. These state plans could clearly do well. 

The state of Illinois state retirement plans have $130 billion unfunded liability. That is not something made up. This is a bipartisan group. The state fiscal agency does it. Here is the reason they 

have fallen short. In fact, they have lowered the long range investment returns on the plan, that in fact the plan is under performing 

from the assumptions they made themselves, leaving either the 

state or the employees on the hook. 

Yet, we want to give more flexibility to the states to create plans 

for private sector employees because they are better shepherds of 

the money than private investment groups? Somehow, we are worried about fees when in fact they are not doing well. I guess I am 

a little stymied on what the logic on that would be. Can you help 

me with that? 

Mr. SOSSA. I can speak about what we bring to the table, in the 

spirit of large employers. There are three key advantages that we 

bring to our programs. We bring professional management, experts 

in the field, selecting investing/investment choices, putting emCEWDOCROOM with DISTILLER

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ployer money into a lot of our plans. The other is a level of professional tools and resources that we can provide to the programs. 

In the context of what we’re trying to preserve here, it is that 

type of value that we bring to the table. I think all the intent of 

expanding programs to state levels, and all exactly completely 

align, what employers are looking for, we agree on the problem, 

allow us to develop the solutions that are pertinent and flexible to 

the populations we own and we manage. 

Mr. MITCHELL. Let me get this one question out because I do not 

want Dr. Furman to feel neglected from this side of the aisle over 

here. 

My background is economics and public policy. I did not have the 

good fortune to go to Harvard, I had to get a real job, could not 

go get a Ph.D. 

I appreciate your comments in the written testimony and your 

oral testimony. Yes, access to health care is important, long term 

economic viability, but it is also affordability of insurance, affordability of actually getting health care, and we have seen ample 

demonstration that ACA did not do that. 

If you could talk about what does do that rather than try to defend something that is clearly falling around our ears, that would 

be productive in a public policy discussion, if you want to have that 

debate, call my office, I am happy to have it and we can talk about 

economics as much as you like. 

Let’s try to move forward rather than try to defend something 

that most people say unless we throw more money, it is a train 

wreck. 

Thank you, and I yield back. 

Mr. FURMAN. Did you want me to respond to that? 

Chairman WALBERG. Since we are fair around here, and I am 

sure my colleague would want to be fair, a brief answer or response. 

Mr. FURMAN. I agree very much that our goal should be lowering 

the overall cost of health care, and if you do that, you can make 

everything better, the solvency of Medicare, the premiums families 

pay, the cost to the federal government. 

There are a number of steps in the Affordable Care Act to reform 

delivery system, many of which this Congress built on in the 

MACRA legislation, extending it to physician payments as well, 

shifting to alternative payment models. 

Partly as a result of that, we have seen health costs as measured 

by the PCE growing at the slowest rate they have grown since the 

passage of the Affordable Care Act. I think more needs to be done. 

I would cite two things. One is aggressive implementation of the 

tools that Congress gave to HHS on a bipartisan basis in MACRA, 

less bipartisan basis in the ACA. Second, giving private sector an 

incentive to continue to control costs by making sure we’re not conferring tax advantages on very expensive health plans and the 

Cadillac tax was intended to do that, but I am happy to continue 

that discussion. 

Chairman WALBERG. I thank the gentleman. It was significantly 

less bipartisan involved in the ACA. I think the figure was zero. 

Now, I am pleased to recognize the gentlelady from Delaware, 

Ms. Blunt Rochester. 

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Ms. BLUNT ROCHESTER. Thank you, Mr. Chairman, and thank 

you to the panel. I guess I will start off by saying I am glad this 

is a bipartisan issue that we are dealing with here, particularly 

when we talk about retirement and the security of families and individuals. 

In my state of Delaware, over 90 percent of our businesses are 

small businesses. This is a really important issue, particularly with 

the MEPs. 

I wanted to address my question to Mr. Kais. In your testimony, 

you mentioned that 89 percent of workers who have access to retirement savings plans, like a 401(k), are saving for retirement, but 

only 47 percent of workers who are not offered a workplace savings 

plan are doing so. 

Based on those numbers, I think we all would agree that we 

need to encourage more of that. Can you explain how open multiple 

employer plans could help address this problem, and also talk a little bit about the elimination of the one bad apple rule? 

Mr. KAIS. Sure. I’ve done a little bit of work with the Chamber 

in Delaware, so it’s great to have your question, thank you. 

Open MEPs clearly would help as it would relate to removing 

barriers, to having employers pull together to gain lower costs for 

their retirement plans, to eliminate administrative burden, and to 

reduce fiduciary risks. Those are the three reasons why employers 

don’t have a plan today by and large. 

If you’re not a client of a professional employer organization, 

H.R. outsourcing, or if you’re not part of a trade association or cooperative, why shouldn’t you be afforded the same opportunity to 

band together with other employers? 

The one bad apple rule has been a deterrent because employers 

are afraid of what might happen with another rogue employer in 

the plan. I don’t believe, and Mr. Campbell can probably correct me 

if I’m wrong, there is any case law that a plan has been disqualified because of the one bad apple rule, but what it does do, which 

is unfortunate, is it makes people think twice about getting into 

the arrangement. 

There are plenty of ways to mitigate that risk and to protect the 

others, and that shouldn’t be a deterrent for retirement security. 

Ms. BLUNT ROCHESTER. The other question is based on your experience, your current experience with MEPs, how would an open 

one operate? Could you talk a little bit about that? 

Mr. KAIS. Sure. Each employer would not have to file their own 

tax filing, first of all, which would be very important, there is an 

overarching tax filing. There is an overarching audit. Everything 

would still be reportable to the different agencies for enforcement 

and for review. 

Each employer would be able to maintain some flexibility in 

terms of developing the contribution formula that meets their business needs, meets their employees’ needs. 

Also, the best thing about open MEPs or MEPs in general is you 

can set up a mission control tower effectively and design the arrangement in a way that promotes automatic enrollment for thousands of employers at one time, rather than begging and trying to 

explain the merits to one employer at a time. 

CEWDOCROOM with DISTILLER

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Moreover, you are able to prevent leakage as well. You can limit 

distribution types, loans, there are different things you can do, 

leave the money in the plan, and encourage the highest level of 

savings possible for many employers at one time. 

Ms. BLUNT ROCHESTER. Thank you for bringing up our Chamber. 

We have a very, very active State Chamber, and also our local 

Chambers. I know this is something they have been talking about 

for actually decades. It goes back decades, conversations. Thank 

you so much. 

Thank you to the panel, and I yield back the balance of my time. 

Chairman WALBERG. I thank the gentlelady. Now, I recognize the 

always positive/optimistic gentleman from Georgia, Mr. Ferguson. 

Mr. FERGUSON. Thank you, Mr. Chairman. Thank you all for taking the time to come today and inform us and speak to us. 

The first thing I would like to do is ask Mr. Campbell, what do 

you think is the most significant impact on how the fiduciary rule 

has changed the investment landscape, particularly as it relates to 

small businesses like I operated for 25 years? 

Mr. CAMPBELL. I think one of the most significant effects of 

this—just to correct something Dr. Furman had said about my previous comments, I didn’t say that most of the costs were transitional one-time costs. I said in addition to the transitional costs, 

there are real ongoing compliance and litigation risk costs, so it is 

not just a transitional issue. 

All of those costs are resulting in several effects. First of all, it’s 

making it less profitable, and it is, of course, a profit-making enterprise, to provide financial advice, less profitable to serve smaller 

clients, so that is resulting in minimum thresholds increasing, 

which is reducing access for small account balance savers, who are 

in many ways the people who most need assistance in making some 

financial decisions and establishing plans that will result in future 

savings. 

A lot of the decisions that are being made about how to implement the rule are being driven by fear of litigation because the BIC 

exemption, the best interest contract exemption, has effectively 

outsourced enforcement of this to the Trial Bar to bring in class actions in state court. 

When you make decisions that are driven by fear of litigation, 

those may not be the optimal decisions that you would make if you 

could otherwise best serve your clients. 

There is a whole host of these types of tradeoffs that are having 

to take place as the industry figures out how to comply. 

Mr. FERGUSON. A term in health care, we always called it ‘‘practicing defensive medicine,’’ I guess you are now talking about defensive investments? 

Mr. CAMPBELL. Not necessarily investments, but really the whole 

structure of how compensation arrangements are set, what products are being offered, which products are no longer being offered, 

which accounts are being served with which levels of service. 

There’s a variety of different responses that are occurring in the 

industry, but in general, there is definitely a disadvantage to small 

account balances, to small plans, in trying to get the level of service 

they have gotten in the past. 

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Mr. FERGUSON. With the SBA and Office of Advocacy, you all did 

make comments during the public comment period. 

Mr. CAMPBELL. The SBA did make comments. Yes, sir. 

Mr. FERGUSON. Typically, when one government agency makes 

comments to another government agency, are those generally taken 

pretty seriously? Has that been your experience? 

Mr. CAMPBELL. That was one of the interesting things about the 

proposal and the comments on it, several entities, not just the 

Small Business Administration, but FINRA as well, went on the 

record to publicly criticize in public comments the proposal, which 

suggests there really hadn’t been adequate consideration behind 

closed doors, which frankly is normally how Federal entities will 

address these concerns through the OMB review process. 

Mr. FERGUSON. Do you have any idea why these were not addressed in the final rule? 

Mr. CAMPBELL. Someone had previously discussed the length and 

breadth of the process, how many days the comments period were, 

how many pounds the economic analysis weighs. All of those are 

true. A great deal of work went into this. 

At the end of the day, federal agencies have a tremendous 

amount of discretionary authority, so the policies they pursue, if 

they check the boxes on the process, don’t necessarily change, despite the amount of time we spend debating them. 

I think this rule is a good example of where the changes that 

should have occurred, many of them did not. 

Mr. FERGUSON. Mr. Sossa? 

Mr. SOSSA. I’m not speaking on behalf of ERIC, but you talked 

about sort of the defensive investment approach. There is a defensive administration component of this. As I stated earlier, 85 percent of our population is blue collar. They ask us two key questions 

every time they come into our plan, how much do I need to save 

and where can I put it. We do everything we can to answer those 

two questions. 

We have no issues with the intent of the fiduciary rule, the lack 

of clarity and understanding where we may hit trip wires is what’s 

going to cause us and large employers to pull back. 

We have billions of assets under management with significant 

compliance risks. The risk of tripping the compliance in those areas 

is going to cause us to try to do everything we can to avoid that 

risk. 

That is really the challenge that we’re facing. Again, and I feel 

like I’m repeating myself, it’s usually never the intent of what is 

trying to be solved, it is how it’s being addressed and imposed on 

employers. We can agree on the problem, let’s find a solution that 

works within our area. 

Mr. FERGUSON. Mr. Chairman, thank you. I yield back. 

Chairman WALBERG. I thank the gentleman. I am now pleased 

to recognize my friend and the ranking member, Mr. Sablan. 

Mr. SABLAN. Thank you very much, Mr. Chairman. Dr. Furman, 

do you agree that open MEPs would be as beneficial to increasing 

access to retirement savings as the other witnesses claim? 

In your view, are there other solutions that would complement 

or supplement open MEPs, or should be pursued instead of open 

MEPs? 

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Mr. FURMAN. I have not studied the issue in the detail that 

would be required for me to make a confident statement on it. I 

think the goal behind it of reducing costs and giving small businesses access to ways to offer savings products to their employees 

is just something I think many businesses want to do, and some 

are deterred from doing by the cost. One would want to make sure 

you continue to protect those employees as they are making those 

savings. 

Mr. SABLAN. Thank you. Before I forget, I would like to also take 

my time, Mr. Chairman, to recognize in the gallery a young lady, 

my niece, actually, from the Northern Marianas, who is getting 

real life experience work here in Washington, D.C., and hopefully 

will eventually return home to share what she learned here. Carla, 

welcome. 

Chairman WALBERG. We certainly welcome you here, and proud 

to have your uncle here. 

Mr. SABLAN. She is actually here staffing for Mr. Sossa. Treat 

her well, Mr. Sossa. Thank you. 

Mr. Kais, I appreciate you noting in your testimony the importance of customers achieving a lifetime financial security. I am interested in hearing what Transamerica is doing, for example, to 

serve those in remote locations. I know you do not have customers 

in the Northern Marianas. I think you do have four or five in 

Guam, I understand. 

How do you serve Guam where many financial services do not 

operate? 

Mr. KAIS. Great question. I used to live in Hawaii, so next time 

I’m in town, we can get together to talk. A great question. We work 

with employers and employees that are remote every day, whether 

it is in the continental mainland of the U.S. We do one on one 

phone calls and support. We fly people all over the country to meet 

with employers and employees. 

I’m not quite sure how many calls we’ve done to your district, but 

technology allows us to reach a lot of employees. We treat small 

businesses just as we treat our largest clients. 

Mr. SABLAN. Thank you for sharing. It could be useful for small 

businesses and workers in the Northern Marianas. 

Mr. KAIS. Absolutely. We’re delighted to discuss that with you. 

Mr. SABLAN. Thank you. Let me ask you another question. We 

heard today the difference of opinions from both sides, but there is 

really some things where there is bipartisan support to open MEPs. 

Let me ask you, from your testimony I was pleased to learn that 

89 percent of workers who have access to retirement savings plans, 

like a 401(k), are saving for retirement, but only 47 percent of 

workers who are not offered a workplace savings plan are doing so, 

so it seems to me our goal should be to do everything in our power 

to help encourage more employers to offer retirement plans, and as 

a result, we would appreciate the amount of workers saving for retirement. 

Can you help me better understand how open multiple employer 

plans would help address this problem? 

Mr. KAIS. I’d be delighted to. Again, three reasons why employers 

don’t offer a plan, because they believe it is fraught with risk, it’s 

administratively burdensome, and it’s not cost effective. 

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So, by and large, the open multiple employer plan does a lot to 

mitigate the circumstances, making it easier to get into the plan. 

Other things like tax incentives, to put in auto enroll, stretch 

match, things like that would be also helpful. 

Once you are in the plan, you have to cover the employee first, 

once you cover the employee, how do you get them saving the maximum amount possible. That is where we all could use help. 

Mr. SABLAN. Thank you. My time is up, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. I now recognize the 

gentleman from the home of the Masters, Mr. Allen. 

Mr. ALLEN. Thank you, Mr. Chairman. Thank you for having this 

hearing. As we know, this rule has been discussed quite a bit. In 

fact, in my district, it is hugely unpopular. I do not think I have 

had anyone who has come to me and said please make sure that 

fiduciary rule gets done up there. I think it is 100 percent against 

this thing. 

What can this thing do to us? Would it cause a lack of access to 

advice? We talked about litigation, market disruption, increased 

costs to consumers. That is what we are talking about here today. 

As a small business owner, I know firsthand how Washington, 

D.C. can affect a business. I was there for 35 years. We got a June 

deadline looming. 

Mr. Campbell, you have already talked about some of the realworld ramifications for small business owners and industry, and 

Americans trying to save retirement. In fact, you have already 

mentioned that even though the rule is not a rule yet, maybe this 

is already happening in the investment world out there, affecting 

those who request and require investment advice. Is that correct? 

Mr. CAMPBELL. Yes, sir. Unfortunately, you can’t just flip a 

switch and get into compliance starting June 8. It takes months. 

In fact, when the fiduciary rule was promulgated, the 12 months 

that were given to make the transition was widely viewed by folks 

who were going to actually have to do the transition, as being inadequate, that it was an extremely accelerated schedule to make the 

magnitude of the changes required by the fiduciary rule. We are already seeing some of those changes being put into effect. 

There isn’t a single answer in terms of all companies will do X. 

What we’re finding is it’s a highly individualized response, so as a 

result it has taken many months of effort and many millions, actually, billions of dollars, to figure out how to begin to comply. 

So, some of the rules’ effects have already gone into effect in the 

sense of changing the way accounts are set up, sending out notices, 

closing IRAs to new investment in order to fit into this or that provision of this or that exemption. Some of that has already occurred 

in advance of June 9. 

Mr. ALLEN. Is it creating some of these very problems that we 

have discussed and I think you shared with us? 

Mr. CAMPBELL. It is. Those problems are beginning, but obviously once it’s fully implemented is when we will see those really 

take off. 

Mr. ALLEN. Backlash; yes. Mr. Sossa, you had mentioned obviously this rule is very problematic for the investment agency, and 

for those who give investment advice, but you seemed to indicate 

that we needed to have a conversation about how we currently do 

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business and maybe how down the road some changes do need to 

be made, not this rule, but some changes to the way we do business 

in the investment world. What would be your solution? 

Mr. SOSSA. I’ll answer it in a couple of ways. The fiduciary rule 

of itself again is not something we are having a challenge with, it’s 

understanding what the rule is doing and how we comply with it. 

In essence, building the car is not a bad idea but if you build a bad 

car and it breaks down, you haven’t gotten anywhere. 

From my perspective, from the large employer landscape, both on 

behalf of ERIC and a practitioner, as I said earlier, we agree on 

the intent. What we’re looking for is the flexibility and the understanding to work with you, what is the goal we are trying to solve, 

what is the problem we’re trying to solve, 99 percent of the time 

everything that comes up as fiduciary rules, the long-term income 

disclosure, all are meant to draw protection to employees, encourage savings. 

If you look at the large employer market, they probably have 

been doing that for 10 years already, and are doing it in ways that 

are applicable to their employees. We have been doing financial 

education since 2008, recognizing we need our employees to retire. 

As you are developing the policies, developing the ‘‘what’s’’ as opposed to the ‘‘why’s,’’ that you engage organizations like ERIC, so 

we can put things together that solve the problems. Many times 

when we get regulations imposed on us, we end up doing them 

twice. We do them once to comply with the regulation, and then we 

do them for real, to solve a problem. 

The problem is still the problem. We’re just not doing it in a way 

that is effective for our organizations. 

Mr. ALLEN. Again, the biggest problem I have with this top 

down, one-size-fits-all bureaucratic system up here, they never 

seem to go out and talk to the very folks this is going to impact. 

Mr. SOSSA. Thank you. 

Mr. ALLEN. This has to stop. I appreciate your bringing that to 

our attention. Thank you, sir. I yield back. 

Chairman WALBERG. I thank the gentleman. Now, I recognize 

the gentleman who patiently has waited today, although he is an 

anxious person to get things done, as we saw yesterday in our 

markup in our full committee. We appreciate your excitement with 

that. I recognize my friend, Mr. Lewis. 

Mr. LEWIS. Thank you, Mr. Chairman. I have to say this committee’s hearings are worth it just for your introductions. I do appreciate that. 

I am very, very concerned on where this all is going to lead. I 

want to take a little bit of a 30,000 foot view, if we might. The DOL 

regulation a couple of years ago, in 2015, was going to expand the 

universe of activities that trigger the fiduciary rule, primarily what 

we are talking about, retirement service providers in this particular case. If you are an asset-based structure, that might be 

problematic. Commission for transaction would be problematic. 

There is sort of an elephant in the living room here that I want 

to get to, Secretary Campbell, and that is if we are going to go after 

pay for performance with retirement advisors, why would we stop 

there? What about the fellow that is selling automobiles? I was in 

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broadcasting for a number of years, we sold radio ads, they got 

paid on commission. 

If there is a fundamental conflict of interest when I talk to my 

retirement advisor on which mutual funds or which particular 

product is best to buy or how he or she gets paid, why would there 

not be a conflict of interest in every stream of commerce? 

Mr. CAMPBELL. Well, actually, I think it’s a valid criticism to say 

even if you look at the level fee compensation arrangements that 

DOL is trying to shift everyone to, those still have inherent conflicts. I have an incentive to get as many assets as I can. I might 

have an incentive to recommend an investment that I think is 

going to outperform because it builds up the assets on which I get 

compensated. 

You can find a conflict in any of these forms of payment. That 

is why I think if the issue were how do we make sure people are 

giving good advice, how do we give advice that’s in the best interest, that’s one debate. 

This rule is not really about that. This rule is, as you point out, 

is about how do you get paid and being paid is a proxy for whether 

your advice is good or not. 

Mr. LEWIS. Someone said earlier, they are doing it because they 

are doing it for pay. I think it was a relatively obscure commentator, an economist now, named Adam Smith, that said it wasn’t 

for the benevolence of the butcher that the product was brought to 

market, it was in regard to his or her own interests. 

That is the nature of our legal system. A defense attorney might 

think their client is guilty but we believe in the adversarial system, 

and we provide them a defense. 

When I go buy a product, the salesperson wants to get the highest price, I as the consumer want to get the lowest price. I am a 

competent consumer. I understand that. 

That is why the vast majority of small IRA investors end up opting for commission based service. I am a little, as you can tell, concerned about where this is going to end in this fundamental assumption that most consumers are just plain inept. 

Mr. Sossa, on this electronic delivery for disclosures, what are 

the costs associated with having to fill my mailbox all the time? 

Mr. SOSSA. They are significant. Besides the significant part, I’ll 

give you an example. We have almost 100,000 employees in the 

U.S. One disclosure mailing, and if it’s a book, it costs $1.00, that 

is $100,000 in postage alone. Significant cost. 

We pay for it. A lot of employers do pay for them out of their 

plans, so it actually diminishes their accounts over time. 

Actually, for large employers, the real value is the effectiveness 

of the communications. I’ll give you an example. Our hourly plan 

is really a plan of 400 different retirement plan structures. When 

I have to send out my SBD, one way to do that is to send out one 

SBD with 400 different appendices, instead of this massive book for 

employees to figure out which one applies to them. 

If I can do it electronically, I will know who you are, I’ll know 

what plan you are in, not only can I send you the materials that 

are particular to you, I can also use that as an employee engagement moment, coming back to we do things twice. 

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Mr. LEWIS. Obviously, only bureaucrats can predict the future. 

What sort of assurances would we have that these savings, which 

could be what, $200 million, $300 million in some estimates, would 

be passed on to the beneficiaries by the plan administrator? 

Mr. SOSSA. For the companies who charge them to the plans, it’s 

automatic. It automatically happens there because they’re being 

charged to the plan. For employers like PepsiCo. that pay for them, 

we all work through budgets, and that is my communications budget. Now, I have my communications budget, and I have lots of communications I really would rather do or rather do them in a broader context. 

I’d love to send out their plan SBD and actually have information 

to say by the way, you’re not participating in the plan, you’re not 

maximizing the match, you’ve had significant loan deferrals. I can 

now point you to other resources that we offer, to encourage savings. We provide free access to financial education to all our employees. 

Mr. LEWIS. My time is up. I thank the panel for their patience 

today, and I yield back. 

Chairman WALBERG. I thank the gentleman. It now gives me 

great pleasure to introduce a very patient individual, the gentleman from Michigan, me, for my questioning time. I appreciate 

the panel for being here. 

Mr. Kais, it has been reported that the median savings, retirement savings for individuals 55 to 64 is about $104,000, and for 

those 64 to 74, it is $148,000. Incredibly risky to see that miniscule 

level of savings as the median. 

Some have suggested greater access to guaranteed lifetime income products, so I would like your thoughts on that, as well as 

what steps you would recommend to the committee in lieu of what 

Mr. Allen said about discussing and talking before we do things. 

What steps you would recommend to help retirees grow and safeguard their retirement incomes. 

Mr. KAIS. It’s a great question, and it’s one that we are very concerned about as well. We support lifetime income products. There’s 

some problems within the industry right now making those portable, so if you leave your employer, it’s difficult to move those lifetime annuities out of the plan to a new employer, perhaps. That 

is something we all need to work on. 

We support generally and do provide lifetime income information 

on participants’ statements today, we think it is important for people to see the number differently, what it means, what they are 

going to have to live on a month by month basis. We think that 

education is important. We need to encourage catch up contributions, of course, for folks over age 50. 

There are a lot of things we can do. I will reiterate that automatic enrollment is still very important, and anything we can do 

as a community, public and private, to incentivize automatic enrollment is key. 

Chairman WALBERG. Okay. Thank you. Mr. Campbell, the elephant in the room, and we have talked around it, if DOL does not 

further delay the Obama administration’s fiduciary regulations, 

should Congress pursue a legislative fix, and should it follow the 

pattern of what we brought out of the House in committee last year 

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with the Affordable Retirement Advice Protection Act and the SAVERS Act? Would that be an approach to take? 

Mr. CAMPBELL. Well, of course, I’m hopeful that the Trump administration will further delay the rule and handle this as a regulatory matter. I think the principles in the legislation that the 

House considered last year are very good starting points for legislative approaches to dealing with the fiduciary issue. 

One of the distinctions that legislation does that the original Department of Labor regulation also did was draw a distinction between sales activities fully disclosed to sales activities and distinct 

from advice activity. I think that would be a useful distinction that 

the legislation makes, that would be something that the Trump administration should consider as well. 

Chairman WALBERG. Thank you. Mr. Sossa, we have talked 

about H.J. Res. 66, my bill that the President signed yesterday. 

The disparaging comments, I understand. We in no way want to 

discourage experimentation, new ideas, states being involved in it 

as well, and our legislation did not do that. 

Our legislation simply said if you are going to do it, there have 

to be safeguards. ERISA ought to be there like it is for everything 

else. That is what that legislation did. 

Could you please explain why allowing states to impose benefit 

related mandates on employers is dangerous, and secondly, how 

might these perhaps well-intentioned state laws be counterproductive for retirement savers? 

Mr. SOSSA. Thank you for that question. It is absolutely paramount, so the ERISA preemption, not just in retirement, in all of 

our benefit programs, that we as a large employer, a multi-state 

employer, who has employees who live and work in different states 

or live and work in different states at the same time, so our ability 

to provide a uniform retirement program, to bring down our leverage purchasing, we can purchase, we select our investment choices, 

we use the leverage of large plans to drive down those investment 

management fees, so there is a value we provide there. 

There’s a value in communications and how we educate, particularly a blue-collar workforce, and how to prepare for retirement. 

Being able to do that with one message across our population is 

paramount. 

If we start to break that apart, and each state starts to have a 

different regulation, employers are going to have to either step out 

of those areas and lose all that leverage, or —— 

Chairman WALBERG. And lose the education opportunities, right? 

Mr. SOSSA. Lose the education opportunities. Think about the administrative costs now for trying to accommodate for each—I have 

a huge sales force who lives in a state but works the whole territory, so which rule applies to them? Is it the rule they work in, the 

rule they drive through? 

I’ll go even beyond retirement. Some of the paid sick leave laws 

that are coming through now are now varying. Even just to administer and track those items are adding significant amounts of costs. 

Again, as I said earlier, we all operate on budgets. If that cost 

is being added here, it’s going to come out of something else. We’re 

adding more to the administrative burden. We’re adding more to 

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timony, it adds no value to the benefit of the employee, and that’s 

what we’re trying to preserve with the ERISA exemption. 

Again, allows us to do it in a way that we can do it uniform within our organization and knowing our population. 

Chairman WALBERG. Thank you. Appreciate the testimony of all 

the witnesses, the responses. This is helpful to us. It has been recorded, and this discussion will continue. 

Now, I would like to turn to my friend, the ranking member, for 

any closing remarks you would like to make. 

Mr. SABLAN. Thank you very much again, Chairman Walberg. 

Well, there were certainly areas of agreement and disagreement expressed among members today. There seemed to be bipartisan recognition of the magnitude of the retirement savings crisis confronting our country. 

I hope we can work together to find common ground to address 

it and help increase retirement savings opportunities for American 

workers. 

For that to happen, I believe my Congressional Republicans and 

the Trump administration will have to take a much different approach than the one they have taken so far. I am hopeful that in 

the weeks and months ahead, Congress can break from that, because that is what our constituents and the American people expect 

and deserve from us. 

I hope today’s hearing is just the first of several on the subject 

of retirement security. As my colleagues know, we have a massive 

crisis in the multi-employer pension plan system that impacts millions of workers and employers. We also must responsibly address 

the solvency of the Pension Benefit Guarantee Corporation. 

These are issues that demand the subcommittee’s attention. 

Again, I want to thank Chairman Walberg for his courtesy, and all 

the witnesses for taking the time to be here today on such an important issue. Thank you very much, and I yield back my time. 

Chairman WALBERG. I thank the gentleman. Again, I thank you 

as well. This is an important issue, and I think, Mr. Sablan, there 

is some bipartisan agreement and correlation that goes on, and we 

can build on those things. We have seen that happen. 

I think our main desire is to make sure that if someone wants 

to be a big box greeter in their retirement years, that is fine, but 

we do not want to force them to consider that because of inadequate planning. 

We also do not want to simply assume that people cannot do 

good things for themselves in planning if they have good education. 

So, where we can foster that opportunity taking place in the private sector, in the workplace, with employers generally who like 

their employees and want them to go away in retirement years 

looking back, as my dad looked back on DuPont, for instance, and 

knew my mother was going to be taken care of well because of 

what was put together for him over the years of working, that 

there was a relationship that was developed and it has continued 

on. 

This is something that society has to come together on, and we 

here on this subcommittee and the full committee have the opportunity to make historical changes for the better to pick up some of 

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headed legislation and regulation, that put barriers in the way, and 

also allowed people to think they could not do it on their own, they 

could not plan, they could not ask good questions and find good advisors. I do not believe that. 

I think a mix of making a good strong playing field out there, 

finding good partners, giving good incentives and opportunities, 

will bring to fruition something that we together can be proud of 

for the future. 

Yes, thank you for your involvement in this hearing. I thank the 

good showing of my subcommittee, although they have all gone on 

to other places now. This will have an impact. 

Without having any further issues to deal with before the committee at this time, we will adjourn. 

[Whereupon, at 11:56 a.m., the subcommittee was adjourned.] 

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