Testimony Summary
sion broadstation categories. and three radio stations in Washington, DC, to air a series of paid public service announcements
"Participants almost unanimously expressed interest in obtaining positive, practical, and concrete infor-
ning. Testimony For the agency's free Consumer Information Catalog, call 1-888-878-3256, or write "Consumer Information
First, the coalition is evaluating current and future levels of financial literacy among young adults. An
urging mation," Catalog," peop Widmeyer Pue leblo, to save Colo., said. for81 But retirement. 009."they The don't Internet know address where is towww.pueblo.gsa.gov. turn, whom to trust, and how to proceed. They want to
• Government is grappling with mounting financial pressures on the Social Security system. Employers, encoun-
Chairman Johnson and members of the Subcommittee, my name is Dallas Salisbury. I am President and CEO of
initial baseline survey, administered to 1,500 twelfth graders in March and April 1997, showed a serious lack of
The U.S. Federal Trade Commission offers advice on how to guard against fraudulent investment
find a credible WJLA-7, financial the local advisor, ABC affiliate, but they produced are wary the of people television who announcements. stand to gain from Specific their savings. advertisements They are were also
EBRI
tering competitive forces and trying to manage a diverse work force, are revamping traditional pension pro-
the Employee Benefit Research Institute (EBRI) and also serve as Chairman and CEO of an affiliated organiza-
knowledge about personal financeaestudents scored, on average, just 57.9%. Less than 15% said stocks are likely to
schemes. Write or call: Consumer Response Center, Federal Trade Commission, Washington, DC 20580, (202) 326-
scared by the complexity of certain financial information."
geared to each of the three major groups--'strugglers," "impulsives," and "deniers"--who currently are failing to
grams. These forces underscore the need for individuals to play a major role in providing for their own retire-
EMPLOYEE
tion, the American Savings Education Council (ASEC). It is a pleasure to be here this afternoon to discuss pension
have 2222 the or TDD highest (202) growth 326-2502 over or 18visit years, thewhile agency's over Web one-half site at (54.7%) . said a U.S. Government savings bonds would
save enough The challenge for retirement. of SAVER, The campaign then, is toalso findtouted ways the to channel "Ballpark such Estimate fears ," andauncertainty one-page form intoASEC constructive developed
ment. Fortunately, individuals have more opportunities than ever to save for themselves, either through work-
BENEFIT
and retirement income savings issues. I first had the privilege of appearing before this Subcommittee 22 years
and one-quarter (27.8%) said savings accounts would. Over one-half (51%) said bank certificates of deposit are not
that enables individuals to make quick and easy estimates of what they will need to save and invest each year to
planning for the future. But first, we must assess where we stand today when it comes to preparing for retire-
based retirement-savings plans or through tax-deferred individual retirement accounts (IRAs). For a variety of
T-112
RESEARCH
ago, and congratulate the Committee on its longstanding work toward strengthening the American retirement
ment. protected by the federal government against loss, and nearly 20% thought U.S. Savings or Treasury Bonds are not
meet Conclu their sion retirement objectives.
reasons, however, many people have failed to take full advantage of these tools.
INSTITUTE_,o
system.
protected. Nearly a one-third (30%) said retirement income received from a company is called Social Security.
WJLA-7 If workersalso areprepared to assumeits more own weekly personal news responsibility stories on the for providing retirement for savings themselves issue, in and retirement, hosted two they town
EBRI's mission is to contribute to, to encourage, and to enhance the development of sound employee
No one can deny that Social Security provides the primary source of income today for over two-thirds of all retired
Similar tests will be repeated every two years for the next decade to determine whether students' knowledge is
must understand at least the basics of saving and investing.
hall • As meetings a first ,step portions toward of building which will public be included understanding in a prime-time of the retirement-savings news special to be issue airedweFriday need, to June clarify 12.what
Americans. benefit programs For those and no sound longer public working, policy employment-based through objective research defined benefit and education. pensions, EBRI employment-based does not lobby defined and does
increasing.
A The number Washington of surveys area have Choose shown, to Save however, TM campaign that many was lack underwritten the knowledge by Fidelity they need Investments. to be effective The public
today's workers can expect from government and employers concerning retirement, and what individuals must
contribution not take positions pensions for , or and against individual legislative savings proposals. outside of ASEC's any tax-deferred goal is to make arrangement, saving andorplanning through a anvital IRA,concern
Second, the coalition is disseminating teaching guidelines for grades K-12. Over 20 representatives from
demand of themselves. The simple fact is that for most people, Social Security and employment-based pensions
investors. service announcements In 1996, the Retirement are generic, Confidence and are available Survey for found use that in other only media one-third markets. of workers have a high degree of
Statement :_.._.Rolo
of Americans.
provide additional cash income to supplement Social Security.
elementary schools, middle schools, business, and others provided written advice on the guidelines. In addition, a
alone ASEC's do not provide Web siteeverything , which includes that isan needed interactive for a secure versionretirement--and of the Ballpark they Estimate surelyalong won'twith suffice other in retire- the
financial knowledge, while 55% have a moderate level and 11% have a very low level of knowledge. The survey
Since 1978, EBRI has conducted hundreds of studies that have documented the important role of pensions
No more than 20 percent of all workers will ever work under one defined benefit pension plan long enough
panel future. of five teachers from across the United States provided additional input for the guidelines based on their
ment-related found, in particular, resources that: , is . The Choose Beforeto Save the TM Campaign maintains its own Web site at
in our retirement income system. Our work on small employers and pensions underlines the importance of admin-
to get a sufficiently substantial pension to fully supplement Social Security. For the other 80 percent, the only
classroom experiences.
. The EBRI Web site is .
• Numerous public and private agencies have joined forces to help Americans prepare financially for retirement.
istrative simplicity, contribution flexibility, and rules that can be clearly understood by the average plan partici-
hope of adequate supplementation is individual savings, hopefully with the added contributions of an employer to
Third, the coalition is operating a national clearinghouse that can serve as a one-stop source for high-quality
• Only 44% Separately of those , the polled U.S.knew Department that a male of Labor retiring (DOL) today andatthe age U.65 S.can Department expect to live of Treasury to age 80, launched on average. a
Committee on Ways and Means
These diverse partners have created and field-tested many of the resources that will be needed to make saving a
pant. a money This purchase Committee pension has taken plan, asteps 401(k), in recent a 403(b), years or some to make other plans typemore of defined approachable contribution for small arrangement. employers, and I
teaching materials that will help educators teach the skills covered by the coalition's guidelines. The information
• 61% knew that the U.S. stock market has provided a greater return over the past 20 years than U.S. govern-
Retirement Savings Education Campaign in July 1995. One part of the campaign, a unique public-private sector
Subcommittee on Oversight
national priority in the years ahead.
commend you for continuing that important work. Later this month we will complete analysis of our 1998 Small
First, consider the fact that two-thirds of retirees have little from the sources just mentioned, which underlines
will ment be disseminated bonds. primarily via the World Wide Web, but print materials also will be available via mail, tele-
partnership, was the creation of ASEC. The campaign's signature brochure, "Top Ten Ways to Beat the Clock and
U.S. House of Representatives
the need for education.
Employer Retirement Survey (SERS), and I will make our findings available to the Committee at that time. I am
phone, and direct contact at exhibits, seminars, and conferences.
• Just 53% knew that employer stock typically is more volatile than a diversified portfolio of stocks.
Prepare for Retirement," describes basic steps individuals should take to ensure their financial security. It also
• The Employee Benefit Research Institute (EBRI) and its American Savings Education Council (ASEC) affiliate,
hopeful More that Then,these information consider findings theabout fact will that assist the Jump$tart Congress your efforts has Coalition to already increase can acted be small obtained to raise employer the by contacting age sponsorship for full the retirement and American coverage benefits Financial rates. under
recommends a number of other informational resources.
• Only one-half knew that the probability of losing money on an investment goes down the longer one holds the
have developed "Choose to Save TM,, a media campaign for spreading the word about retirement savings. In its
Services Association Last year, Congress Educationrecognized Foundation the at need (202) for296-5544. retirement The education coalition's with Internet the passage addressof is the Savings Are
Social Security from age 65 to age 67, and the fact that more will have to be done to assure the system's future
investment.
DOL also offers two other publications that give workers information about their pensions: "What You
inaugural efibrt, EBRI and ASEC joined forces with one television station and three radio stations in Washing-
Vital to Everyone's Retirement Act of 1997 (SAVER). The Act, as you know, aimed to increase efforts to educate
viability.
. Hearing on
• Should Fully Know 86% knew Aboutthat Your the Pension averageRights" personand retiring "Protect today Your will Pension." need 60%-80% of his or her working income to
ton, D.C., to air a series of paid public service announcements urging people to save for retirement. The cam-
Americans These about facts thecombine importance to tell ofus saving that and anything planning we can for do retirement. as a nation Signed to encourage by President employers Clinton to on do November more to
Separately, the American Bankers Association sponsors an annual "National Teach Children to Save Day,"
maintain the same standard of living.
These and other publications are available through the agency's toll-free Publication Hotline 1-800-998-
paign will cuhninate in a prime time news special to be broadcast Friday, June 12, 1998.
20, 1997, SAVER called tbr the White House/Congressional National Summit on Retirement Savings to spearhead
in provide which pensions bankers of around any type the, country and to educate visit elementary workers, schools should be to done teach if children we continue abouttothe have importance the policyof objective saving of
7542 and on the Internet at .
Oversight of Various Pension Issues
• EBRI and ASEC also sponsor, with Mathew Greenwald Associates, the Retirement Confidence Survey, an
a broad-based public eflbrt involving both the public and private sectors in helping Americans achieve their
allowing individuals to retire with dignity.
money. Last year, more than 2,500 bankers made 5,000 presentations to 125,000 students. The American Bankers
In February 1997, the National Association of Securities Dealers Inc., (NASD) reported survey results
In April 1998, a broad coalition of government, business, and consumer organizations launched a
by
annual survey of American workers' and retirees' attitudes and behavior concerning retirement saving and
dreams for a financially secure retirement. Follow-up summits in 2001 and 2005 will gauge our progress and
Association I congratulate Education Foundation the OversightcanSubcommittee be reached at for 1-800-338-0626, its ongoing work and on it this maintains important a Web topic. site As at previously
showing that, while 63% of Americans know the difference between a halfback and a quarterback, only 14% can
grassroots education project called the Facts on Saving and Investing Campaign. The campaign's slogan is "Get
planning. This year's survey is scheduled for release June 2, 1998.
. explore mentioned new , Iissues first appeared and strategies. before this Subcommittee in 1976, some 22 years ago, and I have always found it to be
distinguish the facts. It's between your mone a growth y. It's your stock future." and an income stock. Moreover, NASD said, while 78% can name a character
Dallas L. Salisbury
Government, bracing for the retirement of the baby boom generation, is grappling with mounting financial
focused on providing a framework of policy that will allow Americans to fulfill the dream of a comfortable retire-
Observing that many women are more economically vulnerable than men, Girl Scouts of the U.S.A. has
on a television situation comedy, only 12% know the difference between a "load" and "no-load" mutual fund.
Spearheaded by the Securities and Exchange Commission (SEC), the campaign published "The Facts on
• Separately, the U.S. Department of Labor (DOL) and the U. S. Department of Treasury launched a Retirement
President and CEO, Employee Benefit Research Institute
ment. You have continued that positive movement today, and I thank you for allowing me to be a part of this
pressures on the Social Security system. Employers, encountering competitive forces and trying to manage a
developed "Money Snmrts," a comprehensive personal finance project and resource guide for girls. Inquiries should
Not surprisingly given such findings, some individuals fail to follow basic rules about diversifying their
Saving and Investing," which explains the need for increased financial literacy. The campaign also has assembled
Savings Education Campaign in July, 1995. One part of the campaign, a unique public-private sector partner-
Chairman & CEO, American Savings Education Council
diverse hearing. work force, are revamping traditional pension programs.
be directed to Membership and Program, Girl Scouts of the U.S.A., 420 Fifth Avenue, New York, N.Y. 10018-2702.
portfolios, a "Financialand Facts ninny Toappear ol Kit," which to invest includes too conservatively. a variety of educational Surveys by materials Hewitt Associates on how to and getthe started Profit inSharing developing /
ship, was the creation of the American Savings Education Council. The campaign's signature brochure, "Top Ten
These forces underscore the need for individuals to play a major role in providing for their own retire-
Girls Inc., a research, advocacy, and educational organization, also is developing a money management
401(k) a financial Council plan,of how America to understand suggest, for investment instance, choices, that between how toone-quarter manage money and one-third and investments of all ,retirement and how plan to get
Ways to Beat the Clock and Prepare for Retirement," describes basic steps individuals should take to ensure
ment. Fortunately, individuals have more opportunities than ever to save for themselves, either through employ-
curriculum for girls. The project is supported in part by $50,000 in profits donated by OppenheimerFunds from its
assets are invested in stock issued by the participants' employers. (In some cases, this may not reflect the plan
more information on saving and investing.
their financial security.
ment-based retirement savings plans or through tax-deferred individual retirement accounts (IRAs). For a variety
book, A Woman's Guide to Investing.
The SEC also holds periodic investor 2121 town meetings K Street,aimed NW at increasing financial literacy. At a recent
participants' decisions, however. Frequently, employers only make matching contributions in the form of company
• of reasons A broad , coalition however, of many government, people have business failed and to take consumer full advantage organizations of these hastools. launched a grassroots education
The latter project was developed after a nationwide survey of 522 women conducted in March 1997
stock). Suite 600
town meeting in Connecticut, for instance, SEC Chairman Arthur Levitt conveyed basic tips to investors on how
projectAscalled a firstthe step Facts toward on Saving buildingand public Investing understanding Campaign. of The the campaign's retirement slogan: savings "Get issue,thethen, facts. weIt'need s your to
showed that 41% said learning about investing and money management is one of the most important skills a girl
they canIn make a 1996 informed study of decisions the retirement , monitor plans their of current three large investments companies, , andEavoid BRI found investment that even problems. though U.S. equity
Washington, DC 20037
clarify money. what It'stoday your's future." workers Sp can earhexpect eaded from by the government Securities and and employers Exchange concerning Commission, retirement, the campaign and published what indi-
can acquire. Only 6% of the women felt they were very knowledgeable about investing, and 56% said they were not
investments Senators Christopher have consistently J. Dodd and outperformed Joseph I. Lieberman other kinds addressed of investments issues over before long Congress periods affecting of time, anywhere individual from
Voice: 202-775-6322
viduals "The inust Facts denmnd on Saving of and themselves. Investing," Thewhich simpleexplains fact is that the, need for most for increased people, Social financial Security literacy. and The employment- campaign
very knowledgeable.
17%-34 investors. % of Connecticut's plan participants Banking under Commissioner age 39 had invested John R Burke none of described their funds individual in stock.investor protection efforts in
Fax: 202-775.6312
also has assembled a "Financial Facts Tool Kit," which includes a variety of educational materials on how to get
based retirement plans alone do not provide everything that is needed for a secure retirement--and they surely
Girls Inc. is based in New York, and can be reached at 212-689-3700 or via the World Wide Web at
the StateMany of Connecticut. people are concerned In addition, about there their were own seminars lack offollowing understanding the town when meeting it comes , including to managing one entitled their
E-mail: salisbury@ebri.org
won't suffice in the future.
started in developing a financial plan, how to understand investment choices, how to manage money and
retirement . funds. The 1997 Retirement Confidence Survey found that while 44% of the people who are saving for
"Women and Retirement: The Difficult Road Ahead" presented by ASEC and The National Center for Women and
Internet: www.ebri.org
investments, and how to get more information on saving and investing.
The Pension Benefit Guaranty Corporation (PBGC), which ensures that more than 42 million workers
Retirement Research.
retirement arc very confident that they are investing wisely, 48% are only somewhat confident. What's more, 31%
How Do Individuals View Retirement?
who are enrolled in 50,000 defned benefit pension plans have some pension protection if their employers have
More information on SEC activities is available at the agency's Web site , or by calling 1-
said they do not enjoy making investment decisions about retirement savings. The survey contains a core set of
• A number of programs seek to increase financial awareness among young people and children. The Jump$tart
financial difficulty and cannot fund pension plans or pay promised benefits, has published Your Guaranteed
800-732-0330. The Alliance for Investor Education also maintains a Web site on the Facts on Saving and Investing
questions that is asked annually and is used to track key attitudes and behavior patterns over time. The 1998
Coalition, a group of about 20 federal agencies, universities and non-profit associations, seeks to improve
While the evidence is compelling that individuals must carry a substantial part of the burden of providing for their
Pension. The publication can be obtained by writing to PBGC, 1200 K Street, NW, Washington, DC, 20005-4026 or
5 May 1998
survey is scheduled for release June 2, to coincide with the National Summit on Retirement Savings.
Campaign at . Individuals who want more information or are seeking help because
understanding of personal finance among young adults. Separately, the American Bankers Association sponsors
own retirement, many people seem almost willfully ignorant of what they must do to make their retirement
calling (202) 326-4000. The agency's Internet address is .
they have had trouble with an investment can write to the Office of Investor Education and Assistance, Mail Stop
an annual "National Teach Children to Save Day," in which bankers around the country visit elementary
dreams a reality. How can we understand this pervasive lack of planning and saving in the face of our strong
The Cooperative State Research, Education and Extension Service, U.S. Department of Agriculture, offers
Financial Education Activities
11-2, 450 Fifth Street, NW, Washington, DC 20549.
schools to teach children about the importance of saving money. Last year, more than 2,500 bankers made 5,000
desire for a comtbrtable and secure retirement? In 1995, the Widmeyer Group convened a series of focus groups to
educational programs in personal finance with an emphasis on saving for retirement, through partner universities
One useful tool included in the Financial Facts Tool Kit is The Consumer's Almanac. Developed by the
presentations to 125,000 students. Observing that many women are more economically vulnerable than men,
explore how individuals view retirement-planning issues. It found a public that is troubled and hungry for reliable
How, then, can we give today's workers the knowledge and help they need to make sure their retirement savings
American and county Financial offices nationwide. Services Association Contact your (AFSA), local Cooperative this 32-page Extension booklet is designed office, often to located help individuals in courthouses, organizepost
The the views Girl Scouts expressed of the in this U.S.A. statement have developed are solely "Money thoseSmarts of the ," author a comprehensive and shouldpersonal not be attributed finance project to the and
information but unsure of where to turn for help.
will grow enough to meet their future needs?
offices, or other government buildings. The Internet address is .
their finances, incorporate long-range goals such as financing retirement or paying for children's education into
Employee resource Benefit guide for Research girls. Institute, or the EBRI Education and Research Fund, its officers, trustees,
"Caught between expectations and current realities," many of the focus group participants look to the
Numerous public and private agencies have joined forces to help Americans prepare financially for
The Internal Revenue Service has many resources to help taxpayers understand financial issues facing
family budgets, and manage credit wisely. Information is available from the AFSA Education Foundation at
sponsors, or other staff, or to the EBRI-ERF American Savings Education Council. The Employee Benefit
future with "grand hopes and deep fears," Widmeyer reported. "Retirement for many may be the number one
retirement. • The Pension These Benefit diverseGuaranty partners Corporation have created , which and field-tested ensures thatmany moreofthan the resources 42 million that workers will be who needed are enrolled to
them in retirement. One good starting place is Publication 910, Guide to Free Tax Services. This and other publica-
or (202) 223-0321.
Research Institute is a nonprofit, nonpartisan, public policy research organization which does not lobby or
savings priority, but it is not immediately pressing and is therefore the easiest item to put off."
make in 50,000 saving defined a national benefit priority pension in the plans yearshave ahead. some pension protection, publishes '_-our Guaranteed Pension."
tions can be ordered by calling 1-800-TAX-FORM (1-800-329-3676). The TTY/TDD number is 1-800-829-4059. The
A number of programs seek to increase financial awareness specifically among young people and children.
take positions on legislative proposals. Neither EBRI nor ASEC has received federal government grants or
When forced to face the issue--for instance, when shown how much they will need to save each year to be
EBRI and its affiliate ASEC have developed "Choose to SaveTM," a public service media campaign to
Internet address is .
The Jump$tart Coalition, a group of about 20 federal agencies, universities, and non-profit associations,
contracts in the preceding two fiscal years.
able to provide themselves an adequate income--most people "listened intently and then appeared truly alarmed,
The General Services Administration offers many free and low-cost publications about retirement plan-
spread the word about retirement savings. In its inaugural effort, EBRI and ASEC joined forces with one televi-
seeks to improve understanding of personal finance among young adults. The coalition's initiatives fall into three
taken aback, and even depressed." But they don't know what to do about their concerns.
3 6
2
