Testimony Before the Subcommittee on Oversight,
of the House Committee on Ways and Means
Oversight Hearing on Pension Issues
March 23, 1999
Chairman Houghton, Congressman Coyne and members of the subcommittee, I am delighted to be here today to talk about the importance of women in the context of the overall Congressional discussion of the future of pension policy in America. Let me state from the outset that resolution of this nation's retirement policy, or the lack of one, is of paramount importance for all, but most especially if we are to combat the growing problem of poverty in old age being distinctly female. The Heinz Family Philanthropies are committed to ensuring that women have the information and skills needed to surmount the overwhelming challenges to secure retirement income. In 1996, the Foundation launched the Women's Institute for Secure Retirement (WISER) to implement these goals.
The reality of today is that most Americans, regardless of their gender, are ill-prepared for their retirement. The fate that awaits most women, however, is by far the more troublesome problem. Of the 63 million baby-boomers in America, fully 32 million are saving less than one-third of what they will need for retirement - and the overwhelming majority of those unprepared for retirement are women.
Today, women earn, on average, 74 cents for every dollar earned by men which creates less of an opportunity for retirement savings. Nearly, three-fourths of full-time working women earn less than $30,000, in fact their median income is only $21,883. Of course, the numbers are even worse for minority women, where half of all African American women earn less than $19,741 and for Hispanic women it's only $15,967.
Women are at a structural disadvantage too. Their work patterns provide them with fewer pensions and less time to accumulate savings through their workplace, yet they need more income because they live longer. Currently, 40 percent of all women's jobs are now non-standard. These non-standard jobs are part-time, contract, freelance and are often combined to create one full-time job. Moreover, more and more employers are incentivizing non-standard work by offering permanent part-time positions -- guaranteed part-time jobs with no benefits. These non-standard jobs also mean lower wages, fewer if any employee benefits, and more often than not, no company pension plan.
In spite of work outside the home, women have not been relieved of their responsibilities as family caregivers. In addition to the time women are home on maternity leave, they also bear the primary responsibilities of caring for an ill child or sick relative resulting in diminished job tenures. These shorter careers can have serious repercussions at retirement because fewer years of work and/or breaks in employment affect eligibility and lower benefits under employer pensions and Social Security. The data shows that women, on average, spend almost 15 % of their working years out of the job market, while men miss out on less than 2 % of their working years.
As a result of a woman's dual burden of caring for her family and working outside of the home, the majority of working women are generally disadvantaged in their knowledge of pensions and investments. Nearly 40% of women are dependent on Social Security for almost all of their income because they have had fewer opportunities to participate in the retirement plans provided by employers.
The combination of lower income, and fewer pension opportunities as well as less knowledge means that women get lower returns on investments when they are able to save. They are more likely to choose lower risk, lower return vehicles. Women are more likely than men to have money in a regular savings or money market account, life insurance, and U.S. Savings Bonds. Men are more likely than women to have money in mutual funds, real estate, and 401(k)s.
Mr. Chairman, while we applaud this committee for allowing us to focus attention on the ways in which the system's current inadequacies affect working women, expanding savings opportunities may not have much effect on the women we should be most concerned about -- most working women are struggling from paycheck to paycheck, juggling their finances to find the income to contribute to their 401(k) savings plans. And, Mr. Chairman, research from the Heinz Foundation/Sun America 1998 National Women's Retirement Survey found that 61% of women reported that they usually have little to no money left after paying bills to save for retirement. For African-American and Hispanic women this problem is even more pronounced -- 75% of African American women and 69% of Hispanic women reported no money left for retirement savings.
The Comprehensive Retirement Security and Pension Reform Act of 1999 introduced by Congressmen Portman and Cardin contains several provisions that will help women. This is particularly important given that only 20% of small businesses offer retirement plans. First and foremost the legislation contains provisions that will make it easier for small businesses to offer pension plans. Second, the legislation requires accelerated vesting in three years instead of five years for employer matching contributions in 401(k) plans. Finally, the legislation provisions makes pension portability easier.
However, in whatever pension reforms the Congress ultimately considers, we have got to be clear about who will benefit from these reforms.
If this Congress and this Administration are truly committed to reducing and ultimately wiping out the fact that the face of poverty in old age is distinctly female, then hearings like this one become increasingly important. But, if this issue continues to be politicized, and ultimately no action is taken, I hope we will see a ground swell of women voting -- some for the first time -- saying we won't take it anymore!
Mr. Chairman, no one -- Republican or Democrat -- wants to take the voting power of women for granted. Economic security is an issue that women think, care and vote about. It's up to all of us to give them good choices.
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