[House Document 104-221]
[From the U.S. Government Publishing Office]




104th Congress, 2d Session - - - - - - - - - - House Document 104-221


 
     PROPOSED LEGISLATION: ``RETIREMENT SAVINGS AND SECURITY ACT''

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

 A DRAFT OF PROPOSED LEGISLATION TO PROVIDE FOR RETIREMENT SAVINGS AND 
                                SECURITY




    May 23, 1996.--Message and accompanying papers referred to the 
 Committees on Ways and Means, Economic and Educational Opportunities, 
Government Reform and Oversight, and Transportation and Infrastructure 
                       and ordered to be printed


To the Congress of the United States:
    I am pleased to transmit today for the consideration of the 
Congress the ``Retirement Savings and Security Act.'' This 
legislation is designed to empower all Americans to save for 
their retirement by expanding pension coverage, increasing 
portability, and enhancing security. By using both employer and 
individual tax-advantaged retirement savings programs, 
Americans can benefit from the opportunities of our changing 
economy while assuring themselves and their families greater 
security for the future. A general explanation of the Act 
accompanies this transmittal.
    Today, over 58 million American public and private sector 
workers are covered by employer-sponsored pension or retirement 
savings plans. Millions more have been able to save through 
Individual Retirement Accounts (IRAs). The Retirement Savings 
and Security Act would help expand pensions to the over 51 
million American private-sector workers--including over three-
quarters of the workers in small businesses--who are not 
covered by an employer-sponsored pension or retirement savings 
program and need both the opportunity and encouragement to 
start saving. Women particularly need this expanded coverage: 
fewer than one-third of all women retirees who are 55 or older 
receive pension benefits, compared with 55 percent of male 
retirees.
    The Act would also help the many workers who participate in 
pension plans to continue to save when they change jobs. It 
would reassure all workers who save through employer-sponsored 
plans that the money they have saved, as well as that put aside 
by employers on their behalf, will be there when they need it.
    The Retirement Savings and Security Act would:
   Establish a simple new small business 401(k)-type 
        plan--the National Employee Savings Trust (NEST)--and 
        simplify complex pension laws. The NEST is specifically 
        designed to ensure participation by low- and moderate-
        wage workers, who will be able to save up to $5,000 per 
        year tax-deferred, plus receive employer contributions 
        toward retirement. The Act would encourage employers of 
        all sizes to cover employees under retirement plans, 
        and it would enable employers to put more money into 
        benefits and less into paying lawyers, accountants, 
        consultants, and actuaries.
   Increase the ability of workers to save for 
        retirement from their first day on the job by removing 
        barriers to pension portability. In particular, 
        employers would be encouraged no longer to require a 1-
        year wait before employees can contribute to their 
        pension plans. The Federal Government would set the 
        example for other employers by allowing its new 
        employees to begin saving through the Thrift Savings 
        Plan when they are hired, rather than having to wait up 
        to a year. In addition, the Act would reduce from 10 to 
        5 years the time those participating in multiemployer 
        plans--union plans where workers move from job to job--
        must work to receive vested benefits. It would also 
        help ensure that returning veterans retain pension 
        benefits and that workers receive their retirement 
        savings even when a previous employer is no longer in 
        existence.
   Expand eligibility for tax-deductible IRAs to 20 
        million more families. In addition, the Act would 
        encourage savings by making the use of IRAs more 
        flexible by allowing penalty-free withdrawals for 
        education and training, purchase of a first home, 
        catastrophic medical expenses, and long-term 
        unemployment. It would also provide an additional IRA 
        option that provides tax-free distribution instead of 
        tax-deductible contributions.
   Enhance pension security by protecting the savings 
        of millions of State and local workers from their 
        employer's bankruptcy, as happened in Orange County, 
        California. The Act would (1) require prompt reporting 
        by plan administrators and accountants of any serious 
        and egregious misuse of funds; (2) double the 
        guaranteed benefit for participants in multiemployer 
        plans in the unlikely event such a plan becomes 
        insolvent; and (3) enhance benefits of a surviving 
        spouse and dependents under the Civil Service 
        Retirement System and the Railroad Retirement System.
   Ensure that pension raiding, such as that which 
        drained $20 billion out of retirement funds in the 
        1980s, never happens again--by retaining the strong 
        current laws preventing such abuses and by requiring 
        periodic reports on reversions by the Secretary of 
        Labor.
    Many of the provisions of the Retirement Savings and 
Security Act are new. In particular, provisions facilitating 
saving from the first day on the job, in both the private 
sector and the Federal Government; the doubling of the 
multiemployer guarantee; and improving benefits for surviving 
spouses and dependents of participants in the Civil Service 
Retirement System and the Railroad Retirement System deserve 
special consideration by the Congress. In addition, many of the 
provisions and concepts in this Act have been previously 
proposed by this Administration and have broad bipartisan 
support.
    American workers deserve pension security--as well as a 
decent wage, lifelong access to high quality education and 
training, and health security--to take advantage of the 
opportunities of our growing economy.
    I urge the prompt and favorable consideration of this 
legislative proposal by the Congress.

                                                William J. Clinton.
    The White House, May 23, 1996.




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