[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.