[Congressional Record Volume 143, Number 68 (Wednesday, May 21, 1997)]
[House]
[Pages H3082-H3088]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SAVINGS ARE VITAL TO EVERYONE'S RETIREMENT ACT OF 1997
Mr. FAWELL. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 1377) to amend title I of the Employee Retirement Income
Security Act of 1974 to encourage retirement income savings, as
amended.
The Clerk read as follows:
H.R. 1377
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Savings Are Vital to
Everyone's Retirement Act of 1997''.
SEC. 2. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds as follows:
(1) The impending retirement of the baby boom generation
will severely strain our already overburdened entitlement
system, necessitating increased reliance on pension and other
personal savings.
(2) Studies have found that less than a third of Americans
have even tried to calculate how much they will need to have
saved by retirement, and that less than 20 percent are very
confident they will have enough money to live comfortably
throughout their retirement.
(3) A leading obstacle to expanding retirement savings is
the simple fact that far too many Americans--particularly the
young--are either unaware of, or without the knowledge and
resources necessary to take advantage of, the extensive
benefits offered by our retirement savings system.
(b) Purpose.--It is the purpose of this Act--
(1) to advance the public's knowledge and understanding of
retirement savings and its critical importance to the future
well-being of American workers and their families;
(2) to provide for a periodic, bipartisan national
retirement savings summit in conjunction with the White House
to elevate the issue of savings to national prominence; and
(3) to initiate the development of a broad-based, public
education program to encourage and enhance individual
commitment to a personal retirement savings strategy.
SEC. 3. OUTREACH BY THE DEPARTMENT OF LABOR.
(a) In General.--Part 5 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1131 et seq.) is amended by adding at the end the following
new section:
``outreach to promote retirement income savings
``Sec. 516. (a) In General.--The Secretary shall maintain
an ongoing program of outreach to the public designed to
effectively promote retirement income savings by the public.
``(b) Methods.--The Secretary shall carry out the
requirements of subsection (a) by means which shall ensure
effective communication to the public, including publication
of public service announcements, public meetings, creation of
educational materials, and establishment of a site on the
Internet.
``(c) Information To Be Disseminated.--The information to
be disseminated by the Secretary as part of the program of
outreach required under subsection (a) shall include the
following:
``(1) a description of the vehicles currently available to
individuals and employers for creating and maintaining
retirement income savings, specifically including information
explaining to employers, in simple terms, how to establish
each of the different retirement savings vehicles for their
workers, and
``(2) information regarding matters relevant to
establishing retirement income savings, such as--
``(A) the forms of retirement income savings,
``(B) the concept of compound interest,
``(C) the importance of commencing savings early in life,
``(D) savings principles,
``(E) the importance of prudence and diversification in
investing,
``(F) the importance of the timing of investments, and
``(G) the impact on retirement savings of life's
uncertainties, such as living beyond one's life expectancy.
``(d) Establishment of Site on the Internet.--The Secretary
shall establish a permanent site on the Internet concerning
retirement income savings. The site shall contain at least
the following information:
``(1) a means for individuals to calculate their estimated
retirement savings needs, based on their retirement income
goal as a percentage of their preretirement income;
``(2) a description in simple terms of the common types of
retirement income savings arrangements available to both
individuals and employers (specifically including small
employers), including information on the amount of money that
can be placed into a given vehicle, the tax treatment of the
money, the amount of accumulation possible through different
typical investment options and interest rate projections, and
a directory of resources of more descriptive information;
``(3) materials explaining to employers in simple terms how
to establish and maintain different retirement savings
arrangements for their workers and what the basic legal
requirements are under this Act and the Internal Revenue Code
of 1986;
``(4) copies of all educational materials developed by the
Department of Labor, and by other Federal agencies in
consultation with such Department, to promote retirement
income savings by workers and employers; and
``(5) links to other sites maintained on the Internet by
governmental agencies and nonprofit organizations that
provide additional detail on retirement income savings
arrangements and related topics on savings or investing.
``(e) Coordination.--The Secretary shall coordinate the
outreach program under this section with similar efforts
undertaken by other public and private entities.''.
(b) Conforming Amendment.--The table of contents in section
1 of such Act is amended by inserting after the item relating
to section 514 the following new items:
``Sec. 515. Delinquent contributions.
``Sec. 516. Outreach to promote retirement income savings.''.
SEC. 4. NATIONAL SUMMIT ON RETIREMENT SAVINGS.
(a) In General.--Part 5 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (as amended
by section 3 of this Act) is amended further by adding at the
end the following new section:
``national summit on retirement savings
``Sec. 517. (a) Authority To Call Summit.--Not later than
June 1, 1998, the President shall convene a National Summit
on Retirement Income Savings at the White House, to be co-
hosted by the President and the Speaker and the Minority
Leader of the House of Representatives and the Majority
Leader and Minority Leader of the Senate. Such a National
Summit shall be convened thereafter in 2001 and 2005 on or
after September 1 of each year involved. Such a National
Summit shall--
``(1) advance the public's knowledge and understanding of
retirement savings and its critical importance to the future
well-being of American workers and their families;
``(2) facilitate the development of a broad-based, public
education program to encourage and enhance individual
commitment to a personal retirement savings strategy;
``(3) develop recommendations for additional research,
reforms in public policy, and actions in the field of
retirement income savings; and
[[Page H3083]]
``(4) disseminate the report of, and information obtained
by, the National Summit and exhibit materials and works of
the National Summit.
``(b) Planning and Direction.--The National Summit shall be
planned and conducted under the direction of the Secretary,
in consultation with, and with the assistance of, the heads
of such other Federal departments and agencies as the
President may designate. Such assistance may include the
assignment of personnel. The Secretary shall, in planning and
conducting the National Summit, consult with the
congressional leaders specified in subsection (e)(2). The
Secretary shall also, in carrying out the Secretary's duties
under this subsection, consult and coordinate with at least
one organization made up of private sector businesses and
associations partnered with Government entities to promote
long-term financial security in retirement through savings
(including for 1998, and thereafter as the Secretary may deem
appropriate, the American Savings Education Council).
``(c) Purpose of National Summit.--The purpose of the
National Summit shall be--
``(1) to increase the public awareness of the value of
personal savings for retirement;
``(2) to advance the public's knowledge and understanding
of retirement savings and its critical importance to the
future well-being of American workers and their families;
``(3) to facilitate the development of a broad-based,
public education program to encourage and enhance individual
commitment to a personal retirement savings strategy;
``(4) to identify the problems which hinder workers from
setting aside adequate savings for retirement;
``(5) to identify the barriers which impede employers,
especially small employers, from assisting workers in
accumulating retirement savings;
``(6) to examine the impact and effectiveness of individual
employers to promote personal savings for retirement among
their workers and to promote participation in company savings
options;
``(7) to examine the impact and effectiveness of government
programs at the Federal, State, and local levels to promote
retirement income savings;
``(8) to develop such specific and comprehensive
recommendations for the legislative and executive branches of
the Government and for private sector action as may be
appropriate for promoting retirement income savings among
American workers; and
``(9) to develop recommendations for the coordination of
Federal, State, and local policies among the Federal, State,
and local levels of government and for the coordination of
such policies (including any solutions for Federal, State,
and local needs devised at the Federal, State, and local
levels) with the efforts of the private sector to meet such
needs, and to identify the appropriate authority and entities
to implement such recommendations.
``(d) Scope of National Summit.--The scope of the National
Summit shall consist of issues relating to individual and
employer-based retirement savings and shall not include
issues relating to the old-age, survivors, and disability
insurance program under title II of the Social Security Act.
``(e) National Summit Participants.--
``(1) In general.--To carry out the purposes of the
National Summit, the National Summit shall bring together--
``(A) professionals and other individuals working in the
fields of employee benefits and retirement savings;
``(B) Members of Congress and officials in the executive
branch;
``(C) representatives of State and local governments;
``(D) representatives of private sector institutions,
including individual employers, concerned about promoting the
issue of retirement savings and facilitating savings among
American workers; and
``(E) representatives of the general public.
``(2) Statutorily required participation.--The participants
in the National Summit shall include the following
individuals or their designees:
``(A) the Speaker and the Minority Leader of the House of
Representatives;
``(B) the Majority Leader and the Minority Leader of the
Senate;
``(C) the Chairman and ranking Member of the Committee on
Education and the Workforce of the House of Representatives;
``(D) the Chairman and ranking Member of the Committee on
Labor and Human Resources of the Senate;
``(E) the Chairman and ranking Member of the Special
Committee on Aging of the Senate; and
``(F) the parties referred to in subsection (b).
``(3) Additional participants.--There shall be not more
than 400 additional participants. Of such additional
participants--
``(A) one-fourth shall be appointed by the Speaker of the
House of Representatives;
``(B) one-fourth shall be appointed by the Minority Leader
of the House of Representatives;
``(C) one-fourth shall be appointed by the Majority Leader
of the Senate; and
``(D) one-fourth shall be appointed by the Minority Leader
of the Senate.
Such remaining participants shall be selected without regard
to political affiliation or past partisan activity and shall
be representative of the diversity of thought in the fields
of employee benefits and retirement income savings.
``(4) Presiding officers.--The National Summit shall be
presided over equally by representatives of the executive and
legislative branches.
``(f) National Summit Administration.--
``(1) Administration.--In administering this section, the
Secretary shall--
``(A) request the cooperation and assistance of such other
Federal departments and agencies and other parties referred
to in subsection (b) as may be appropriate in the carrying
out of this section;
``(B) furnish all reasonable assistance, including
financial assistance, to State agencies, area agencies, and
other appropriate organizations to enable them to organize
and conduct conferences in conjunction with the National
Summit;
``(C) make available for public comment a proposed agenda
for the National Summit that reflects to the greatest extent
possible the purposes for the National Summit set out in this
section;
``(D) prepare and make available background materials for
the use of participants in the National Summit that the
Secretary considers necessary; and
``(E) appoint and fix the pay of such additional personnel
as may be necessary to carry out the provisions of this
section without regard to provisions of title 5, United
States Code, governing appointments in the competitive
service, and without regard to chapter 51 and subchapter III
of chapter 53 of such title relating to classification and
General Schedule pay rates.
``(2) Duties.--The Secretary shall, in carrying out the
responsibilities and functions of the Secretary under this
section, and as part of the National Summit, ensure that--
``(A) the National Summit shall be conducted in a manner
that ensures broad participation of Federal, State, and local
agencies and private organizations, professionals, and others
involved in retirement income savings and provides a strong
basis for assistance to be provided under paragraph (1)(B);
``(B) the agenda prepared under paragraph (1)(C) for the
National Summit is published in the Federal Register; and
``(C) the personnel appointed under paragraph (1)(E) shall
be fairly balanced in terms of points of views represented
and shall be appointed without regard to political
affiliation or previous partisan activities.
``(g) Report.--The Secretary shall prepare a report
describing the activities of the National Summit and shall
submit the report to the President, the Speaker and Minority
Leader of the House of Representatives, the Majority and
Minority Leaders of the Senate, and the chief executive
officers of the States not later than 90 days after the date
on which the National Summit is adjourned.
``(h) Definition.--For purposes of this section, the term
`State' means a State, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, Guam, the Virgin Islands, American Samoa,
and any other territory or possession of the United States.
``(i) Authorization of Appropriations.--
``(1) In general.--There is authorized to be appropriated
for fiscal years beginning on or after October 1, 1997, such
sums as are necessary to carry out this section.
``(2) Reliance on private contributions.--The Secretary may
accept private contributions, in the form of money, supplies,
or services, to defray the costs of the National Summit. The
Secretary shall ensure, to the extent practicable, that at
least one-half of the funds available to the Secretary for
each fiscal year to carry out the provisions of this section
consist of such private contributions.
``(j) Contracts.--The Secretary may enter into contracts to
carry out the Secretary's responsibilities under this
section, but only to the extent, or in such amounts, as are
provided in advance in appropriations Acts.''.
(b) Conforming Amendment.--The table of contents in section
1 of such Act (as amended by section 3 of this Act) is
amended further by inserting after the item relating to
section 516 the following new item:
``Sec. 517. National Summit on Retirement Savings.''.
(c) Authorization of Appropriations for Fiscal Year 1998.--
Notwithstanding subsection (i) of section 517 of the Employee
Retirement Income Security Act of 1974 (added by this
section), the amount authorized to be appropriated for fiscal
year 1998 to carry out such section is an amount equal to
$1,000,000.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Illinois [Mr. Fawell] and the gentleman from New Jersey [Mr. Payne]
each will control 20 minutes.
The Chair recognizes the gentleman from Illinois [Mr. Fawell].
Mr. FAWELL. Mr. Speaker, I yield myself 5 minutes.
(Mr. FAWELL asked and was given permission to revise and extend his
remarks.)
Mr. FAWELL. Mr. Speaker, I am very pleased to join with my colleague,
the gentleman from New Jersey [Mr. Payne], the ranking Democrat on the
Subcommittee on Employer-Employee Relations, as well as many other
Democrats and Republicans from across the political spectrum in
sponsoring the SAVER Act.
H.R. 1377 represents bipartisan legislation addressing a critical
national
[[Page H3084]]
problem, the lack of individual retirement savings. I am also pleased
to say the SAVER Act has been introduced on the other side of the Hill
by Senators Charles Grassley and John Breaux, the chairman and ranking
member of the Special Committee on Aging.
In addition, the SAVER Act is endorsed by a diverse group of
organizations including the U.S. Chamber of Commerce, the Association
of Private Pension and Welfare Plans, the Financial Executives
Institute, the National Association of Manufacturers, the American
Association of Retired Persons, the American Council of Life Insurance,
the Profit Sharing 401(k) Council of America, the Investment Company
Institute, and the Society for Human Resources Management.
America faces a ticking demographic time bomb that requires increased
retirement savings. The Savings Are Vital to Everyone's Retirement Act,
or the SAVER Act, as we refer to it, is a first step in defusing that
retirement time bomb. The SAVER Act initiates a broad-based educational
program to educate America's employers, workers, and the public in
general about retirement savings and convenes a national summit on
retirement savings.
Through this bill, we facilitate a broad-based public-private
partnership to educate the public on the serious and underreported
national problem. Workers need to know the importance of saving for the
future and of saving as early in life as possible.
As a survey released this year by the Employee Benefit Research
Institute reveals, there is much work to do. Less than a third of
Americans have even tried to calculate how much they need to have saved
by retirement. Furthermore, less than 20 percent are very confident
that they will have enough money to live comfortably through their
retirement. The lack of adequate retirement savings will only become a
more pressing problem as the baby boomers begin to retire in about a
decade. Far too few Americans, particularly the young, have either the
knowledge or the resources necessary to take advantage of the extensive
benefits offered by our retirement savings system. The virtue of saving
appears to have escaped most Americans while the ``just charge it''
mentality is thriving, according to the research group, Public Action.
The same EBRI study, that is the Employee Benefit Research Institute,
found that, while only a quarter of workers expressed confidence in
their ability to map out a retirement savings strategy, an encouraging
50 percent said that they would stick to a plan if they had one. We
have to find ways to get the information and skills out to workers to
harness this latent energy.
The SAVER Act directs the Department of Labor to maintain an ongoing
program of education and outreach to the public through, first, public
service announcements, second, public meetings, third, creation of
educational materials, and, fourth, establishment of a site on the
Internet. The information will include a means for individuals to
calculate their estimated retirement savings needs, a plain English
description of the common types of retirement savings arrangements
currently available to both individuals and employers, and an
explanation for employers in simple terms of how to establish different
retirement savings arrangements for their workers.
The SAVER Act also convenes a national summit on retirement savings
at the White House, cohosted by the executive and the legislative
branches to be held by June 1, 1998, and then again in the years 2001
and 2005. The national summit would advance the public's knowledge and
understanding of retirement savings and facilitate the development of a
broad-based public education program. It would develop specific
recommendations for legislative and executive and private sector
actions to promote retirement savings among American workers.
The national summit would bring together experts in the fields of
employee benefits and retirement savings. Key leaders of Government and
interested parties from the private sector and general public; the
delegates would be selected equally by the majority and minority
leaders of the two Houses of Congress and would represent the diversity
of thought in the field without regard to any political affiliation.
The national summit would receive substantial funding from private
sector contributions.
I hope, therefore, that the SAVER Act can be a very important first
step in a truly bipartisan effort to reverse the long course of neglect
on this vital issue and help American workers better prepare for a
comfortable and secure retirement. I urge my colleagues to vote for
passage of the SAVER Act and to vote to help to refuse the retirement
time bomb to which I made reference.
Again, I thank the gentleman from New Jersey [Mr. Payne] for his
leadership and his patient guidance of this legislation because without
him, we would not be here today.
Mr. Speaker, I reserve the balance of my time.
Mr. PAYNE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think the SAVER Act will provide a big first step
toward greater awareness about retirement security for all Americans. I
want to commend the gentleman from Illinois [Mr. Fawell] for his
efforts to bring attention to this very important issue that affects
millions of Americans. The retirement clock is running out for millions
of Americans and their families. After a lifetime of hard work and
contributing to and building our society, millions of older Americans
have retired and are not prepared for it.
{time} 1100
They cannot afford to pay their bills.
While we have worked closely with the administration to make gains in
strengthening protection for plan participants in the last 4 years, we
still have miles to go in assuring retirement security for the American
worker. Half of all older Americans have incomes of less than $11,300.
This is because their incomes are drawn primarily from Social Security,
which, on an average, pays $8,460 to retired workers. That is less than
today's minimum wage. Very little of their income comes from individual
savings.
A very alarming picture painted by statistics is that many of the
people we need to reach out for are women and minorities. As my
colleagues know, there is a direct correlation between pension adequacy
and the wages that workers receive. This is because many employers base
their pension benefits on workers' wages. This is true with respect to
the defined contributions and defined benefit plans, including 401(k)
plans.
A very disturbing image forms when we begin to think about the
retirement security of low-wage workers, particularly women and
minorities. Many of these workers will never receive a pension. We know
that less than half of all working women are covered by a pension.
Those who are fortunate enough to be covered by a plan can expect to
receive lower benefits in retirement because their wages were lower
while they were working.
A recent study noted an alarming trend in private pension coverage
among African-Americans and Latino-Americans. This study suggests that
many minority workers will become strictly dependent on Social Security
and have a shrinking chance to enjoy a financially comfortable
retirement.
Moreover, the report shows that the percentage of blacks covered by
private pensions of all types plummeted from 45.1 percent in 1979 to
33.8 percent in 1993, while coverage of Latinos fell from 37.7 to 24.6
percent during the same period.
I am hopeful that the SAVER Act will be successful in reaching these
workers. Many of them live in my district, but they just do not live in
my district, they live in all our hometowns. They may be our friends or
members of our families. Millions of people will not have any
significant retirement income beyond Social Security, which makes the
Federal program even more critical, especially at a time when its
fiscal future is under tremendous scrutiny.
With the baby boom generation on the eve of retirement, this
statistical snapshot of the next generation of retirees is fueling the
current debate about Social Security. I believe the provisions in the
SAVER Act will provide more opportunities to better educate and prepare
Americans in their retirement. Today, Mr. Speaker, I hope that this is
the beginning of developing real solutions that affect real people.
Mr. Speaker, I reserve the balance of my time.
[[Page H3085]]
Mr. FAWELL. Mr. Speaker, I yield 2 minutes to the gentleman from
Pennsylvania [Mr. Goodling], the chairman of the Committee on Education
and the Workforce.
Mr. GOODLING. Mr. Speaker, I thank the gentleman for yielding me this
time and I want to congratulate the gentleman from Illinois [Mr.
Fawell], and the gentleman from New Jersey [Mr. Payne], for bringing
this legislation before us today.
We are here to address in a bipartisan fashion the real demographic
time bomb that faces the American work force. Workers are not saving
adequately for their retirement, and this problem will only become more
profound as the baby boom generation continues to age.
It does not take a mathematician to recognize that in the future
retiring Americans will have to rely less on Social Security and more
on pensions and other personal saving. Diffusing the retirement time
bomb requires immediate action. Educating American workers in this is
the critical first step.
The Savings Are Vital to Everyone's Retirement Act of 1997, the SAVER
Act, is that first step. The SAVER Act initiates projects to educate
American workers about retirement savings and convenes a national
summit on retirement savings.
I am pleased to join with my colleagues from across the aisle, both
in this body and in the Senate, to support this important initiative.
Far too few workers, especially the young, understand the importance of
saving for retirement.
And others of us understand how confusing it can be to end at 3 a.m.
and begin immediately thereafter.
Many small businesses are confused as to how to set up some of the
new retirement saving vehicles created by Congress or do they know how
to go about encouraging their workers to take advantage of them.
The SAVER Act creates a statutory mandate for the Department of Labor
to help inform American workers about retirement savings to give them
the tools they need to take advantage of the many existing benefits of
our retirement system.
The SAVER Act also hopes to focus greater public awareness on the
lack of retirement savings by convening a national summit at the White
House. The summit would be a bipartisan undertaking of both the
executive and legislative branches, bringing together employee benefit
experts throughout the country.
Mr. PAYNE. Mr. Speaker, I yield 2 minutes to the gentleman from
Connecticut, [Mr. Gejdenson].
Mr. GEJDENSON. Mr. Speaker, I want to commend the sponsors of the
bill. It is an important step, but we could do a lot more.
There are a number of pieces of legislation that are in the hopper at
the moment that could take action to deal with people's situations in
dealing with pensions. H.R. 1130, the Retirement Security Act, already
has 108 sponsors.
We know what the problems are in pensions. Women particularly,
because they leave for childbearing reasons and others, often sever
their work in a way that precludes them from getting a pension.
We need to make vesting take less time. We have to figure out and put
forth proposals that will get the majority of this Congress, because we
know how to do it, we just need to find a majority. The majority in
this Congress are Republicans, and we need them to step forward to help
us with legislation that will guarantee that women will have an equal
shot at pensions, and poor working people as well will have an equal
shot at pensions; that corporations cannot raid the funds and leave the
pensions underfunded in the final days of people's lives.
When we have the wealthiest country in the world, with 51 million
people without pensions, it is clear we are not doing enough. Now, we
have done some things through the years. We have prevented some
movement of assets. We have done some other things. But there is a lot
more to do here.
Women in particular are disadvantaged by this present system. In the
next generation it will work less well than our generation. Our parents
held one job in a lifetime; most of us will have three or four; the
next generation could have as many as eight. It will be impossible for
people to vest in pension systems.
This Congress needs to do more than just get information out; it
needs to change the laws to make it easier for corporations to set up
401(k)'s and other kinds of retirement benefits. It needs to move
forward to change the vesting period so that people, particularly
women, can vest in their pensions. We have to move forward and make
sure that people can keep their pensions even if they work only several
years at a job.
Those are the things we ought to be doing and can do if we get some
support from the Republican side of the aisle.
Mr. FAWELL. Mr. Speaker, I yield 3 minutes to the gentleman from
Arizona, [Mr. Kolbe].
Mr. KOLBE. Mr. Speaker, I thank the gentleman for yielding me this
time, and I rise in support of H.R. 1377, the Savings Are Vital to
Everyone's Retirement, known as the SAVER Act.
I applaud the work of my colleagues of the Subcommittee on Employer-
Employee Relations, the gentleman from Illinois, Chairman Fawell, and
the gentleman from New Jersey, Mr. Payne, the ranking member.
With this critical piece of legislation we have taken the first step
in providing the American people with the information they need to have
to prepare for their retirement years. There is a critical need to look
at the low level of retirement savings in the United States today. The
story is dramatic.
Between 1951 and 1980, the United States' national savings rates was
fairly stable, ranging from 7 to 10 percent. However, since the 1980's,
the rate of savings in the United States has dropped to a low of 3
percent. This number reflects the decline in personal family savings,
which includes pension accumulations, business savings, and also in the
level of savings of the Federal Government. The simple truth is, as
Americans, we are just not saving enough for our retirement.
Based on the current economic and demographic trends facing Social
Security, it is unlikely that that program can be sustained in its
present form without modifying either the benefits or the
contributions. Growth in the elderly population in the United States,
already very rapid because of increasing life expectancy and declining
fertility rates, will accelerate when the baby boom generation reaches
retirement age in 2010.
Social Security has been a very successful program over the years,
but it provides few Americans with adequate retirement income, and it
is likely to play an even more limited role in the retirement picture
in the future.
According to the Department of Labor, the average worker will need
about 70 percent of his preretirement income to maintain his standard
of living after retirement, but Social Security will not provide that
level of retirement income. Social Security pays the average worker
only about 40 percent of preretirement income and only about 27 percent
for workers that earn over $60,000 or more.
Over 2 years ago I became concerned about this and I became involved,
in an effort to address the long-term viability of the Social Security
program, by forming the house public pension reform caucus. The caucus
has begun to explore reform options to address the many economic and
demographic problems of the Social Security Program. It is the goal of
the caucus to ensure that future generations, including those of our
children and grandchildren, are not strapped with a bankrupt system
prior to their retirement.
We must encourage Americans to supplement their Social Security
income with pension plans and personal savings. These investments will
help individuals plan for a more comfortable retirement. In order to
encourage individuals to increase their savings and take greater
responsibility for their futures, workers must be educated about the
various retirement savings choices and investment strategies regarding
their retirement future, and that is why I stand here in support of
H.R. 1377, the SAVER Act.
This legislation initiates a number of projects to help educate
American workers about retirement savings options. It creates a
national summit on retirement savings in conjunction with the White
House and the private sector. The summit will convene on three
occasions, in 1998, 2001, and 2005.
[[Page H3086]]
The SAVER Act also directs the Department of Labor to maintain an
ongoing program of education and outreach to help workers understand
these options and prepare wisely for their retirement.
Mr. Speaker, I urge my colleagues to support this valuable education
effort and vote ``yes'' for H.R. 1377.
Mr. FAWELL. Mr. Speaker, may I inquire as to how much time remains on
this side?
The SPEAKER pro tempore (Mr. Coble). The gentleman from Illinois [Mr.
Fawell] has 10 minutes remaining and the gentleman from New Jersey [Mr.
Payne] has 14 minutes remaining.
Mr. FAWELL. Mr. Speaker, I yield 2 minutes to the gentleman from
Delaware [Mr. Castle].
Mr. CASTLE. Mr. Speaker, I thank the gentleman for yielding me this
time. I rise today in strong support of H.R. 1377, the Savings Are
Vital to Everyone's Retirement Act.
I also want to thank the gentleman from Illinois, [Mr. Fawell], and
the gentleman from New Jersey, [Mr. Payne], for providing leadership on
such an important issue for the House to consider and for forwarding
this timely piece of bipartisan legislation that I am pleased to be an
original cosponsor of.
Unfortunately, too many retired Americans today have misjudged their
retirement savings needs and today's youth are following in their
footsteps as well. These problems pose a significant risk to the future
well-being of millions of soon to be retirees as well as the countless
baby boomers who will retire after the turn of the century.
Just as the long-term solvency of Social Security remains a vitally
important issue that must be addressed by Congress very soon, so too
must we also address the looming crisis in private retirement savings
by reaching out to all Americans and informing them of this enormous
problem. If we fail to do so, the impending retirement of the baby
boomers will severely strain our already overburdened entitlement
system, necessitating increased reliance on pension and other personal
savings. The SAVER Act would do just that.
Studies have shown that less than a third of all Americans have even
tried to calculate how much they will need to have saved by retirement,
and that less than 20 percent are very confident that they will have
enough money to live comfortably throughout their retirement. By
passing this legislation, we can help advance the public's knowledge
and understanding of retirement savings and its critical importance to
the future well-being of American workers, and provide for a periodic
bipartisan national retirement savings summit, in conjunction with the
White House, to elevate the issue of savings to national prominence,
and initiate the development of a broad-based public education program
to encourage and enhance individual commitment to a personal retirement
savings strategy.
{time} 1115
Highlighting this national problem is one of the best things this
Congress can do. Enact the SAVER Act now. The retirement time bomb is
ticking.
Mr. PAYNE. Mr. Speaker, I yield as much time as he may consume to the
gentleman from North Dakota [Mr. Pomeroy].
Mr. POMEROY. Mr. Speaker, I thank the gentleman from New Jersey [Mr.
Payne] for yielding.
Mr. Speaker, I am very proud to rise as an original cosponsor of H.R.
1377, the SAVER Act, and to join with my colleagues from both sides of
the aisle in urging the House to pass this important legislation.
I want to commend specifically the gentleman from Illinois, Chairman
Fawell, and the gentleman from New Jersey, ranking member Payne, for
their attention to the critical issue of retirement security and for
their dedication to crafting bipartisan solutions that will advance the
goal of economic security in retirement for all Americans.
Mr. Speaker, statistics demonstrate that our Nation faces an
impending crisis when it comes to retirement savings. From World War II
until 1980, personal savings rates as a percent of disposable income in
this country averaged nearly 8 percent. Yet, in recent years, personal
savings rates have fallen dramatically, now averaging barely 4 percent,
half of what it was earlier. People are simply not saving what they
will need to have a financially secure retirement.
Indeed, one-third of those close to retirement age have savings of
less than $10,000. One in six new Social Security recipients has no
retirement savings whatsoever. The problem is particularly acute for
modest-income workers. Among the millions in this country with incomes
of less than $25,000 a year, fully 42 percent report no retirement
savings. And in the baby-boom generation which is rapidly approaching
the retirement period, only one in three baby-boomers is on track in
their savings for a financially secure retirement.
Mr. Speaker, by focusing on education, the SAVER Act takes an
important step in turning this retirement crisis around. A key
ingredient in achieving a secure retirement is knowledge, knowing what
savings opportunities are out there, knowing how compound interest can
work for you, knowing how to plan for retirement throughout one's
career, and knowing some basic investment strategies.
Too many people simply lack this information, and we must step up the
education efforts so that all Americans will have the tools to plan and
save for their own retirement. Retirement education efforts in the
workplace have proven enormously effective in getting employees to
participate in their 401(k) and pension plans and in providing them
with basic information about retirement savings. Yet, more than half of
all private sector workers do not have access to a retirement plan at
work, and so they miss out on these educational efforts.
The SAVER Act addresses this need by involving the Government in a
broad public-private partnership to educate American workers about
retirement savings. Specifically, the act directs the Department of
Labor to maintain an ongoing program of outreach and education about
retirement planning. It convenes a series of national summits on
retirement savings at the White House over the next decade. These
focused and high-profile efforts will help get the message about the
importance of savings to every American so that retirement information
no longer depends on the good fortune of having a pension plan at work.
Today, with our retirement system undergoing profound change,
education is more important than ever before. For the first time, many
Americans are now relying on defined-contribution plans such as
401(k)'s rather than the traditional defined-benefit pension plans for
their retirement security.
While 401(k)'s are quite popular with employers and employees alike
and offer some undeniable advantages, they also involve a substantial
shift of retirement risk from the employer to the worker. Employees
must decide what portion of their income to contribute, how to invest
their contributions, whether to take loans or withdrawals from their
accounts, and how to use their 401(k) savings wisely over the course of
their retirement. All this adds up to more risk on the shoulders of
individual workers, who may or may not be ready to accept this
additional risk.
And the risk for those without retirement plans at the workplace, who
must save for retirement all on their own, are even greater. The
education about retirement planning and savings authorized by the SAVER
Act will help individuals manage their new-found retirement
responsibility.
Mr. Speaker, it is my hope that the SAVER Act represents a first step
in what will be an ongoing series of bipartisan efforts to enhance
retirement secured by expanding pension coverage, increasing pension
participation, and boosting permanent savings rates.
While education is critical, it is not the where-all and end-all at
getting at this problem; it must be paired with efforts to get more
workers covered by retirement plans and the development of a
comprehensive national strategy for achieving retirement security.
Along these lines, I am pleased to have joined with my good friends,
the gentleman from Illinois, Chairman Fawell, and the gentlewoman from
Connecticut, Mrs. Nancy Johnson, in introducing legislation that spurs
pension coverage of small business employees and cuts pension redtape
for small business.
Just this past Friday, we introduced H.R. 1656, the Secure Assets for
Employees Plan Act of 1997, also known as
[[Page H3087]]
SAFE Act. This will allow small businesses to offer simplified defined-
benefit pension plans. SAFE plans will provide all small business
employees with a secure, fully portable retirement benefit without
choking small business with complex rules and regulations they simply
cannot afford.
Unfortunately, only 24 percent of small business employees today have
access to a retirement plan at work. We have got to do better than
that. I look forward to working with Chairman Fawellto advance the SAFE
Act so that more small businesses can offer pension benefits to their
workers.
Mr. Speaker, today I am introducing another piece of legislation
which I believe will help advance our Nation's retirement policy. This
bill, the Retirement Savings Commission Act of 1997, will create a
specific national commission to examine the scope of the retirement
savings crisis and recommended policies to help improve the economic
security of retirement workers. The Retirement Savings Commission will
be the only Federal panel solely charged with exploring pension and
savings issues that will help us develop the comprehensive national
strategy on retirement savings that we have so sorely lacked in the
past.
We have had Social Security commissions, we have had Medicare
commissions, but we never looked in a dedicated way at the variety of
private savings opportunities and assessed whether or not we have a
coherent national strategy for private retirement savings.
In conclusion, Mr. Speaker, let me again congratulate the gentleman
from Illinois [Mr. Fawell] and the gentleman from New Jersey [Mr.
Payne] for their leadership on this issue and for the excellent bill
they have crafted in the SAVER Act. I urge all my House colleagues to
advance the cause of retirement education and support this bill, and I
look forward to working in the weeks ahead to see that this measure is
quickly passed by the Senate and signed by the President.
Mr. FAWELL. Mr. Speaker, I yield 3 minutes to the gentleman from
Michigan [Mr. Knollenberg].
Mr. KNOLLENBERG. Mr. Speaker, I thank the gentleman for yielding me
the time.
Mr. Speaker, I want to thank the gentleman from Illinois [Mr. Fawell]
and the gentleman from New Jersey, the ranking member, [Mr. Payne], for
their leadership in recognizing the importance of preparing for
retirement. It is not too often that we see such bipartisanship on
legislation passed out of the Committee on Education and the Workforce.
This was one of those examples. But it is not a partisan issue, it
affects everyone, whether you are a Democrat, a Republican, an
Independent.
There is a common problem that we have: All of us either live too
long or we die too soon. And speaking about the former, investing for
retirement is not easy. It takes discipline; it takes foresight. Too
often we put off until tomorrow what we should do today. I believe
Congress has an opportunity to play a major role in educating the
public about retirement preparation, and that is why I am in strong
support of the SAVER Act, the so-called Savings Are Vital to Everyone's
Retirement Act.
Mr. Speaker, there are several things we know about the current
status in America. We know that the average retiree can no longer rely
upon Social Security benefits as their sole means of retirement income.
We also know workers are not taking advantage of savings opportunities
available through 401(k) plans, IRA's, and the rest.
Again, education and outreach are both vital. The SAVER Act begins
the process that will highlight on a national level the importance of
educating individuals about retirement savings. First, as has been
pointed out by the chairman and others, it directs the Department of
Labor to maintain an ongoing program of education and outreach. Second,
the SAVER Act convenes a national summit on retirement savings.
Mr. Speaker, I believe it is time that we begin to recognize that
there are Federal barriers to retirement. Call them disincentives if
you will. But investing is complex enough without adding the many
Federal barriers. By identifying those barriers, we in Congress can
begin to develop a system that is investor friendly and not investor
prohibitive, and Congress must be aware of these so that we can move
those disincentives out of the way.
Last, I am glad to see that Congress is taking a proactive role in
educating the public about the benefits of retirement planning. The
fact is, and I believe this has already been pointed out, the more a
person understands about the benefits of retirement planning, the more
likely that person will plan for retirement. And the sooner we begin to
educate, the sooner we can defuse this retirement time bomb.
I again thank the gentleman from Illinois, [Mr. Fawell], and the
gentleman from New Jersey, ranking member Payne, for their work.
Mr. FAWELL. Mr. Speaker, I have no further colleagues here ready to
speak at this time. I yield myself such time as I may consume for just
a couple of short points.
I think the gentleman from Connecticut mentioned a salient point in
regard to substantive legislation which is pending before the Congress,
substantive issues. I think it is important to stress that what we have
in this legislation certainly is basically a broad-based education for
the country in general so that workers and employers and the public in
general can better comprehend what the challenges are before us as we
look to those golden years ahead of us. But also, it brings together in
a very bipartisan fashion people from both sides of the aisle and
brings also the private sector into being here.
For instance, it would bring into action the American Savings
Education Council, which is a partnership of over 200 private and
public sector institutions, including organizations like IBM, American
Express, the Employee Benefit Research Institute, many, many entities,
and all in a nonpartisan atmosphere. So that I think, especially in a
White House summit, that would be part and parcel of this legislation.
We would be able to address ourselves perhaps more objectively and more
dispassionately to some of the substantive issues which are before us
here in Congress which would perhaps otherwise we may not be able to
do.
I would be the first to admit that there are important substantive
issues. And I so very much appreciate my colleague from New Jersey [Mr.
Payne] and the tremendous help that he has extended to me in regard to
this area of deep interest.
Mr. Speaker, that is all that I do have to say. I am not sure if my
colleague on the other side of the aisle, [Mr. Payne] has any further
comments to make.
Mr. PAYNE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would just like to conclude by once again thanking the
gentleman from Illinois [Mr. Fawell] for the cooperative spirit that we
have on this very important bill. It seems like the theme is
bipartisanship, and it shows that progress is being made. Some of us
never felt that that would be a word uttered by us, but we see that we
are moving in a new direction. I hope it is the right direction. But
certainly, we look forward to this legislation moving forward.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I would like to speak in
support of H.R. 1377 to encourage greater investment savings to
strengthen the retirement security of our Nation's working men and
women.
There are over 51 million Americans who do not have retirement
savings. The range of savings for our citizens in the 1980's was 7 to
10 percent. Today the savings rate on average is a little over 4
percent.
Social Security with each passing decade is becoming more and more a
supplement to retirement and not just a sole means of income for
retirement for those who have sufficient incomes to allow for savings.
In 1980, the Employment Retirement Income Security Act allowed 57.9
million people to participate in private pension programs sponsored by
employers and employees, and by 1992 the number had grown to 81.9
million participants.
The total amount of contributions into private pension programs has
grown from $66.2 billion in 1980 to $128.8 billion in 1992.
Although these numbers are encouraging they are still far from what
they should be with a total national work force of 124 million
according to the Statistical Abstract of the United States. The reality
for most working Americans is closer to little or no savings. For most,
retirement income does not enter into their
[[Page H3088]]
minds until the time just before retirement. This is far too late to
make needed plans to enhance retirement income and further secure their
financial security.
I am a strong advocate of any change in our Nation's savings habits
which would further strengthen the retirements of women and minorities.
These two groups are disproportionately affected by low savings rates
because of a much lower earnings rate on average than white males.
If we are to overcome the disparities in the retirement habits of our
Nation, we must deal with income levels and the cost of living in
different regions around the Nation.
The average annual pay in the city of Houston in 1994 was $30,000. A
$30,000 a year income in Houston for a family of four would allow for
little savings. Cost of living from region to region or even within
States are not equal and this should be taken into account as we work
to encourage greater savings and retirement planning.
I ask my colleagues to support this effort to encourage greater
savings among our Nation's workers. I would also ask that as other
opportunities arise for use to raise the earnings potential or savings
rates of minorities that we act.
Mr. PAUL. Mr. Speaker, I rise in opposition to H.R. 1377, the Savings
are Vital to Everyone's Retirement Act [SAVER]. Although I applaud the
good intentions of the sponsors of this bill, I must oppose H.R. 1377
for two reasons.
First, the proper level of savings should be determined by the free
choices of individuals acting in the market. Saving should be a
voluntary decision, undertaken because individuals value the greater
future rate of return from saving over the value of present consumption
not because the Government instructed them that they needed to save. We
in Washington cannot judge what the correct level of savings is for any
individual much less the entire country. I ask my colleagues, if this
program increases the rate of savings beyond the level Congress
considers necessary, will we then enact a ``Spending is Vital'' bill to
encourage greater consumption?
Second, and perhaps more importantly, H.R. 1377 ignores the primary
reason Americans forgo savings: Government policies that discourage the
American people from saving. Even creating a Department of Labor-run
education program and spending a million dollars on a series of White
House conferences will further reduce the rate of savings as payment
for these new initiatives will come either from taxes paid directly by
the American people or from inflating the currency to monetize the
national debt, thus eroding American's purchasing power. Either way,
working Americans will be left with less funds available for saving.
I respectfully suggest that it is not the people who need a savings
education. They especially do not need it from a government which, the
recent claims of the leadership and the administration notwithstanding,
cannot balance its own books. Rather, Congress needs to be educated on
how the interventionist policies of this Government are eroding the
people's standard of living and making it nearly impossible for many
Americans to save an adequate amount for their retirement, or any other
vital needs, such as their children's education.
Today, the average American pays more than 40 percent of this income
in Federal, State, and local taxes. Thus, before the average American
even has a chance to consider saving, a substantial portion of his
paycheck is stripped from him in order to fund the welfare-warfare
state. Federal tax policy further discourages savings through the
exorbitant Federal taxes on capital gains, estates taxes, and the
double taxation on corporate dividends.
Government policy further reduces incentives Americans have available
for savings through the inflationary policies of the Federal Reserve,
which erode the average consumer's purchasing power. The average
consumer must spend an ever-increasing share of his or her income
purchasing necessities, meaning they have less income available to
devote to savings. Today, prices are more than 15 times higher, in
normal terms, than when the Federal Reserve was established.
This diminishing purchasing power also creates a disincentive to
save. When one's earnings will purchase more today than they will in
the future, the rational action may very well be to spend the funds in
the present. After all, who would trade a dollar's worth of goods today
for 50 cents worth of goods in 20 years?
Clearly, a major reason why the United States has a low rate of
saving is the crushing tax burden imposed on the American people by the
Government and the erosion of their purchasing power. Yet, rather than
address how Government policy is destroying American's ability to save,
Congress is planning to spend more taxpayer money to educate the
American people on the importance of saving.
Mr. Speaker, the American people neither need nor want Congress to
spend another penny of their hard-earned tax dollars on educating them
on the importance of savings, and they certainly do not need the
Federal Government to spend a million dollars to create a conference on
savings. Rather, Congress must cease all unconstitutional spending, cut
taxes, and prohibit the Federal Reserve from debasing the currency.
Therefore, I urge my colleagues to vote against H.R. 1377, and
instead join me in working to eliminate the true obstacle to savings:
the unconstitutional leviathan state that is jeopardizing the economic
future of America and destroying the American people's incentive to
save.
Mr. PAYNE. Mr. Speaker, I yield back the balance of my time.
{time} 1130
The SPEAKER pro tempore [Mr. Coble]. The question is on the motion
offered by the gentleman from Illinois [Mr. Fawell] that the House
suspend the rules and pass the bill, H.R. 1377, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________