[Congressional Record Volume 146, Number 127 (Thursday, October 12, 2000)]
[Senate]
[Pages S10402-S10403]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    SECURITY AND PENSION REFORM ACT

  Mr. L. CHAFEE. Mr. President, I rise today to express my support for 
H.R. 1102, the Comprehensive Retirement Security and Pension Reform 
Act.
  In my short time in the Senate, I have supported pension and savings 
reform and expansion, including cosponsoring S. 741, the Pension 
Coverage and Portability Act, and voting in favor of a pension and 
savings amendment offered by Finance Committee Chairman Roth during 
consideration of H.R. 8, the estate tax phase out bill. I strongly 
believe that enacting H.R. 1102 will benefit millions of Americans, 
help boost America's savings rate, and bolster long-term economic 
growth. Indeed, economists agree that the increased personal savings 
and investment that would result from expanding pensions hold the key 
to long-term economic growth, and would shore up the country's savings 
tendencies.
  Currently, only half of all workers have a pension plan. That means 
about 75 million Americans don't have access to one of the key 
components to a comfortable retirement. Pension laws have become so 
convoluted and the annual contribution limit so diminished that many 
small businesses simply do not bother setting them up.
  In fact, the contribution limits to Individual Retirement Accounts 
(IRAs) have not changed since 1981. At that time, when the $2,000 limit 
was set, according to the U.S. Census Bureau the U.S. means the U.S. 
mean household income was under $23,000. In 1998, mean household income 
was almost $52,000, an increase of more than 130 percent. Still, the 
maximum IRA contribution hasn't budged from $2,000.
  Setting aside $5,000, rather than $2,000, will provide the retiree 
with significant additional savings. For workers who don't have access 
to an employer-sponsored retirement plan, the IRA is their primary 
savings vehicle. Increasing the contribution to $5,000 helps put these 
people on a more equal footing with their fellow citizens covered by 
employer-sponsored plans. Also, it is estimated that more than 61 
percent of IRA participants with incomes under $50,000 contribute the 
$2,000 maximum; and 69 percent of all IRA participants contribute the 
maximum. Workers are ready to invest more--if we in Congress will open 
the door for them.
  H.R. 1102 includes an income tax credit to help those who might not 
be able to fund their retirement accounts without additional help, or 
who need more incentive to save. Under this legislation, joint filers 
of tax returns earning under $50,000, heads of households earning under 
$37,500, and all other taxpayers earning less than $25,000 will receive 
non-refundable tax credits for each of five years on a sliding scale 
from five to 50 percent for contributions to a broad range of existing 
retirement savings choices. In effect, the federal government will be 
matching these savers contributions dollar for dollar--through the tax 
credit--up to the maximum allowable based on their income and filing 
status.
  Another provision will help workers approaching retirement age to 
jump start, or catch up with, their retirement savings. Many of our 
younger workers are limited in what they can invest toward retirement 
due to the other priorities such as saving for a house, starting a 
family, or setting aside funds for their children's education. With 
retirement beginning to loom as they turn 50, the current limits on 
contributions both to their IRAs and to their employer-sponsored 
retirement plans make catching up extremely difficult. H.R. 1102 allows 
taxpayers 50 and older to contribute $7,500 annually to an IRA, or 
$5,000 to their employees' retirement plan when fully phased in.
  Today, it is commonplace for workers to switch jobs frequently. But, 
under current regulations, these workers often cannot carry the 
retirement benefits they have accumulated with one employer to a new 
job. Provisions in H.R. 1102 remove the final obstacles to full 
retirement portability, meaning that a worker easily can take his or 
her accumulated benefits to a new job. This component of the 
legislation is particularly important to state and local government 
employees who currently cannot roll over their qualified retirement 
savings to a new employer when they move to private sector jobs.
  In Rhode Island, small businesses are the heart of the economy. 
Indeed, 98 percent of Rhode Island businesses are small. And, they are 
important forces in developing two emerging segments of the state's 
economy: service and technology. H.R. 1102 also will remove 
disincentives which currently prevent many small business owners from 
offering retirement plans to their employees. In addition, it will make 
it easier

[[Page S10403]]

for long-serving union members to collect the full pension benefits 
they have earned.
  Some provisions in the bill have stirred debate. One relates to cash 
balance pension plans. I recognize and appreciate the hard work that 
the Senate Finance Committee has done with respect to this issue, and 
understand that negotiations are still under way. I hope that the final 
product of these negotiations will help workers that are negatively 
affected by cash balance pension plan conversions.
  The House approved H.R. 1102 by a vote of 401-25 on July 19th. I hope 
that we in the Senate act soon to approve this bill and send it to the 
President so that millions of hard working Americans will accrue its 
benefits.

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