[Congressional Record (Bound Edition), Volume 147 (2001), Part 16]
[Extensions of Remarks]
[Page 22942]
[From the U.S. Government Publishing Office, www.gpo.gov]



          UPON INTRODUCTION OF THE LIFETIME ANNUITY PAYOUT ACT

                                 ______
                                 

                           HON. PHIL ENGLISH

                            of pennsylvania

                    in the house of representatives

                       Friday, November 16, 2001

  Mr. ENGLISH. Mr. Speaker, today Representative Karen Thurman and I 
will introduce legislation that takes a key step toward addressing an 
issue of fundamental importance to our nation's retirees.
  Achieving a stable retirement income is a challenge being faced by a 
growing number of Americans. Today's retirement savings will become 
retirement spending that will have to last 20, 25, even 30 years or 
more. Yet America's personal savings rate has declined over the last 
decade from 5 percent to less than I percent. In the meantime, Social 
Security, the traditional safety net for retirees, will be under 
significant strain in the decades to come as America's retired 
population doubles. These challenges underscore the importance of 
Americans personally managing their retirement savings.
  The legislation we are introducing, The Lifetime Annuity Payout (LAP) 
act, encourages people to use an annuity to provide retirement income. 
An annuity is a retirement tool that offers a steady stream of income 
for life--much like Social Security. The proposal calls for annuity 
payouts to be taxed at capital gains rates instead of ordinary income 
rates if the owner of an individual annuity elects lifetime payments 
from his or her contract.
  The challenges for retirees are quite real. Actuarial predictions 
estimate one-fifth of today's 35-year-olds who reach retirement age can 
expect to live into their 90s. Yet current financial planning models 
and tax laws often encourage retirees to spend down their assets by the 
time they reach their 80s. Americans need to receive a substantial 
portion of their retirement income in a guaranteed stream of income 
they can never outlive.
  Traditional pension plans, where the employers assumed all the 
investment risks and guaranteed workers lifetime income in retirement, 
are declining. Defined contribution plans are on the rise, but these 
plans do not always guarantee retirement income for life. Annuities 
allow retirees to convert all or a portion of their savings into a 
steady stream of lifetime retirement income.
  That is why The Lifetime Annuity Payout Act is sound public policy. 
It provides an incentive for people to use an annuity to ensure their 
hard-earned savings last throughout retirement, no matter how long they 
live.
  This proposal is an important step in bringing our nation's 
retirement system in line with 21st century challenges. Like any solid 
retirement plan, our reform efforts must be comprehensive. They should 
account for accumulated funds in pensions, IRAs, 401(k)s, and other 
qualified plans. They need to help retirees manage their savings to 
last a lifetime.
  Mr. Speaker, this Congress has already taken great strides to reform 
America's private pension system. The bill we introduce today 
complements previous efforts to encourage accumulation in qualified 
plans. The Lifetime Annuity Payout Act will help Americans manage those 
accumulated funds to provide for a stable standard of living in 
retirement.

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