[Public Papers of the Presidents of the United States: William J. Clinton (1996, Book I)]
[May 23, 1996]
[Pages 815-817]
[From the U.S. Government Publishing Office www.gpo.gov]



Message to the Congress Transmitting Proposed Retirement Savings 
Legislation
May 23, 1996

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-advan-


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taged 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 distributions 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 multi-employer guarantee; and improving benefits for

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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.