Dear Mr. President:
Recently, there have been several press reports on possible Administration actions to improve retirement security for Americans. Let me say there are several points that I have found very encouraging, and urge that you include in your State of the Union address and budget.
First, I, too, believe it is very important that we strengthen all forms of retirement security -- Social Security, employer-sponsored pensions, and personal savings. In particular, I have had a longstanding interest in expanding opportunity and flexibility for retirement savings through individual retirement accounts (IRAs), including the Roth IRA, for women who work in the home, and for long-term health care expenses.
Second, personal retirement accounts, whether part of Social Security or not, could make an important contribution to retirement security for Americans. Last July, I introduced S. 2369, the "Personal Retirement Accounts Act of 1998," that would create a 5-year program of personal retirement accounts for working Americans funded by a portion of the budget surplus. Establishing a personal retirement accounts program will be a big job. My legislation would jump start these accounts -- get them up and running, proven and tested -- while Congress makes decisions on long-term Social Security reform.
Enclosed is a summary of S. 2369 and a copy of the bill. Please note that this program is modeled after the highly successful Federal Thrift Savings Plan (Federal TSP). In 1983, when I was then-Chairman of the Committee on Governmental Affairs, the retirement program for Federal employees needed to be revamped. One of the new elements we added was the Federal Thrift Savings Plan (TSP) -- a defined contribution employer benefit plan -- that has been a great success in providing a secure, generous retirement for Federal employees and members of Congress and staff.
The Honorable William Jefferson Clinton
Jan. 11, 1999
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In my view, personal retirement accounts have many attractive features. With even conservative investment, such accounts have the potential to provide Americans with a substantial retirement nest egg, and perhaps provide an estate people can leave to their children and grandchildren.
Creating these accounts would also give the majority of Americans who do not own any investment assets a new stake in America's economic growth -- because that growth will be returned directly to their benefit. More Americans will be the owners of capital -- not just workers.
Creating these accounts would demonstrate to all Americans the power of saving -- even small amounts -- and how savings may grow over time. As you will know, Americans today save less than people in almost every other country.
Creating these accounts will also help Americans to better prepare for retirement generally. According to one estimate, 60 percent of Americans are not actively participating in a retirement program other than Social Security. A recent survey found that only 27 percent of working Americans have any idea of what they will need to save in order to retire when and how they want. Hopefully, personal retirement accounts will prompt Americans -- particularly Baby Boomers -- to think more about retirement planning.
Third, although Social Security is and will surely remain the foundation of retirement income, we must look at ways to improve personal savings and employer-provided retirement plans. With personal savings, the place to start is by increasing the opportunities for individuals to save on their own through IRAs and employer-sponsored 401(k) plans and 403(b) plans.
And what might be done to encourage employers, especially small businesses, to sponsor retirement plans? Simplification of the complex tax rules relating to the administration of these plans, and the loosening of restrictions on benefits for those who sponsor these plans, would be very helpful. We must also give individuals increased ability to transfer retirement funds tax-free to other qualified retirement vehicles, in order to preserve these assets for retirement.
The Honorable William Jefferson Clinton
Jan. 11, 1999
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In the coming year, I look forward to working with you and members of your Administration on legislation to preserve and protect Social Security, and to enhance all forms of retirement security for Americans.
Sincerely,
William V. Roth, Jr.
Chairman
Source: Ranking Member’s News
