Conservative congressmen in each chamber have introduced a package of legislation designed to boost retirement savings that includes creation of Lifetime Savings Accounts, something the insurance industry strongly opposes.
The bills were introduced in the Senate by Sen. Craig Thomas, R-Wyo., and in the House by Rep. Sam Johnson, R-Texas.
Besides creating LSAs, the bills would create Retirement Savings Accounts, which would simplify the current Individual Retirement Account program, and Employer Retirement Savings Accounts, which would streamline workplace savings programs, such as 401(k)s and 403(b)s.
In introducing the bills, Thomas said, “Our tax code is entirely too complex and contributes to lack of participation in the tax-preferred vehicles that already exist. These bills, by allowing individuals to accumulate tax-free interest and by streamlining current savings vehicles, represent an important step toward fundamental tax reform.”
Moreover, he said, “as the Social Security system strains under increasing pressure, it is even more important that we provide a better, more responsive, simpler system for Americans to accumulate personal savings for retirement.”
In a statement reacting to introduction of the legislation, Frank Keating, president and CEO of the American Council of Life Insurers, said, “As a nation with a personal savings rate of only 2%, we believe incentives are needed to boost Americans long-term retirement savings, adding that, creation of RSAs and ERSAs “represents positive developments.”
Keating said that “with some minor changes to the ERSA proposal,” ACLI could strongly support both RSAs and ERSAs.
However, Keating said, in repeating comments made several times over the years as conservatives pressed for LSAs, these “represent the one proposal that raises significant concerns and ACLI cannot support because it would not boost long-term savings.
“It would divert before-retirement savings into accounts that could be easily tapped,” he said.
“Still, the congressmans and senators contribution to the discussion of ways to increase savings is more than welcome. ACLI looks forward to working with them to provide retirement security to all Americans,” Keating said.
Sen. Craig Thomas, R-Wyo., said, “These bills, by allowing individuals to accumulate tax-free interest and by streamlining current savings vehicles, represent an important step toward fundamental tax reform.”
Reproduced from National Underwriter Edition, March 10, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.