Conservative congressmen in each chamber Tuesday introduced a package of legislation designed to boost retirement savings.[@@]
The package includes bill that would create lifetime savings accounts, something the insurance industry strongly opposes.
The bill was introduced in the Senate by Sen. Craig Thomas, R-Wyo., and in the House by Rep. Sam Johnson, R-Tex.
Besides creating LSAs, the legislation would create retirement savings accounts, which would simplify the current individual retirement account program, and employer retirement savings accounts, which would streamline current workplace savings programs, such as 401(k)s and 403(b)s.
In introducing the bills, Sen. 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.”
Thomas also said expected strains on the Social Security system made it “even more important that we provide a better, more responsive, simpler system for Americans to accumulate personal savings for retirement.”
Frank Keating, president and chief executive officer of the American Council of Life Insurers, said that, creation of RSAs and ERSAs “represent positive developments” in view of Americans low savings rate of 2% of income.
Keating said that with “some minor changes” to the proposed legislation, ACLI could strongly support both RSAs and ERSAs.
However,. Keating reiterated the ACLI’s opposition to LSAs because they “would divert before-retirement savings into accounts that could be easily tapped.”