let me call this meeting to order and i hope that our guests would take their seats i want to welcome everyone to this hearing on the role of individual retirement accounts or ira's by the select revenue measures subcommittee by way of introduction i think that my bipartisan credentials on this issue of that pretty sound i heard as a young member of this committee many years ago i think let's put it this way chris my name recognition with chairman wresting koski in my push to expand ira limits and at that time his argument was fairly simple and it's still something we need to be mindful of making sure that the basis of the ira is not just to allow wealthy people to save more and at the same time i work with the former chairman of this committee before he was the chairman to expand i limits and we had a great deal of success back in the mid ninety's you have all probably heard of the three legged stool men to prop up retirees in their golden years that is social security pensions and savings today we will be discussing personal savings and while the nationals why the national savings rate continues to decline as you can see from the slide i hope that will be displayed as i speak our personal savings rate has declined over the decades to a paltry one half of one percent since two thousand and five iras have existed for decades now with the hopes that those without employer plans would save on their own and yet we are still faced with underutilization by the intended targets g a o recently projected that thirty seven percent of all workers will retire with zero plan savings and that of young and low income workers sixty three percent will have no plan savings at retirement clearly we must do more to foster personal savings we must begin to think more creatively and use innovation to capture this group of workers who are not saving one of the vehicles is the auto ira which mr english and i have sponsored here in the house and i really think that this could get done next year with seventy five million workers with no access to a workplace retirement plan and only ten percent of these workers saving on their own clearly the current incentives are not working today's hearing will explore these issues and other ideas to reach out to those who should be saving more as george foreman observed and i quote the question isn't at what age i want to retire it's at what income if only we all had this same observation in our twenty's we wouldn't be fighting so hard to save in our fift with that i recognize my friend mr english for his opening statement thank you mr chairman mr chairman i find myself entirely in agreement with the thrust of your remarks and i want to express my gratitude to you for in sponsoring in the house of representatives the issue of improving our retirement savings system is one that certainly lends itself to bipartisanship it is particularly important to me as cochairman of the congressional savings and ownership caucus clearly we need to do more to encourage all americans to save for retirement and we need to work together to find creative solutions to the u s retirement savings system has been described by many as well as yourself mr chairman as that three legged stool was social security employer based retirement plans and personal savings constituting each of those legs the first leg social security cover workers on a near universal basis but the benefits of the program are limited by statute in the system itself faces significant financial challenges over for your future decades due to changes in demographics the second leg employer based retirement savings plans includes both traditional defined benefit pension plans and more recently established defined contribution arrangements such as the now familiar for a one k plan such employer based plans are estimated to cover only about one half of the workforce although three quarters of the workers whose employers currently offer such a plan do participate in it and estimated seventy five million american workers are employed by businesses temperately small businesses which do not offer such a plan the third leg of the retirement stool is personal savings unfortunately the personal savings rate which averaged about nine percent during the sixty's seventy's and eighty's now as been on steady decline for a generation alarmingly the personal savings rate has been less than one percent in every quarter since two thousand and five this constitutes a quiet crisis that is a core challenge to the competitiveness of our economy congress has enacted numerous tax incentives over the past several decades designed to encourage retirement savings both through employer based plans and through individually own savings plans and this hearing will focus on one such set of retirement savings vehicles and particular iras were first created in their traditional form in one nine hundred seventy four and they've been expanded repeatedly since and as we're going to hear from our witnesses today these savings vehicles play a significant role in the s retirement system more assets are held by held in iras than any other type of retirement savings arrangement including four zero one k plans due to ongoing concerns regarding the retirement savings patterns of americans especially among low and middle income individuals i've been excited to pursue proposals to expand our iras particularly mr chairman your proposal  to create the automatic ira building on the success of similar initiatives i believe this tool has the potential to fundamentally expand savings opportunities for millions of americans and generate billions of dollars in new savings mr chairman i look or forward to hearing from the distinguished panels that you've arranged for this morning and i'm hopeful that their testimony will help us develop creative solutions and i hope also a groundswell of support in the house for the initiative you've outlined thank you thank you mr english consistent with that principle of the distinguished we have two members of the committee mr kind and mr hall so often together they will advocate for legislation modifying simple plants on our second panel we will hear from government witnesses starting with misess barbara bomberger the director of education workforce and income security issues at the g a mr tom reader the benefits tax counsel in the office of tax policy at the treasury department and we will hear from mr bradford camp all the assistant secretary in the employee benefits security administration at the labor department our third panel a professor at georgetown and a principle that the retirement security project but still finds time to share his thoughts this morning with the congress next we will hear from mr dallas salisbury president and c e o of the employee benefit research institute we also welcome ross ice and vice president for the economic policy institute and finally we will welcome randy hardock of davis and hartman who will be testifying in behalf of the savings coalition of america who might point out i work with back in the early and mid ninety's without objection any other members wishing to insert statements as part of the record may do so all written statements written by the witnesses will be inserted into the record as well i recognize mr kind thank you mr chairman and ranking member english members of the committee is kind of fun to be on the side of the table is in the can for a change but we really appreciate the opportunity to testified today and i think both you and mr english te the issue very very well and i couldn't be more supportive of the proposal of automatic ira legislation that you've introduced i think one of the best things we did with pension reform legislation a few years back was called for automatic enrollment of four one k s because we all know one of the greatest obstacles do increase individual savings in this country is quite frankly inertia is getting people to do something so automatic enrollment i think would be a tremendously helpful and beneficial step to try to increase the individual savings rate but you've both piloted what the problem is we have an effective zero percent individual savings rate right now in the country you couple that with the bad savings on the public ledger side of things too and all three legs of the retirement savings stool is in great jeopardy today we know we have some long term fiscal challenges dealing with the solvency of social security we've had a dramatic decline in defined pension plans throughout the country from roughly sixty five percent hundred seventy nine to a little bit under ten percent today and we're not doing enough i feel to encourage and incentivize greater individual savings opportunities for ploys employees throughout the country but as mr holsworth and i were looking into this there was a real glaring hole out there that we felt needed to be addressed and that was the savings options or opportunities for employees in small businesses because today isn't a lot of participation along these lines even though back in one thousand nine hundred six as this committee is well aware with the creation of simple for a long kaizen simple iras it was meant to get at this pool of workers to make it easier for them to set up their own savings and now here we are twelve years later there really hasn't been any reform or changes or modifications based on what we've learned and we've learned a lot during that time the fact that there aren't that many plans still being offered because in most instances for small employers it's either too complicated to cops lee or there's it's a somewhat risky endeavor and that was the impetus behind the legislation in that we've introduced h r fifty one sixty of the small business add value for employees act the save act and i think mr english for being one of the original co sponsors on the legislation as well and with your insistence mr chairman was helpful is the recent g a o report that came out this month the recommendations that they're making is very consistent with many of the proposals that we're that we're offering in this legislation to try to increase and incentivize the opportunities for employers to offer ira savings opportunities for more employees because the numbers are very stark  today we know that only fourteen percent fourteen percent of small businesses offer a four one k plan sixty three percent of small businesses throughout the country offer no savings option at all to their employees that's roughly seventy one million workers in small businesses that don't have a plan that they can participate even if they wanted to that's a lot of people who are being left behind in perhaps the most vulnerable population that we have when it comes to retirement security and needs let me just quickly and briefly summarize what the legislation would try to address both the complexity of the cost and some of the risky endeavors a small employers are facing or trying to increase flexibility for employers under the legislation and it would remove the requirement that simple ira plans operate only on a calendar year basis authorizing small business owners to make major changes to their simple plans ensures that business owners the not wait until the beginning of the year to move to a new retirement plan the save act also would change outdated simple ira rules that unnecessarily restrict an employer's ability to contribute to the employee's savings under current law the employer's not permitted to match more than three percent of the employee's salary and make more than two percent non elective contribution to workers accounts for the save act would remove this restriction allow employers to make additional contributions all participants accounts are also trying to increase incentives for employers to offer more simple iras to their employees and the ad could make a number of important reforms with this goal first that would create a new automatic ira option under the internal revenue code although we still leave it discretionary with the employer whether they want to have an automatic enrollment  i think that's something we can have a further conversation about as far as modifying the legislation that we're offering automatic iras would provide a relatively simple and cost effective way to increase retirement security for those seventy one million employees who sometimes aren't taking steps in the road to increase their own savings also the save act would increase a small employer pension plan start up cost credit for small business owners to fifty percent of the sparts start up costs and this again  consistent with some of the findings of the g a o report i just came out with this month and it would also allow a one time twenty five dollars tax credit for every new employee who's enrolled in the savings program and finally it increases incentives for employees to participate in simple ira plans and would update the annual contribution limits employers covered under employees covered under the for a long for a one k plans today are permitted to save up to fifteen thousand five hundred annually but small business  employees can only save ten thousand five hundred annually under a simple ira we're just bringing that to parity and we see no reason why there's a distinction or discrimination with simple iras given the contribution limits of for a long case so we think you know this legislation we can move forward in a bipartisan fashion i think addresses the the interest in the concerns that you mr chairman and mr english and others on the committee are trying to get at through this hearing and through important legislation that you've addressed we're trying to reach those seventy one million or so employees in small businesses that don't have an opportunity to save while addressing some of the current concerns and feedback that we're getting from small business employers throughout the country cost complexity some of the risk involved regarding at an early time on this committee i'm certain that that's why he he he has such a pleasant expression i also assure you he still remembers you and i mr chairman have had the opportunity to respectfully  discuss perhaps debate in a number of arenas i remember in the rayburn hearing room and social security we talked about the challenges of solvency and the timing and the imminence of those and and i think you've adequately touched on that as as my friend ron the first baby boomer began to retire on january one of this year and if tradition holds one out of every two senior citizens age of sixty two will opt out for early retirement and so whether that number continues to hold or whether they continue to stay strong in the workforce we don't know but obviously time is of the essence as we look at what can we do for this arena retirement and i i think we should also highlight the fact that this committee has distinguished itself over the course of years working in a bipartisan way to address the pension challenges our former colleague mr portman from ohio our former colleague mr carden now in the other body from the state of maryland did some tremendous work in the whole area is a pain and especially as we began to move the discussion away from defined benefits to define contributions so this committee has a great record i think as far as helping prepare for those golden years i'm not sure that kind whole softly roll off the tongue or be a significant portman carden but nonetheless we're here because we think that we are on the right right track and fact as we had these discussions before the g a o report really came out and and we saw that we were at least on the same page in many of these important aspects as far as providing some updates to the simple plans and i think ron has touched on them fairly significantly if i were to summarize what we hope to accomplish by the save act it would simply be flexibility and portability and as ron talked about the flexibility for small businesses you know some of these are back i'm not quite sure even why that  there were these obstacles in place but we have seen now as ron pointed out but it is i would also cite that in a two thousand and five publication of the investment company institute's perspective the number of simple ira plans had been growing at an average of about twenty five percent per year between one thousand nine hundred eighty two thousand and three but we want to expand those opportunities and providing flexibility for small businesses is a way to do that on the other end of it though for the employee  portability you know again we are such a mobile workforce that having the opportunity then to have universal portability by allowing rollover assets and other qualified plans i think is another feature of our bill that should enjoy some pretty strong support you know our nation with the chairman was built on the backs of able and willing entrepreneurs who with a little fa and a lot of ingenuity started businesses in the hopes of achieving the american dream the small businesses have been enormously successful of course drive our national economy to the greatest degree they have to surpass numerous hurdles to making those businesses survive and grow and of course attracting the most talented bright workers too to participate in that american dream attracting those employees is crucial to their growth and offering the employer sponsored retirement plan such as a simple ira or four a one k or certainly helps that goal and so i would like to thank my friend from the state of wisconsin for his willingness to yet again reach across the aisle and for us to have the opportunity to work together and thank you mr chairman for giving us this opportunity for hearing to highlight some of the things that we think would move us forward as far as  chairman i don't have a question i just want to thank both of you for being here today this is an extremely important issue for all of our constituents in all of our districts and we need to do everything we can to make sure that people are prepared and have the retirement the could we have the next panel please mr chairman members of the subcommittee i'm really pleased to be here today to speak about individual retirement accounts and their role in retirement saving congress created iras in one thousand nine hundred seventy four to help build  preserve retirement saving and over time have developed a variety of these accounts including the traditional iras roth iras and several types of workplace based iras such as simple iras step and payroll deduction ir my testimony today focuses on the role of iras and retirement saving the prevalence of workplace based iras in the barriers that limit access to them and finally the waves that government agencies can help my statement is based upon a r should recently for ways and means on this topic first let me speak on the role of virus although intended to generate as well as preserve retirement savings iras today again most of their assets from transfers we call them roll overs from other retirement accounts such as four one k s between one thousand nine hundred eighty eight and two thousand and four over eighty percent of funds flowing into iras came from other accounts this means iras are infective an important means to preserve retirement assets already saved but play a significantly smaller role in building such savings also ira ownership is limited and is skewed towards households with relatively high earnings levels and educational attainment in other words people who have resources are more likely to have a virus than people who do not those who own iras are more likely to have traditional iras set up by individuals on attacked for basis a smaller but growing number of people hold roth iras in which individuals make after tax contributions to take tax free distributions in the future i'd like to turn now to ira's offer to the workplace to address the issue of low retirement plan sponsorship among small employers congress created step and simple employer sponsored iras labor also a sheet of regulation under which an employer could without being considered a plan sponsor under a risk to maintain a payroll deduction program for workers to contribute to iras individuals are thought to be more likely to save for retirement if payroll deduction and other workplace arrangements are available to make saving easy and routine and the limited regulation of these types of virus is designed to encourage employers to offer them but such arrangements for workers appear to be relatively rare although there are little data available according to labor data only about eight percent of workers in small firms have simple iras only about two percent of them have step iras and data are not available at all for payroll deduction iris in interviews we conducted experts pointed to a range of possible barriers including administrative cost specially for small employers who don't have automated automated payroll system a lack of incentive for employers a perceived lack of flexibility and promoting such plans to employees and simply a lack of awareness of these arrangements and this leads me to my third point how government can help clearly federal agencies have much to do to better publicize these options and support the very small employers who need help to administer payroll deduction arrangements they also need better aggregate data on use of such options and what employers  we've made recommendations to labor and i r s to develop more regular and informative data collection that we believe will lead to better targeting these programs to assure higher employer participation and if the government is successful in encouraging a higher employer take of these options which we believe for salt in higher retirement saving it will be important to develop an oversight strategy that balances the inducement of limited regulation against the need to ensure the contributions are going to the iras set up to receive them this is why we've recommended that congress consider assigning authority of her peril deduction iras were currently there is no clear regulatory jurisdiction this will be especially important if other policy changes are adopted such as the auto proposals that are under consideration and conclusion the ira's an excellent and well use means to preserve retirement assets that have already been saved but it is underutilized as a means to build saving it's particularly disappointing that payroll deduction iras which requires a little of employers are so seldom offered government can and should do more to encourage and oversee the savings arrangements to help all americans better prepare for their retirement future and that concludes my statement i hope i considered it my written statement for the record and i await your question you certainly can escape thank you mr chairman chairman neal ranking member english and the other members of the subcommittee i very much appreciate the opportunity to come here today to discuss the department's efforts to promote and also protect the interests of workers in employer sponsored iris bradford campbell i'm the assistant secretary of labor for the employee benefits security administration our mission is to protect the retirement security of the security of retirement health and other employer provided benefits in the private sector we're committed to promoting policies that encourage retirement savings and protect employer sponsored benefits employers today can choose from an array of retirement plan designs that are created were created by congress to make it easier for americans to stave iras are an important vehicle among these options that may encourage small employers in particular to provide retirement programs for their workers employer sponsored iras such as steps and simples our employee benefit plans under risk that were designed specifically to address these concerns of small businesses the department has over employer sponsored iras and is responsible for their oversight and for their compliance with risk as fiduciary standards in our oversight role we employ a comprehensive integrated approach which encompasses programs for compliance assistance interpretive guidance britta transaction exemptions education and outreach to small businesses as well as workers enforcement and participant assistance directly to workers who have questions about their plans by contrast payroll deduction iras or not employer sponsored plan subject to a recent but are individually owned iras that merely make use of an employer's payroll process to withholding forward contributions to the individuals ira our guidance that we issued helps employers ensure that their payroll deduction arrangements are not a recent plans and therefore do not carry with them the associated reporting burdens and so forth as congress intended but as with other individual iras the i r s oversees and enforces the law with respect to payroll deduction and iras the department believes that this current oversight structure structure for ira retirement programs is appropriate and we would oppose changes in current law that would shift to the department the oversight of retirement programs that are not employer sponsored such as payroll deduction iris we've devoted significant resources to assisting small employers and choosing a retirement program through comprehensive education and outreach and regulatory programs these initiatives include publications  developed in consultation with the i r s i have a few of them here today choosing a retirement solution for your small business is one separate tire plans for small businesses simple ira plans for small businesses and also payroll deduction iras for small businesses which helps employers know how to structure these arrangements we've also recently issued a d v d which goes through the real life experiences of several small employers as they evaluated their their operations and decided which of these plans to choose we've partnered with the american institute of certified public accountants as well as the chamber of commerce and some other organizations to help us reach out to small businesses to work with them in their service providers to make plans more available we also have a very active participant assistance program that helps individuals with their benefits questions and problems our benefits advisors provide information but they also seek informal resolution of complaints and if appropriate they refer those complaints on for investigation since october of two thousand and six our benefits advisors have resolved one hundred eighty three complaints involving missing contributions to simple and step by race and through informal dispute resolution recover just over a million dollars on behalf of about a thousand workers in addition these complaints resulted one hundred fifty seven cases referred for investigation now we match our enforcement our outreach and our assistance with very strong enforcement and oversight  overall e b s a which in our mission of protecting all employer provided benefits has been reporting results in recent years or nearly double those of the previous years last year we had about one point five billion in civil results and about one hundred fifteen criminal indictments resulting from our investigations since two thousand and one that's been approximately eleven billion in civil results and over eight hundred criminal indictments with respect to simple and supple iras in the past three fiscal years we've had enforcement results of about one point two million and most of those violations involve the failure to forward contribution contributions or failure to forward timely forward contributions to the ira given the size of the employer sponsored plan and ira universe we believe that our integrated approach is effective very effective in providing compliance assistance interpretive guidance and strong enforcement we work closely with the i r s and the treasury department to conduct enforcement as well as to reach out to employers so thank you for the opportunity to testify today we are committed to promoting retirement programs and helping employers understand the options that congress has provided for them and to secure ensuring the security of savings under our jurisdiction thank you very q mr campbell mr reader chairman neal ranking member english and members of the committee thank you for the opportunity to appear today to testify on iras in their vital role in generating and maintaining retirement savings american workers and their beneficiaries ira has been important retirement savings tools and one hundred seventy five iras are now available to all americans with compensation income certain tax preferences a virus however are dependent on the individual's level of income and whether the individual is covered by an employer sponsored retirement plan as more fully described in my written testimony there are several types of iras including two special iras that can be sponsored by employers ours are particularly valuable to those in individuals who do not have access to other employer sponsored savings plans and also operate as a portable and in a d into which employees can combine and efficiently manage their retirement savings they have accumulated over their working careers the administration remains committed to educating employers about return all their retirement plan options although the large employers typically sponsor workplace retirement savings programs such as four hundred one ks for three b s for fifty seven plans many employers lack the knowledge of the resources to adopt and maintain these plans along with the department of labor the treasury department the i r s have taken significant steps to publicize the advantages of employer sponsored ira based savings programs and to educate employers and individuals on the ease of setting them up for example the i r s has developed a model plan document for simple iras and seps and has created a number of publications and online resources in many in cooperation with the department of labor as mr campbell has just testified the administration has long been concerned that the rules of employer retirement savings plans are unreasonably complicated this complex city imposes substantial compliance administrative and enforcement costs on employers participants and the government and hence the taxpayers in general moral or because employer sponsorship of a retirement plan is voluntary this complexity discourages many employers and especially small employers from offering a plan at all complexity is commonly cited as a reason the coverage rate of employer sponsored plans has not grown above fifty percent overall and has remained below fifth twenty five percent among employees of smaller firms to address the hurdles employers face in trying to establish savings plans for their employees the administration's budget includes a proposal for an employer retirement savings account ursa to combine the various types of employer sponsored savings plan to a single type of plan with simplified administrative rules for small employers the ministration is also proposed a significant simplification of individual iras to create just two types of iras with extremely simple distribution rules one that can be used for any purpose at all and the other would be just for retirement of course the administration be open to other proposals that decrease the complexity or administrative burden on small employers who want to provide savings opportunities for their employees while the treasury department and the i r s have been promoting employer sponsored retirement savings programs and developing new ideas to make plan sponsorship even easier are concerned about the prospect of imposing mandatory requirements that could affect the ability of an employer particularly a small employer to run its business efficiently and compete effectively in its marketplace operating a business already involved a significant amount of investment and adding yet another burden could have an adverse effect particularly on small employers which are so it's an essential to the sex six o'clock success of our economy moreover mandating a particular benefit on small employers particularly to the extent such a benefits impose a significant cost on the employer could affect the employer's decision to offer other employee benefits that may be more relevant to the employer's workforce particularly health coverage including conclusion we should not lose sight of the fact that the ira generally is not as powerful a retirement savings tool as other tax qualified retirement plans such as the four a one k the four three b other defined contribution plans and defined benefit plans this is primarily because the restriction on pretty distributions and such other plans of ois much of the retirement leakage that occurs in iras we should not encourage the adoption of ira programs my employers there are willing to and able to adopt plans that are a better deal for their employees mr chairman and members of the committee thank you for the opportunity to testify and look forward to answering questions  you have offered a very interesting chart on page thirteen which shows how easy payroll deduction iras are for employers no reporting no matching etc but still uses is very limited do you think if there were credits to offset some of the administrative costs we might see greater participation by employers one would have said since we heard so much about administrative costs when we were interviewing various stakeholders in this system but at the same time one of the things we heard that despite all the efforts that clearly the department of labor has gone to make the types of our arrangements known to small employers many say that they don't know about them that it's not well publicized so anything that you were to do on tax incentive side would certainly have to be very well publicized at the same time and you cite a study showing that automatic enrollment in a four one k plan increased participation by new hires from fifty seven percent to eighty six percent in one year and the increase was especially dramatic among young young and young and low income workers i read recently that t s p has decided to auto enroll in the same way that it seems the evidence from model for one case shows some need for an opt out system rather than opt in and if we really want to induce more savings is that the path we should travel well it's certainly encouraging that the mishal information on auto enrollment for one case suggests that the idea that everyone had in creating a system appears to be right that inertia can work for for you in encouraging saving rather than discouraging saving that might be something that could work with it workplace based iras as well mr english thank you mr chairman mr reader may i ask specifically one of the topics that we are exploring today is a would greatly increase the efficiency of employees greatly increase savings among employees particularly low income mr campbell what is the view of the department of labor of the prospect of  an automatic ira device well as has been alluded to in the context of for one case and other plans automatic enrollment has proved to be very effective and the department of labor as well as treasury have been very active in implementing regulations to facilitate that in to make that known to employers and advertise it i think there's no reason that concept wouldn't work for iras as well one distinction i think though is in the context of for one there is an employer who is selecting the providers of the investment options that workers are defaulted into when they don't give investment direction and from the proposals i've seen so far it's not clear to me how that issue would be addressed in some of the automatic i burden i do think the issue i just mentioned is one of the crucial ones in the context of a four one k or other plan there is always someone out there who is responsible for the selection of investments who is looking at the appropriateness at the assessing those factors in the interests of the workers if the intention in an automatic ira is that the employer not be sponsoring a plan it's not clear to me who then would fulfill that function and how that would function in practice mr rader from the standpoint of the treasury do you see any special challenges and administrating automatic iras other than the one mr i've been in congress twenty years so i fly back and forth on the same airline every friday and monday i got to know the united employees and i had a discussion with one on the other day about the pension system that we've created for him by our laws which allow companies to go into bankruptcy and strip out their pension benefits and then throw people into the pension fund this gentleman  has worked for united airlines as a flight attendant for twenty two and a half years and he is going to receive two hundred seventy two dollars a month when he retires now what i'm struggling with is how do we make a better system used to be that you went to work for a company like united and you came out with a defined benefit you knew what you were going to get when you got seniors and you we've changed all that by allowing the bankruptcy laws to be applied the way they have how does this system of forced enroll in a four hundred one how does that make it better for explaining how he will be guaranteed at the end of his obviously all the different sorts of retirement plans and pension plans that are available have different strengths and weaknesses which is one of i believe the benefits of our system in that employers and workers are able to together select the plans that make the most sense for their particular situation one of the benefits of a four one k plan is portability the contributions that have been made to the plan are the property of the worker from their inception and can be rolled over and transferred from job to job and in an increasingly mobile workforce where fewer employees are choosing to work for the same employer for twenty or thirty years that's a valuable benefit that is not at all to denigrate the importance of defined benefit plans which is part of the reason the administration urged congress to pass the pension protection act to kind of sort of you put your money in and you can cure it from one university to another the question is how do you give the worker the ability to understand the costs in the system and the average person doesn't spend their life their professional sitting around figuring out what the four hundred one fees are and where they are hidden and all that sort of thing what clarification do we need to make it possible for them to know what they're actually buying into and what they're going to get well the labor department currently has to regulations that we are in the process of proposing that address both of those  concerns the first is building on the investment advice provisions in the pension protection act that make it easier for workers to get access to professional investment advice to help them make those decisions the second deals with disclosures to workers about both the fees the past history the performance the nature of the investments in their plans in a very concise and useful way so that rather than getting twenty or thirty pages of legal gobbledygook a prospectus that's not read that workers wouldn't still instead get a very concise comparative documentary a chart that would let them get the basic information at a glance what the options are in their plans and make comparative judgments about them we anticipate issuing those proposed regulations in the near future they're currently pending at the office management and budget under review pursuant to the executive order of the worker that's plant manager is not going to be doing what we've been seeing in wall street recently while the pension protection act provided a number of safeguards to ensure that the investment advice is impartial and not tainted centrally it either has to be provided on a level fee basis in which the person providing the advice gets paid the same regardless of the options the worker picks to invest in alternatively advice would be provided through an unbiased computer model that would have been certified not to give biased outcomes so i think we're addressed but that we just saw on television this last week people who as the companies were go and kill one hundred miles an hour we're still recommending that people buy those stocks right how do you stop this how do you protect the worker in the united airlines from that kind of investment scheme well again i think the intent that congress had passed and that the administration had in the investment advice provisions is that workers will benefit from better information there may well be analysts in the universe of picking stocks to advise this that or the other but the basic information about investing the importance of diversification the importance of investing in a way appropriate for your age so that you're not holding one hundred percent equities or eighty percent employer stock when you're ten years from retirement that type of information will be extremely valuable to workers and is the kind of information investment advice will make available like thank you mr mcdermott the gentleman from connecticut mr larson thank you mr chairman and let me say from the outset i am unabashed co sponsor of the nail english automatic ira i have some questions and what in your estimation is the income classes for those who can benefit from iras and who does this leave and is there a way and what would be a way to  government to help bridge this gap i believe the savers credit can be that bridge but i'm interested in what the palace after same we'll start with you mr rader the the current tax preferences as i've pointed out in my testimony in the current tax preferences are dependent upon people's income and whether or not they're covered by employer based retirement plans so if they're not in an employer based retirement plan  any taxpayer can gain the tax preference i believe you're referring to tax payer people who are tax payers and therefore a tax preferences of no use to so for example people in the thirty thousand to fifty thousand dollars range can in fact because of end up with no income tax liability in essence are the people most in need of savings but in fact it seems as though our system is geared toward providing those that don't need the savings to getting the savings is there a way that you could see for government to bridge that gap to help out the thirty thousand to fifty thousand person in this area  the i think a lot of the people in that thirty to fifty thousand gap are taxpayers in that can avail themselves of the tax savers credit which is available but i think you're referring to those people in that range that are not taxpayers and the bulk of those folks are already getting a very large or a much larger portion of their income in retirement through security so there is a forced savings program in place already in the in the form of social security for the with the country for the first time since the pression had negative savings should the government be involved in providing incentives to assist  people in that range group i'm all in favor of the automatic ira i think that that's a great step forward but i think that there's still a gap scammell what do you labor department think one of the benefits of a payroll deduction ira for example even if you ignore the question of whether there's a particular tax benefit to an individual it's still a very convenient and easy way to save and one of the things i think studies and generally shown is that the easier it is to save the less additional effort  individual has to make the more likely they are to do so so even if there is not a tax incentive for a lower income worker by virtue of a lack of tax liability they still may be very effective in having these simplified programs what about a government incentivize savers credit really do think i should probably defer the treasury department on the tax credit issues mr reeder what about a government incentivize savers credit well the savers credit that exists we're very much in favor of  e a little bit concerned about making it refundable where we were constantly concerned about complexity administration in the midst ration and potential fraud that's available in and over a funny time you have a refundable  credit but that's that's something that is going to be something like fifty nine million people that are eligible but only about a fifth of them participate i'm not particularly familiar with that particular ratio but that's sounds reasonable that sounds like it's logical misses both work the saver credit i'm aware that there are some statistics that it's not used to the extent that it could  be making it refundable could entice more people into saving i would like to see some analysis of how effective that would be and how much it might cost i'm glad to hear that maybe that is being done i think though that as mr campbell says the inertia of having something that is is more automatic would be a huge factor for people and it would be interesting to see how much of the problem that might address mr reed are you said that there were a lot of you were concerned about the fraud abuse diminished rate of costs could you amplify on that and all i see my time is well i'm not an expert in the administration of all the credits of the treasury mention in a bout the again people to the nurse who work in their direction which is to encourage savings is really really important for all of us and i think just as well this afternoon we'll be passing a resolution to also address a slightly different problem and i know there are some exceptions or ways you can withdraw early from from iras and now it's a little different we've been talking about but i want to do your opinion about something i've been thinking about and that is  early retirees basically those who are fifty nine and a half may find themselves particularly as we are moving ahead on able to afford health insurance it's really the largest group as i understand of those americans who don't have insurance who are over fifty five before they get medicare and i think that particularly they don't have health benefits that they can afford or extend beyond employment if they choose to retire early over fifty five this five ahead your potential gap when they go find it very difficult to pay for health insurance private health insurance and so my my question is kind of an open ended one is what do you think about using potential using tax law to allow people to withdraw from their ira for the express purpose of paying for health insurance if they have chosen to retire early for those five and a half years and get we make some exceptions in utility to withdraw this not for drawing early but to be able to use say not have them have to pay tax so treated the sort of the same way that if they were employed they would have to pay taxes on their health benefit this is sort of applying the same principle but to the ira which they could then withdraw without penalty at age fifty five and a half if you nine have so  an open ended question as to what to think about that my thinking here is not only is health coverage a huge issue for many americans but particularly for those for medicare and that that early retirement years  but it's you know it's also a way that people might want to say i don't want to save because i'm afraid i might have certain kinds of expenses so we've made some exceptions around education and health  buying a first home so given the concern we have about forty seven million americans many of whom are in this age category what do you think about that i don't know if you haven't thought about it but if you have it's just a concept and whether that would encourage people to think about using iras because they would know that they would be able to have the ability to use it for yet one more purpose i don't know that any of us are in a position to give you a definitive answer because this savings and when iris were first created they were established for soley for retirement and now not a year goes by when something doesn't come up to tap into those retirement savings all of them good good reasons very valid reasons what's your point what you're proposing is a kind of a super preference because it would give to the distribution tax exemption so it would be tax free going in and tax free going out there's already a very limited area where that occurs and that's what the h s a and i think if you did that with iras you may actually encourage people to tap their retirement savings who might not already be inclined to tap their retirement savings they may have other other assets that they could use to buy pay that insurance but instead would use the retirement savings because it would be tax free  and also question whether or not it's equitable to give somebody who has an ira that super tax preferences over somebody who doesn't have the who couldn't have the tax free  preference i've been preferences to in ploy is then employees who get benefits to their employer into their workplace if you're an individual that's a different terms there are these are significant tax terms anyway i know it's an idea but i just wanted to i just was interested in whether that it was something we might be able to consider as we consider encouraging people to save for retirement again some of the things that i think prevent people is that they worry about expenses coming up that they won't be able to handle that are pretty immediate and even in this case would be someone who might have not started an ira a long time ago i'm mounting the twenty five year olds are thinking about this but someone who's forty five might be thinking of this who might say well i could do an i but what happens to me you know when i'm fifty nine and a half i'm going to return to hire early so if you have some thoughts about i think my time is up to you have some thoughts about it going forward i've certainly would appreciate maybe your i think about that or we could be in touch with you about this because again these are both important issues for us both retirement savings and of course health coverage for americans particularly those who are in early retirement free medicare so i think with that chad i should have with the chairman of some point as well reader my my question pertains to the benefits of the tax code for encouraging retirement savings and the government is and show the treasury for goes one hundred ten billion dollars in revenue in an effort to encourage savings that was in two thousand and seven but the data shows that those who are receiving who are saving and i raise are tend to be better educated and higher wage earners the average encouraging savings or they simply rewarding people for actions that they would otherwise that would take otherwise they would take normally anyway in terms of savings and if you think these benefits are helping to encourage savings how can we expand these benefits to capture more americans in the system when the course you're bringing up the the point that you've decided the flipside at the point that someone raised earlier which is a tax incentive is a bigger incentive for someone who is in much higher tax bracket than it is for preferences and pensions through i think i think the behavioral economists of which i am definitely not would agree that that that the the incentives do produce new savings but i also think they would agree that some of that savings is savings that would occur anyway and so i think the answer is a little bit above and mr larsen was was focusing largely on how to refocus that tax preference so that it does create retirement savings that would've ordinarily occurred i don't have the silver bullet for that answer and  there there may be some things you can't do with the tax code but i think most people here think you can do most anything with the  plans and generally a lack of awareness could you walk us through how a small business one of the range of twelve or so workers would try to access a payroll deduction either for their employees and do that in the real world  managing such a thing but first the first thing is she would have to know about it and apparently many of them don't know that this is an option they have a fear that if they do offer this to their employees and say identify a provider and then tell the employees about it that suddenly they will be a fiduciary and her rep so that they will be a plan sponsor now we know that that is not the case that that is not true and labor has put safe harbor guidance out there but find the small business owner i have to i have to be able to understand that i have to have had it in front of me it probably would help if my employees asked me if i would do it but but i think that it can represent a burden to people to find out about these things if they do their payroll by  hand it's another thing that they have to deal with too to employ the payroll deduction and send it off to whoever's holding the ira it could be burdensome but there are a lot of small been businesses who do have electronic payroll and by small i'm probably it's probably not as many for employees under twelve then you know up to fifty but they do have electronic payroll who still are not doing this so we think when we made recommendations to labor and i r s we're really thinking it's not that we're doing something poorly or we're doing something bad it's just that it's pretty clear when you go out there that we're not doing enough to incentivize these employers finally this the same as credit credit which we created in two thousand what was billed as being a tool to help but taxpayers earning less than fifty thousand dollars a credit for depositing money in the forward accounts how many people have  rolled in the program and my concern is that it does not appear to be working as intended for some reasons one low income folks don't have the means to save as others do simply because a living paycheck to paycheck and secondly this is a non issue for refundable tax credit and many of these people have very small if any income tax liability to see ministration think we should expand this credit to be to be refundable credit i not in a position to say that we're for against making it refundable but i have expressed concerns about mr ability and have to be evaluated in terms of the revenue involved in the entire portion of the bill  this program it's about five point three million people and generally of what age of those individuals i don't have the age break break down with me but i don't even have a speculation but i can i can definitely provide thank the gentleman gentleman from wisconsin mr kind to inquire thank you mr chairman and thank you again for holding is very important hearing today and i think the panelist for your testimony mr campbell real quick mr mr hall so if and i certainly would appreciate any administration feedback that you might have that with the save act that we had previously introduced in was testifying about today and this bold we appreciate the g a o updated study and report that you just released this month on increasing savings opportunities for more employees perhaps i should have read it more closely but were you offering some recommendations and you testified previously about the need to do more education outreach with small businesses throughout the country about the availability of what already exists but did offer any recommendations or policy guidelines that how we can best accomplish that at all it's difficult for labor because they are already doing a lot we felt that for example in the guidance they could be more specific about what constitutes what would make you into a tie to want to risk employer and what does not you know what exactly constitutes the safe harbor it's difficult to reach out when you don't always know who is eligible to do this and one of the frustrations that we fan is there  data on payroll deduction iras and we thought that anything that could be done to to learn more about the learn more about what it costs mall employers to do it but you know what what are really the fears out there  learn more about how many are out there we thought that the bureau of labor statistics for example could add some questions to their national compensation survey that all these things would help these are also things that could be done in the context of some of the policy changes that have been suggested here today and your bill or in the the neil anguish bill oversight as well would be important those are the recommendations well i think the more that we research the topic too i think there is a very real concern about any fiduciary obligation a small business owners would have by offering these type of plan we're trying to clarify that want to make it more explicit in the legislation that so that's not an additional burden that might prevent them from offering these plans for their employees but you know staying with you and mr cameron's to read if you want to chime in on this as well but we're trying to thread the needle a little bit as far as the automatic enrollment ira under our legislation we allow the automatic but we still a while the discretion of the small business owner whether they want to participate in the automatic sign up or the automatic therefore not mandating it upon them because the concern obviously that we share is that if you have too many strict mandates on small businesses they're just going to walk away from it anyway and not offer to their employees does that seem to you to strike the right balance having an automatic enrollment but still leaving it up to this question of the small business employer whether or not to have had that feature applied in the plan that they're offering you wouldn't have to make that people know that this is out there and i think we have to do more because otherwise it's not really clear that you would have that many employers participating on the other hand it's difficult to measure increase since we don't know how many are out there now right that's very similar to what congress did in the p p a with respect automatic enrollment for one k plans it's now very clear that this is a feature of the plans may adopt but it's not required the plans adopted i guess my concern is expressed earlier is the question when it comes automatic enrollment who is making decisions about the in propre this is the default investments when workers aren't providing elections who's assessing the reasonableness of those fees is the employer a fiduciary for those purposes or not that's a question that didn't arise in the four one k context because it's very clear they are and do have that's your point bearing that particular problem in mind i think approach does strike the right balance and that's the we are concerned about the mandates on small employers and and the likelihood of that affecting other benefits that employers may offer and also whether or not the employer is willing to adopt a more flexible for one k plan and if you force them into an ira it may detract from their desire to go into a more sophisticated plan thank you leadership of subcommittee chairman secondly i really i think that the panel has been terrific and i'm very delighted with the engaged to participate in of the members as we look at what's ahead of us as a country getting people prepared for lifelong income in retirement in this retirement savings dimension of that puzzle is extremely important i think we're probably a little late in really putting this in the central focus but it's pretty clear from this morning that's exactly where it is now and that's terrific better late than never and i think this is terrific i'm i'm all for the goal of improving savings  workplace based savings vehicles have been the most effective means of promoting savings for retirement my view and north dakota we've got about four out of ten workers that have that opportunity so ways that we i'm very interested in looking at all possibilities i do share the concern the treasury represented that we don't want to advance something by way of a default ira administered at the employer level thinking we're reaching the roughly half nationally that don't have workplace savings only to find that we're somehow rolling for a one k sponsorship by plans i think we've got to play very close attention to the interplay of trying to extend reach without somehow dis incenting what we've already achieved in the voluntary employer participation so we have to be careful on that one i want to now turn to the issues of retirement savings and things that we're hearing one of the things we're hearing is the remember last decade people in my age cohort of baby boomers talking about early retire i meant suddenly retiring in the fifty's pretty broad spread aspiration for one k balances rising appreciably everyone pretty happy how that has changed we now see that basically the dow at the beginning of the decade was ten thousand five hundred to now it's about eleven thousand eight hundred of a ten percent increase over the last eight years the account balances haven't grown like people thought wages have stagnated prices have increased people have actually gone longer than we might have wanted or thought we would have to the data from g a o has been particularly telling in terms of asset accumulation especially focused on the baby boom  cohort i don't know if you're familiar off the top with that or not but i will quote some of the findings released a year ago in a g a o study the i was seven point six trillion dollars in financial assets held by baby boomers the top fifty percent owned ninety seven percent the bottom fifty percent owned three percent this staggering bottom fifty percent of baby boomers on three percent of the wealth held across that core hard with about a third having no wealth whatsoever i think that this speaks to in part earnings capability earnings levels that really are not providing the opportunity to sa i have been very pleased with the savers credit enhanced seeing the incentive to modest earning levels well i think it would be better extended to fundable basis the reality is if you drum is so low there's no tax liability the opportunity we're going to lift people even with the savers credit extended and refundable basis my opinion this is less than people might expect one barbara based on your familiarity with these studies do you have observations about wealth distribution across a cohort that you could expand upon what i know the report that you mentioned it's one that uses the term baby boom generation in the title i think and we were asked to look at the issue of whether when boomers retire because it's such a large generation and each year growth of the birth cohort three so quickly when boomers retired would there be a market meltdown in the stock market and the short answer in this report was good news no there won't be a market meltdown because retiring behavior is such that people continue to buy and sell stock in their retirement  they wouldn't just sell it all at once the bad news of that was that hardly anyone in the boomer generation had assets that that the figures that you  mentioned are were very surprising to us we found that there was a significant portion of that cohort whose greatest financial asset was their vehicle and boomers are not speaking us when i can were born in one nine hundred sixty four they're already in their forty's they needed to in this retirement income world that we're facing they really needed to have started saving before this and they have a lot of catching up to do we did another report on defined contribution plans that included iras just by the way because weekly we had difficulty separating them from four in one case and we found that the average balances even if you project at into the future into the one nine hundred ninety one birth court cohort we're not really going to be substantial there will be people who will have significant balances who will certainly have the resources for retirement but there will be a significant percentage who will not have anything from defined contribution plans are going to sensually be living on social security so that the concern about how to  help people save and how to help assure retirement a secure retirement for people particularly in the lower our categories is really urgent and crucial thank you thank you mr chairman there is a gentleman the gentle lady from ohio committee but retirement security is a big deal for me and i think that i want to celebrate my colleagues for offering this proposal or not signed on yet but i'm taking a close look at it there are lots of things that we have to do and just as we are in the midst of a real issue in the housing foreclosure area because people were not well educated in the process most of them there are some who did it on knowing what the possible consequences are there are people in america who are still not well educated on retirement security and i want to contemplate that we should determine how our committee could give some incentives to young folks to start very early in the retirement security piece even if it were part of and i jump into the education the workforce committee for a moment but  require coursework for young people to graduate from high school to require them to understand this process but in the interim while the people who are already out of high school like us that just graduated about ten years ago  we need to work on incentivizing them as well as incentivizing employers and others to encourage retirement security see when i speak the bells go off and start ringing and everything's almost stop just for a moment for the bells to stop ringing and they stop this is my pager going off on me ok but what i'm curious about and when i was outside in the ante room i heard someone speaking about united air lives employees who is that and if i am mr mcdermott and the reason it's of importance to me is my father was a united airlines employees my brother in law and my sister were all united airlines employees and i watched the concern that happen with that company as well as with all the steel companies and all the rest about how do we handle that retirement issue but as we're talking about ira's were to tend to be now talking about people who choose to invest or put money into individual retirement account and i think that we're going to have to spend some time really really incentivizing employers to have this discussion just like we incentiv them to have money to do training for their workers small manufacturing shop to have the opportunity to get money to train their workers we ought to figure out how we can include in it the whole discussion about financial literacy as well as and vestment for the future i really don't have a lot of questions as the bells are going off i know people look at me all right shut up stephanie we've got to move on but i just come to this committee i know you're not saying that earl you're my good friend ok but i come to the committee to express my concern on this issue to celebrate the work of my colleagues and to let you know that from my perspective from my office i'm ready to go to work to help workers across this country plan for retirement one of the things that i've done in a totally different area was to incentivize workers who receive lump sum benefits to purchase an annuity so that that money left over time because we all know when you get a lump sum it seems like a whole lot of money that day but if you spend it off over time if there is none left when you retire i thank you mr chairman for give me a chance to sit in with you guys today and one other woman and be a part thank you very much thank the general a for her thoughtful commentary and let me thank our panelists for their very thoughtful testimony today as well i would like to advise the third panel that we now have three votes on the house floor so the committee would stand in recess for approximately twenty minutes and at that moment in time we would reconvene and i want to thank  and i would like to begin by recognizing mr straw thank you very much mr chairman my name is leo estrada and i'm a member of the board of directors of a a r p and i'm here today to testify on their behalf and our forty million members who are represented to the nation as a whole and just like the rest of the nation they're feeling the impact of a high cost of food and energy and are being forced to make difficult economic decisions with dire long term consequences as increased cost continue a quarter of a baby boomers are pulling money out of their retirement savings early to pay for everyday expenses like health care and food for many segments of the population the news is even worse a third of hispanics are no longer saving for retirement in twenty six percent are prematurely rating their nest eggs to pay for everyday needs half of all women have no pensions and forty three forty four point three percent of african americans age sixty five and older receive all of their income for so security payments alone cerny this economy i hitting us all and efforts like the recently passed stimulus checks are helpful but we must look beyond the near term we are thankful for the committee's vision and examine long term solutions to the financial crisis our nation currently faces the idea that retirement finances consist of a pension personal savings and so security is dying out defined pensions are fewer and further between and personal savings very often consists of equity in a home a a r p believe that all workers need access a retirement plan in addition to so security that this is a far cry from where we are today in fact millions of americans go to work every day and never get the chance to save for their retirement many are members and many are children and grandchildren  members according to the i r s an estimated seventy nine million u s workers are not participating in a retirement plan in their workplace many of these workers are employed by businesses that do not even offer every time a plan  access to workplace based retirement savings plan is particularly acute for employees of small businesses only forty four percent of the employees work in firms with less than one hundred employees have access to an employer retirement plan employer is currently can make payroll deduction iras available to their workers but clearly very few do the data also shows that about ten percent of people eligible to contribute to an ira actually make contributions in any given year as a result a significant segment of the u s workforce does not save systematically for retirement mr chairman we must address this lack of workplace savings option now or future retirees will face greater economic instead and put more strain on already taxed government programs one innovative commonsense idea that can help combat retirement security is the automatic it would make a huge difference to our fifty million workers and their families were very initiative is a positive development for future retirement security your legislation proposes an ambitious for practical mechanism to expand retirement savings for millions of workers this approach involves no employer company contributions compliance with a qualified plan requirements and no employer liability or responsibility for selecting a provider or opening iris for employees has been reaching out to small business owners to find out how they view this legislation for some time and the response has been very positive small business owners recognize the need to help their employees save for retirement for example mr coo son of l n ten pennsylvania reflects the views of many small business owners when we asked him to comment on why it was important help is fifteen employees save and plan for secure retirement he said and i quote because i didn't do it myself my son works for me now and invite started saying when i was his age i'd be in a much better position i according to the a a r p survey eighty four percent of our members and seventy six percent of americans age fifty and over older would like to have a workplace i'll leave you with this final statistic in every and study on how the economic current economic downturn is affecting people seventy four percent said their elected officials are not doing enough to help those being squeezed by the current economy we listen to the people who are struggling to have a secure retirement their problem is clear and automatic ira is the first step to the solution i think occlusion automatic iras create the potential help for finally filling the gaps in retirement savings coverage in the united states automatic ari's would be particularly beneficial to many low wage workers who do not currently have access to an employer sponsored retirement plan thank you mr chairman and members of the subcommittee and i would be happy to answer your questions you might have not like to recognize mr e very general neal ranking member english other members of the subcommittee i mark a very with the brookings institution my written statement has been submitted jointly with my colleague david john senior fellow with the heritage foundation we are both also principles of the retirement security project a nonpartisan partnership of georgetown university and brookings supported by the pew charitable trust and the two of us would be appearing here together but for the fact that mr john is in the united kingdom counseling with officials there on a very similar issues he and i would first like to express our appreciation to you mr kneale and you mr english shorts and mr bloom an hour as well as other members of the house and the senate for co sponsoring your legislation as you know the automatic iras intended to create a breakthrough in pension coverage to break that fifty percent barrier that's been keeping half of the american workforce from having access to easy ways to save at the workplace and to do that by staking out common ground that transcends partisan and ideological differences the auto ira approach as you know is simple it would give the seventy five million american workers who have no employer sponsored retirement plan the chance through automatic enrollment to save to build wealth by using their employer's payroll system to send their own pay to their own ira this would be done by combining three familiar building blocks from our current system which we know work effectively number one saving through payroll deductions in the workplace similar to the four hundred one k mechanism number two automatic enrollment into payroll based saving which congress strongly encouraged in the pension protection act of zero six in its four one k auto enroll in provisions and which is sweeping the four a one k market and third iras which are well established and portable iras makes sense in a market led proposal such as this they have a five thousand dollars maximum annual contribution level which is high enough to meet the needs of most americans six thousand if you're age fifty or older but it's low enough to avoid competing with for one k plans which allow the individual to contribute fifteen thousand five hundred dollars five thousand more if you're age fifty or older and combining with individual and employer contributions forty six thousand dollars a year compared to the five thousand dollars in an ira specifically here's how the automatic ira would work a new employee gets a standard notice perhaps part of the i r s form w for telling the employee about the option to contribute to an ira through the employer's payroll system telling them they're automatically enrolled at three percent of pay in a default investment that would probably be something like a low cost lifecycle highly diversified fund and telling them that they can opt out if they wish to or opt for a higher or lower level of saving consistent with the ira rules employer than simply forwards the money whatever the employee elected to an ira provided by a private financial institution the employer does not contribute anything does not make any outlay does not comply with a plan qualification rules does not have to comply with the risk does not choose the investments doesn't have to do anything other than keep track of what employees elected and pass on the money if the employer wants to avoid choosing a particular ira provider that's the employer's option it can choose a provider that it prefers does business with etc that market it or it can say i don't want any part of that and opt for a fallback entity that would guarantee everyone has access to iras even if their employer is not marketed by any direct trustee or custodian and that would probably be a consortium or pool of private financial institutions by contract the bill would call on employers that are not willing to sponsor any kind of plan any for one k or other other plan that have more than ten employees that have been in business for more than two years to do this to act simply as a conduit for the employees money into the employee's ira and even though those employers would not make any contributions they get a small temporary tax credit that would even be available to employers who are not required to provide the payroll deduction as a as an incentive mr chairman mr english this would all dog till nicely with the savers credit  happy to address that in q and a and it would work very well for people even who are not in the workforce by encouraging them through automatic debit to save more you know iras thank you thank you for your testimony mr salisbury chairman nail writing member emulation members of the committee it's a pleasure to be here i thank you for the invitation and i'm dallas saul's for a president of the employee benefit research institute and chairman of the american savings education council since beginning our work at a brewery in one nine hundred seventy eight we've published three hundred seventeen issue briefs the very first was on the topic of universal iras and deductible employee contributions personally my first testimony on iras before was before the senate finance committee in one thousand nine hundred eighty one they have developed a sense that time with iras now representing about twenty seven percent of total retirement system assets total assets in that system approaching about eighteen trillion dollars employment base defined contribution plans represent about twenty six percent of assets private arista defined benefit plans about seventeen percent and public sector defined benefit plans about thirty percent of those aggregate assets for two thousand and five the most recent year for which data is publicly available about ten percent of all tax payers put money into an ira either directly or through a rollover five point three million made deductible contributions totaling about sixteen billion dollars ross iras six points one million taxpayers about eighteen point six billion dollars two point five percent of taxpayers rolled over funds totaling two hundred thirty one point five billion in that year and a total of one hundred forty billion dollars was withdrawn and iras during that year to be spent on we're not sure what this compares to fourteen percent of taxpayers who are active participants in arista defined benefit plans to which ninety four billion dollars was contributed and thirty five percent of taxpayers who are active participants in a risk of defined contribution plans into which two hundred twenty eight billion dollars which contributed total benefit payments from those programs total three hundred thirty three billion dollars of which two hundred fifteen billion was rolled over into individual retirement accounts thus underlining a point that congressman come palmer i was making in his earlier testimony the critical that employment based programs make in the system and the tenderness of making changes in other areas that might threaten those programs the g a o report points out the lack of success in encouraging ira based plan development among small employers a brief small employer surveys of found a lack of perceived employee demand for retirement plans and higher pay and health insurance always are deemed to be more important bible small employers and their workers are value of benefits surveys are consistently found that over eighty five percent of employees when asked what they would like first say health insurance only about seven percent say a defined contribution savings opportunity all of these trends affect a second point which is that over forty two percent of the workforce still works for an employer that does not use automated payroll surfed surveyed employer attitudes towards automatic iras per se but did surveys on individual cell security account proposals we found overall opposition among small employers if they were being required to set up any arrangement with any financial institution overwhelmingly interestingly they were in support of proposals that would allow them to send additional retirement contributions as part of payroll taxes to the government suggesting there would be ways to structure universal or automatic iras that would be acceptable if the it illogical issues could be overcome hebrew research on the administrative issues an individual cell security accounts reinforces the fact that automatic ira designs are possible but they would take unique approach is not contained in current legislation in order to minimize administrative cost every test or handle included in these proposals adds complexity which small employers in our surveys find troubling is not to say it should not be done but it does suggest a hurdle as g a o points out there's a great deal we do not know about iras as a result of limited data availability since nine hundred ninety five the employee benefit research institute is build a database on for a one k data and effective this year will begin adding details i read data that database it will be helpful if the i r s would make more detailed data available on an ongoing basis to the public on both iras and four a one k s to help us analyze proposals such as these i think the committee again for the to testify and would be pleased to respond to any question  it's a pleasure to be here and an honor proposals like the automatic ira cannot hurt the them is that they probably won't help much either this is because such proposals don't make for a one k s or i as a better deal for ordinary workers they make it physically easier for them to put money into an account but not financially easier to shift from traditional pensions which are truly automatic in the sense that they automatically create retirement savings to iras four zero one ks and other individual savings accounts that require workers to shoulder most or all of the cost of and risk has left most workers with less retirement security it's not enough simply to argue that the shift from traditional pensions to individual accounts is a reflection of market forces the tax incentives congress provides for retirement accounts are not a result of market forces they're a political decision and they constitute an enormous subsidy from the federal government that has done almost nothing to increase retirement savings there are three big problems with these tax incentives which automatic iras would not change first only households that zero income tax are eligible for the subsidies the size of which also depends on the households tax bracket second even if the value of the tax deduction per dollar saved didn't vary by income level high income households have more disposable income to set aside so subsidies would still disproportionately benefit them and finally the incentive effect is weak or nonexistent since there is no way to ensure that these tax incentives encourage new saving and the present value of tax expenditures for four hundred one k and ira contributions in two thousand and seven amounted to nearly one hundred thirty five billion dollars roughly seventy percent of these subsidies go to the top twenty percent of the income distribution and almost half go to the top ten percent the average worker gets a little help from this one hundred thirty five billion dollars due to an upside down incentive structure that gives a wealthy family in a thirty five percent tax bracket a tax break three and a half times more valuable than a family in a ten percent tax bracket even if each family control contributes the same dollar amount to a tax favored account in other words those who need to help least to save get the most help that's it's not surprising that only three out of ten households received a tax break for contributing to a defined contribution plan or ira in two thousand  congress starting with this committee has tilted the sub's of the table toward the better off and told most americans you're on your own these tax breaks are not just unfair they're ineffective because they mostly cause wealthy households to shift savings to tax favored accounts rather than increasing overall savings that's the paradox the tax payers are giving up more and more revenue to promote retirement savings while retirement security declines along with  national savings rate tax incentives ought to do more than lower the taxes paid by help wealthy households they ought to help all workers save for retirement the implicit assumption behind the auto approach is that the problem lies with the worker not with the retirement options she faces but even in the best case scenario a participant who contributes regularly and does not touch her savings until retirement high seas made a road a quarter or more of her nest egg compared to savings pooled in a cost efficient pension fund these problems are compound and by the problem that individual investors feel torn between low fixed returns in gambling with their nest egg and finally even a worker who save steadily and has good luck with investments may outlive her savings so these problems require the kind of creativity that you called for in your opening statement mr neil i think we need to think outside the box that we've been in and we would like to propose and i have brought and would like to offer for the record a plan called the guaranteed retirement account could i submit that for the record you certainly can thank you it's a plan that was produced for the economic policy institute by to receive gaylor duty retirement expert it's a hybrid that combines the best features of defined benefit and defined contribution plans including steady and predictable employer and employee contributions low administrative costs one hundred percent portability and guaranteed lifetime benefits to g r a plan would deliver federal subsidies to the families who really need them while ensuring participants against financial and longevity risk it starts by converting tax expenditures for defined contribution plans into refundable flat tax credits  policy center analysis of the g r a plan found that this by itself would make fifty percent fifty eight percent of taxpayers better off and only sixteen percent of mostly high income tax payers worse off unlike auto ira plans that focus on increasing voluntary contributions to g r a plan squarely addresses the issue of adequacy through mandatory contributions efficiency gains and plugging cash outs and other leaks all workers not enrolled in an equivalent or better pension plan would be enrolled in a g r a account contributions equal to five percent of earnings up to the social security earnings cap could be deducted along with payroll taxes and credited to email i'm pleased to be here today on behalf of the savings coalition of america a nonprofit organization that promotes efforts to increase personal savings for many years the savings coalition has been a  strong advocate for improving and expanding iras and chairman neil over the years you've been doing that doing a great job at that also so we urge you to continue those efforts to further improve our access to geo g a o earlier today expressed concern that many americans who didn't have retirement plans at work are not saving enough for retirement we agree completely we need to reach more people by getting more employers to provide access to ir through payroll deduction mechanisms that have been proven effective in the four one k four three b and four fifty seven plan models the best way to succeed in encouraging more small businesses to provide ira opportunities for their workers is to give them understandable low cost low risk alternatives the creation of a simple ira was a major step in that direction and the use of the simple ira continues to grow just yesterday the investment company institute released data that showed that two point two million individuals participated in over five hundred thousand simple iris simple ira mutual fund plans in two thousand and seven important statistic there is the continuous and steady growth in the adoption of simple iris since one thousand nine hundred eight with a ten percent increase in participation just last year so the growth of simple iras has been something that is actually pretty impressive but there's still much much more to be done as the other witnesses have said we need to find ways to give people access to to see retirement saving in the workplace and first say that the reasons that doesn't happen while there are many there are four major reasons cost potential employer liability the absence of incentives for small business decision makers and the lack of employer education we suggest for changes that we believe would enhance the availability of irate in the workplace first we need to give employers comfort that they will not be exposed to costs administrative burdens and potential liability if they set up an ir saving program at work many employers simply will not establish payroll deduction iras if they even think they could become subject to the full range of rules and regulations under rissa the labor department has published helpful safe harbor comfort for employers and we believe that needs to be expanded to clarify that employers can actively promote the idea of ira savings in the workplace  employers should also be allowed to automatically default employees into a payroll deduction contribution unless the employee affirmatively elects not to do so chairman neil mr english your legislation to promote those kinds of defaults is something we hope to work with you further on the second major change we recommend is making simple iras even simpler as proposed by representative kind along with representative hall schaaf and  represent of english in h r fifty one sixty changes that would improve simple iras include allowing small employers to move mid year from a simple ira to another kind of retirement plan eliminating the restrictions on rollovers from simple iras into other retirement plans and conforming the unique complex penalty tax provisions on premature distributions from simple iras to the same rules that apply across the board the third type of change that  recommend involves creating incentives for small business decision makers right now small business employers have no tax incentives to make iras available to their employees represented kind still your bill mr neal would encourage employers a start up credit for new plans and would and would allow small one time tax credits for each employer that actually signs up we also note that the complex ira income eligibility limits discourage ira participation across the board they have for years without those complex limits we would see increased savings among all income classes and we would see many more small businesses deciding to set up iras for their employees finally we have to do a better job of educating small employers we believe the i r s and small business administration can provide better information and education to small employers about providing iras savings alternatives at the same time the i should be providing additional information on the availability and advantages of the savers credit and some we can get more employers to offer ira savings opportunities to workers with simple low cost low risk alternatives like those i've testified about the interactive effect of auto iras in the saver's credit it's come up a number of times in this panel's presentation can you explain how this would work and other suggestions that you might have for improvement yes m we would have something to say as well i think the first thing is we all understand the underutilization of the savers credit and in fact it occurs because it's most appropriate for people of lower income lower earning and their what happens is that we don't those and a very individual we're not saving so the interaction between these two is that the automatic are a would provide a savings that would take place and then that savings would now become part of the abilities to take advantage of the savers credit so these two would then increase the number of people using the savers credit and i think more most importantly give us a whole new group of savers that need to be those that can take advantage of this program to provide incentives to save for the people who really need those incentives the most essentially beefing up the savers credit by making it refundable by making it a posit the account in which the person saves such as the automatic ira so that the credit is actually saved automatically and by simplifying it and extending it to more of the middle class and those are attributes that the proposed savers credit had when it was first proposed by the treasury department but were cut down in the legislative process and that would further enhance both savings and for a one case to which it would apply  and the appeal of the automatic ira let me follow up with you mr avery we've heard some concern that ira should not this place for one k plans which are more effective retirement vehicles but you also argue that  ira programs might actually spur growth in these other employer provided plans can you explain your graduation theory absolutely mr chairman your bill really has in a sense to go one direct and one indirect the direct goal is to use automatic payroll deposit to iras to extend retirement savings to tens of millions of people who don't have it now but the indirect goal is to actually encourage employers to adopt for a one k's simple as other plans that involve employer contributions it is designed to bring employers into the system who are currently not willing to adopt any of those plans either at the beginning when an employer realizes that it would be offering payroll deposit to its employees for the first time to give them the opportunity to save on tax favored basis or after a year or two of experience with that there's every reason to expect that a significant number of employers would realize that jumping up stepping up to a four one k or stepping up to a simple ira would be easy and to their advantage that their employees like tax favored saving that the employees value the employer's role in making that available and that recruitment and retention of valuable employees is enhanced by the sponsorship of the plan and that's why a number of the entities people who who market plans to small employers  have found the automatic ira to be a very promising way to actually expand for a one k formation mr english thank you mr chairman mr e worry i wonder if you can respond to the point raised by assistant secretary campbell and there's testimony which i believe you may have been hearing over here making the raising the concern that under an auto ira model it isn't necessarily clear who would protect am ploy these from excessive fees potentially dangerous investment decisions for other challenges  would this concern be best addressed and how can we work legislatively to ensure that workers are protected in these types of plans that  very appropriate an important issue of course there are a number of ways in which the bill already takes steps toward that number one an employee or is required to r employee contributions to the iras just as an employer is required to remit income tax withholding or other payroll taxes to the appropriate federal tax deposit institution and the i r s would have authority to impose penalties under the tax system if employers did not remain employees with holdings so there  is a mechanism there of course one would expect that employers would comply and that these penalties are not intended to be imposed but just as a deterrent and it's something to give them ploy ease the comfort that i think you're alluding to that there is an enforcement compliance mechanism with respect to the investment there would be a default investment similar to that to d i s the qualified default investment alternatives that brad campbell and his predecessor and combs oversaw in the department of labor regulations that had a huge impact on the market in the four one k world those kinds of default investments that are essentially standardized asset allocated have proven to to be very popular both with employers and employees and the bill contemplates that a similar approach would be taken that there would be a prescribed kind of  fault investment flexible enough so different financial institutions could provide them but sufficiently uniform that we'd have the comfort that they are reflective of good policy sometimes can be complicated and you provide us with more details as to how eligibility in your view should be expanded or made simpler i think is very important liar they phase out for single individuals between fifty three thousand and sixty three thousand dollars for married couples eighty five thousand two hundred five thousand dollars but if you want to spouse ally or a the phase out this is his kicks in at one hundred fifty nine thousand dollars and starts to phase out over a ten thousand dollars range the roth ira limits are different for single for a couple their marriage penalty since some of those limits phase out there are not marriage penalties and others  excellent point and mr chairman and i think this is something that over time i think the subcommittee could play a particularly useful role in focusing on mr arnaout one of the barriers you're bringing up and you have mentioned  is that the contribution limits to iras under current law are i gather in your view relatively low and the advantages of iras are sometimes outweighed by the hassle and cost you know what else could be done to correct this situation i think the key ingredient particularly in the employer setting if we employ on employers to do it is to find ways to keep the employer cost down to offer this alternative history  talked about the importance of keeping up the cost down for the individuals also within the ira context and that means the rules on iras could be simplified so there's less paperwork last chart that the financial institution might have to provide so they could even provide those cheaper those are the kinds of cost issues ultimately that that this comes down to for for individuals and employers and where do you view i mean and at what level do you think the contribution limits to iras should be adjusted to you know those are those are difficult revenue decisions i think what is the well to get out of the revenue i'm looking at it more what what would be the levels at which it would maximize the benefit from a savings standpoint from a savings standpoint i think unlimited ira contributions well would maximize but  but but are there any are there some other policy issues that maybe apart from just the question of revenue that maybe could could set you know give us guidance here i think that that many have argued that the ira limits for people who don't have access to in where plans may not be adequate and that those people maybe could use a little more annual savings if somehow you don't have access to an employment base plan extremely successful savings vehicle for the middle class and made a significant contribution to current polls or retirement  average american you know was the savings rate for all americans was about nine percent but it's you know there are a whole variety of factors that have would you say defines the middle class well you can define it and members of congress often define it up to you know people earning two hundred fifty thousand dollars a year but the median policy concentrates on raising the limits for people who can put away twenty twenty thousand dollars a year or more into tax favored accounts you are going about leaving the workforce completely behind but what about those who have incomes that vary and will be in situations in one year to kick in twenty thousand dollars but not in year two three and four and what about any minority it's a very small minority of people who never have the ability to put away twenty thousand dollars a year into a retirement account half that's i that there are some people who are who have a large realization or will through sales achieve a you know a bulge in their income and you don't think there should be a tax incentive for them to set aside money i think that our policy has focused so much on people who are in the top twenty percent of income that we have completely lost sight of the fact that as other witnesses have said half of the workforce has no employer provided pension at all a third of people will retire with a family still security you have a still haven't given me the income parameters for the middle class in your view well if you wanted to take the middle third of the income distribution and say that was the middle if you took the middle eighty percent of the income distribution the middle class would end at about one hundred  thirty thousand dollars of income in a year so you were that you and sat in the middle nine eighty percent just you know taking the top ten and the bottom ten saying they're not middle class everyone else is you know you you would not be focusing on people who could put twenty thousand dollars or more away a year into their retirement account i'm a feeling that  probably ideology has crept in your so i'm going to turn this back to you mr chairman but i think that you did raise a good point mr hardwick responded mr eisenberg respond that i think the other panelists might have some interest in responding to the suggestion that mr carter offered and issue of universal and if you go back to the eighty's when they were still universal even though it's that lower contribution limits is the complexity created within the system drove the percentage of individual taxpayers contributing to these programs from what was a high of sixteen point seven percent of taxpayers down to last year three the last year we have data three point eight percent of taxpayers because of the absence of selling the absence of clarity so you get the irony if the government wanted to have the revenue loss be the same except that it would be the same then you would get far more individuals contributing to iras most particularly low income individuals if you lowered the the limit of what could go in but let anybody he put it in so that in absence there would be a far more aggressive approach so i guess really a matter of what the objective of the policy is and who it wants to be targeted out there are ways clearly to have more people create iras more people put money into iras but like all retirement plans very few individuals decide to do this on their on few employers decide to do it on their own it's a question of the level of sales effort made by the society and by the answer to sions and we have the social experiment so sure can as mr english said let politics creep into this i think we mr haas just said it earlier these issues have historically been bipartisan the the issue of how progress if your tax code is  can be dealt with in a lot of other contexts and is a difficult issue if you can keep that out of the pension retirement debate and keep this on the lines of how do we get more people to say than the data that dallas just showed the forty percent decline in iraq contributions by those who continue to be eligible after the one thousand nine hundred six act went into effect we can get more savings and you could get your progress to progress city somewhere else if that's what you want but if you do it through the system you get it you get a usually complex maze of phase outs and nobody knows where they are and what you get is paralysis i think randy would agree with me though that that the most important incentive is a financial incentive and if you give a much smaller financial incentive to a low income person to save that person is going to save less so if you if you gave this the same and it has to be through a rip off refundable credit is as mark avery was saying but if you don't give the low income person the same incentive  you know financial incentive they won't be able to save as much to save as credit was a huge step forward and in that direction and i think there is that incentive part of it there's also the watercooler effect part of it which i think gets lost when harm and in thinking about the appropriate level of ira contributions and the related rules relating to the ability to contribute to an ira the most important consideration i would suggest is that we do nothing to threaten the employer plans system that we do everything we can to protect the four one k s the other retirement plans we've got the incentive to to adopt those including the simple plan which i might note randy hard rock and i originated with with our proposals when we were working together at the treasury and congress then and acted the rules for iras therefore have to be part of the ecology if you will of the whole retirement system set at a level that gets universal participation through your kind of proposal the automatic  not at a level that would detract from the incentive to sponsor an actual employer plan and and your bill is it tuned to that sensitivity so that it would actually enhance that incentive and make it more thinkable for employers to take that step up and adopt a simple or a four one k in addition to or after adopting a automatic ira you gentleman from north dakota mr and which way your politics takes you in terms of its interpretation and conclusions you draw from it it's important that we master the data here let's start by understanding what has been happening in the retirement savings world and so let's start with both defined benefit pensions and and defined contribution plans funds in the workplace and let's look at this decade what is happening my belief is that we've had some decline in dallas perhaps as the keeper of the data you want to speak to that congressman we have seen a substantial decline in the proportion of individuals and defined benefit plans that has gone from about twenty eight percent of active with active participation about seventeen point two percent we've seen very dramatic increases in defined contribution plans at the workplace both in participation on assets and we have seen a relatively flat process visa v individual retirement accounts the three point seven three point eight percent contributing to a deductible ira has been relatively constant we have seen a growth in the number of individuals contributing to ross ir that's now up to about three percent of taxpayers in relative terms as i noted the percentage of tax payers and defined contribution plans on an annual basis contributing on a deductible and or ro basis is about six times the print number that are contributing to individual tyrant accounts but is that defined contribution number holding steady the way i was interpreting current population survey data was that there had been actually an increase a decrease there also it has had flattened in the last three years and is slightly now declining as it appears that the sales efforts have have apparently reached a saturation point now that automatic enrollment is being put in place where likely to see with data in the next two to three years an increase in the number of active participants as a result of the defaults that were contained in the pension protection act number of plans has actually slightly declined is there hope for saving the defined benefit portion of the marketplace very frankly very little reason to think that that will occur most of the new plan formation of defined benefit plans has been so called hybrid or cash balance plans they now represent in excess of thirty percent of plans we're seeing some creation of hybrids by relatively small businesses that are using them because of the more advantageous deductibility limits than they would have under a defined contribution plan we're seeing a rapid pace of even the nation's very largest private employers making announcements including one that came out of boeing company yesterday that they are moving there where they have the ability to move their workers from defined benefit to defined contribution they are doing at boeing has just announced that earlier this year  benefit plan for its its highest paid executives even though it will be eliminating it for all of their employees very interesting very pathetic i might say mr eisenberg what do you think the consequence what is the circumstance for the worker as the move from having a defined benefit plan to a defined contribution optional might well there are clearly worse off i mean that they end up with an employer making less of a contribution by and large they end up with more risk band up having to make decisions that they're not prepared to make about investments we need i'm sure you read this story a few years ago by peter gosselin in the l a times talking to nobel prize winners in economics about their ability to make investment decisions and many of them admitted that they you know weren't doing a very good job and had trouble doing it it's not something that the average person is prepared to do to make you know wise investment decisions for the rest of i haven't seen the  do we just have to accept that the twenty million that still have defined benefit plans that is going to be a vanishing protection for them well our proposal helps in the sense that  it takes away the incentive for employers to provide a four hundred one k which has lead it's the four zero one k the existence of it that that has moved you know so many employers out of the defined pension defined benefit world i mean the broader we hadn't created it was orally and we've had a decade have a way more for we'd have way more traditional defined benefit pension plans but we have had a decade  even looking at wages alone where the middle class earnings have stalled out the productivity gains that our economy has made has flow been deposited disproportionately at the highest elevations of income and we have greater income disparity than ever before so i mean i believe that i don't blame for one case with the rise of defined benefit plans i believe that we've got basically an economic trends that i believe been facilitated by the policies of this administration that has exasperated income disparity by promoting the interests of the those at the top earning brackets and doing very little for those medium  i think that that's true but it's a thirty year or thirty five year trend it isn't just something that began with the bush administration and i have to say that this goes back as far back as the carter administration that a number of things one of which is to build on the work that you've done in the past and that we've worked on together when i was a treasury to expand the savers credit have a refundable credit that reaches more of the middle class and that even ideally might be deposited into the accounts in which people save or at least they might have the option to do that also some salute your championing of defined benefit plans in an era where that's becoming an increasingly lonely exercise one glimmer of hope i would offer there is that i think one of the cardinal virtues of the defined benefit plan that you are more sensitive to than virtually anyone in congress i think is of course the lifetime guaranteed income me and and the conversion to cash balance plans which has its which once done in a way that protects older workers so that it's not unfair to them and not too harsh a  change is at least something that preserves the defined benefit plan and some form that conversion also has a downside which as you know is to take the traditional defined benefit annuity oriented plan and convert it to the lump sum plan the cash balance plan is the lump sum plan but it does not have to be and the fact that the benefit is framed as an account balance and is almost in vari paid out in the vast majority of cases as a lump sum largely because of the framing and the encouragement to do that is something that i believe we can work with there are a few cash balance sponsors that don't pay lump sum very few there are more who could potentially encourage into it as a sion rather than encouraging lump sums across the board the way they do now so what i'm suggesting is that apart from trying to revive the dying patient we can at least do an organ transplant from the traditional defined benefit into the hybrid and the for one case based on a for a one case basis be my final question mr chairman i appreciate are and that's been the strategy that really the treasury has started promoting ten years ago when automatic enrollment was first defined in approved and promoted almost ten years ago to this day in treasury rulings the strategy is now playing out in the market as we see there is a kind of d b s occasion of the four a one k which has not however yet reached the payout phase in developing products designed to a new it ties part of that account balance in the four one k i would very much look forward to working with with you and you mr chairman and other members of this sub  committee and i know there are others on this panel and in this room who would share that interest to try to d b f i that payout phase as well and at least encourage lifetime guaranteed income on the same page on that one thank you very much thank  showed today and i would predict flatly that next year this is going to be one of the most important avenues of debate to congress so i thank you all for your participation and without any additional comments hearing is adjourn