One of our panelists will testify today that IRAs do not create new savings and just cause a shifting of funds. I believe there is enough evidence that IRAs promote savings. I cannot think of a better alternative. IRAs do create new savings and the shifting of savings usually locks up existing savings for retirement. Another import aspect of increasing savings is marketability.
Individuals have to want to save.
We need to offer products that they want and will make savings easy for them. Deputy Secretary Summers testified that IRA proposals must be designed to reinforce and encourage psychological factors that could increase the efficiency of IRAs in promoting savings. A 1990 Gallup survey done for Fidelity Investments showed 71 percent of the respondents preferred expanding the tax incentives for IRAs to close the gap between their retirement needs and their retirement checks from institutional sources. This same answer was given by 69 percent of the respondents in a 1996 Luntz-Lake survey conducted for the Savings Coalition. IRAs provide the right type of vehicle for long term savings for retirement.