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Retirement News
Senate Aging Committee Chair Pushes Bills to Help
Save for Retirement
Senate aging
committee hears testimony on senior citizens savings
June 22, 2006 Sen. Gordon H. Smith (R-OR),
Chairman of the Senate's Special Committee on Aging, used the occasion
of a committee hearing on retirement savings for senior citizens to push
for passage of his legislation aimed at helping Americans better save
for retirement.
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He pointed to the dramatically declining U.S.
savings rate as a reason why Congress should implement reforms.
"Tomorrow's retirees will need to stretch
retirement dollars over a longer period of time," said Smith. "We need
to find better ways for people to manage their assets and preserve their
savings throughout retirement. With a huge wave of baby boomers about to
enter retirement, it is more important than ever that we educate
Americans about the financial risks in retirement."
In June 2005, Smith and Sen. Kent Conrad (D-ND)
introduced legislation that they say would provide Americans a more
secure retirement. The Smith-Conrad bill includes several provisions,
such as:
● Promotion of automatic enrollment of workers
into company-sponsored 401(k) plans, a measure expected to produce 5.5
million new 401(k) participants over five years
● Expansion of the Savers Credit, a tax credit
for low and moderate-income individuals who contribute to workplace
retirement plans and Individual Retirement Accounts. The credit is
scheduled to expire at the end of the year; the Smith-Conrad bill would
extend it through 2010.
● Allow transfers from Flexible Spending Accounts
(FSA). This provision would allow workers who set aside salary in FSAs
for qualified benefits, such as health care costs, to transfer up to
$500-a-year in unused health FSA amounts to a defined contribution plan
or IRA. Current law bars Americans from tapping any money left over in
FSAs by 2½ months after the end of the year.
● Encourage retirees to invest in life annuities
by making a portion of certain annuity payments free from taxation.
Annuities allow retired workers to manage their savings over their
lifetime, providing a steady income through retirement, the sponsors
say.
Smith warned that retirees should be concerned
about inflation, the risk of investment income yielding smaller than
expected returns and higher then expected health care or long-term care
costs. Smith is currently developing other legislation with Senators
Conrad and John Kerry that addresses these issues.
While helping all Americans, the bill will
particularly focus on women as they tend to live longer and women
receive significantly less income during retirement than men, added
Smith.
At least one large financial company jumped forward
to commend Smith. MassMutual Financial Group praised Smith and Sen. Herb
Kohl (D-WI), ranking member of the committee, for conducting the hearing
"to examine the important issues of managing retirement assets and
ensuring that American retirees have sufficient income to last
throughout their lifetimes."
"It is clear that federal Social Security will not
provide adequate income for the average American during retirement,"
said Kenneth Cohen, senior vice president, Government Relations,
Massachusetts Mutual Life Insurance Company (MassMutual).
"Moreover, Americans are living longer than ever
before and face health care costs that continue to skyrocket. And with
fewer and fewer citizens expected to have defined benefit pension plans
in the future, we must ensure that individuals have access to other
financial products that will help them manage accumulated assets and
translate these assets into income in order to produce a secure
retirement."
Cohen said that Chairman Smith has been a
continuous and tireless advocate for sound retirement policy during his
tenure in the United States Senate. He noted that through Smith's
leadership on legislation such as S. 381, "The Retirement Security for
Life Act of 2005" and S. 1359, "The Retirement Savings and Security Act
of 2005," he is working to ensure that retirees will not outlive their
assets in retirement.
These bills have provided tax incentives for
lifetime annuity income and promoted default features (such as automatic
enrollment) in 401(k) plans, among many other positive features.
"MassMutual has been an active partner in the
policy process with Chairman Smith on his past initiatives and we hope
to continue to play such a role in the future," Cohen said.
Notes:
MassMutual Financial Group is the fleet name for
Massachusetts Mutual Life Insurance Company (MassMutual) and its
affiliates, with more than 13 million clients and over $395 billion in
assets under management at year-end 2005.
Founded in 1851, MassMutual is a mutually owned
financial protection, accumulation and income management company
headquartered in Springfield, Mass. MassMutual's major affiliates
include: OppenheimerFunds, Inc.; Babson Capital Management LLC; Baring
Asset Management Limited; Cornerstone Real Estate Advisers LLC; MML
Investors Services, Inc., MassMutual International, Inc. and The
MassMutual Trust Company, FSB. MassMutual is on the Internet at
http://www.massmutual.com/.
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Senator Gordon Smith (
