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ICI Urges Congress to Consider Important Retirement Savings Incentives
Washington, DC, February 13, 2001 - The Investment Company Institute urged Congress to enact measures to encourage Americans to save for retirement as it considers the Bush Administration’s tax relief legislation.
"We are extremely hopeful that President Bush and Congress will work together to assure that Americans of all income levels and in all workplaces have adequate opportunity and incentives to achieve retirement income security. We are committed to supporting promising and long-sought bipartisan efforts to improve Americans’ ability to save for retirement," Institute President Matthew P. Fink said.
In a statement submitted to the House Committee on Ways and Means during a hearing today on the President’s tax relief proposals, the Institute urged Congress to support proposals included in the bipartisan legislation (the "Comprehensive Retirement Security and Pension Reform Act") introduced by Representatives Rob Portman (R-OH) and Ben Cardin (D-MD) and passed by the House of Representatives last year. These proposals, the Institute said, would make the nation’s retirement plan system significantly more responsive to the retirement savings needs of Americans.
The Portman/Cardin bill, which passed the House by an overwhelming majority (401-25), would have, among other things:
- increased portability (improved the ability of workers to move their retirement benefits from one job to the next);
- increased the $2,000 contribution limit that was established for IRAs in 1981 to the inflation-adjusted equivalent of $5,000;
- increased the contribution limits for 401(k), 403(b), and 457 plans in stages from $10,500 to $15,000; and
- provided catch-up opportunities for individuals 50 years and older who have been unable to begin saving for retirement earlier in their working lives.
These and other retirement savings proposals included in the bill would improve incentives and opportunities for Americans to save for their retirement; accommodate the work and savings patterns of today; and simplify the rules applicable to employer-sponsored plans and IRAs, which would result in a greater number of employer-sponsored plans, a higher rate of worker coverage, and increased individual savings. For reasons unrelated to its own merits, Portman/Cardin was not signed into law last year.
"These proposals would encourage retirement savings. Furthermore, many of the unnecessary restrictions that discourage employers from establishing retirement plans and individuals from saving for retirement would be eliminated," Fink said. "The Institute urges Congress to help Americans achieve greater security in their retirement years by enacting these proposals."
The Institute has long supported legislation aimed at providing Americans with opportunities to save for retirement. The vast majority of mutual fund shareholders say that saving for retirement is their primary financial goal. Recent Institute research shows that 42.5 million U.S. households owned IRAs last year, up from 34.7 million the year before. American workers also are increasingly taking advantage of 401(k) plans to build a foundation for their retirement security.
The Investment Company Institute is the national association of the investment company industry. Its members include mutual funds, closed-end funds and unit investment trusts.