Affording the RETIREMENT DREAM.

• Author: SMITH, LOWELL M. JR.

"... Americans are further along the way toward having legislation that is designed to enable people to exert more control over their retirement destinies."

APPROXIMATELY 53% of all American workers--about 70,000,000 people--do not have access to a retirement plan in their workplaces. Baby boomers--the largest portion of the U.S. population--begin to retire in this decade. The reliability of Social Security is in question. Now, more than ever, assisting Americans in their efforts to increase private retirement savings is critical. To that end, Congress passed sweeping pension reform legislation at the end of May.

This comprehensive pension reform legislation was enacted as part of the large tax cut package entitled Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). In addition to addressing pension issues, this law reduces income tax rates, reforms and reduces estate taxes, adds tax incentives for funding higher education costs, and provides additional tax-relief measures.

The pension reform portion of EGTRRA was originally introduced in the House of Representatives on March 14, 2001, by Robert Portman (R.-Ohio) and Benjamin Cardin (D.-Md.) as the Comprehensive Retirement Security and Pension Reform Act of 2001 (Portman-Cardin Bill). The new legislation increases contribution limits for employers and employees in IRAs and other qualified plans, as well as simplifying complex retirement plan guidelines. The reform measure has three important goals: to encourage more employers to offer pension plans, to encourage Americans to save for their retirement, and to boost the nation's savings rate. According to Cardin, "Private savings in our country are at historically low levels. A generation ago, Americans saved at a rate of nine percent [per year]; by [2000], the rate had fallen to 3.8%."

The pension reform legislation had more than 250 bipartisan cosponsors, which fueled optimism for getting it enacted during this Congress. Senators Chuck Grassley (R.-Iowa) and Max Baucus (D.-Mont.) cosponsored the Senate companion bill. Rep. Robert Andrews (D.-N.J.), a cosponsor of the Portman-Cardin Bill, is the ranking minority member of the House's Subcommittee on Employer-Employee Relations that considered this bill. Referring to the Portman-Cardin Bill, he stated, "This bill will help close the pension gap that exists in our country today. I believe more employers will put more money into plans as a result."

Pension reform brings many benefits to every working American by creating opportunities to help individuals reach retirement goals successfully. However, critics of the bill point to the estimated $49,600,000,000 10-year reduction in tax revenues and believe that most of the benefits will go to high-income individuals. Although the impact on the tax base was considered, a more pressing priority is to help Americans achieve their retirement objectives. EGTRRA is an important step toward making this goal a reality.

EGTRRA's pension reform provisions bring significant...