yet maintain flexibility? sir, as i try to think through this, i remember when i was running a small medical practice in dealing with these issues after a full day in the operating room and focusing on clinical -- the clinical side of my practice. ..

by saying the problem you describe has been around. the changes made in 2001 on portability of assets and allowing individuals to combine when they switch jobs or assets from one employer to the next employer from the ira and consolidate those in the new plan were a major improvement and really streamlined the impossible for a business owner to take those assets and. it is still complicated because you still have items that maybe were put in some cases pretax and others post tags. this issues we have to deal with the matter what because they exist today and you can't take away someone's pretax treatment and post-tax treatment. we have made enormous strides

improving those roles. >> yes, i think there is an awful lot of progress made and i also think that if you look at the options that are available, these days you're more likely to have a baby that comes and your is that also had a 401(k) plan at the red arrangement and there is a little more simplicity. i think sometimes we talk about consolidation and talking about a 457, 401(k), the medical compact disc there was the fourth repeat here but the rules have been simplified to make that an easier process. but in most instances, you now have some ready coming from a similar type thing into your current arrangement and i think i've released music. i do think in the written testimony there is comments and those that can be changed to

make it a little easier for small business to not get themselves in trouble and i think we should get rid of the rules that treat people. crinkly rules that applied, whether it was a nurse or a 401(k). just common sense stuff. >> if i may add, the real serious problem is the fact that people forget to combine. i have actually an ira that was rolled over from tsp 20 plus years ago. i keep meaning to berlin in two heritages plan, but i've yet to do it. what we see is a significant number of people who lose their accounts, especially over the years, whether employers go out of business, the providers change and there is a suggestion in my written testimony about a way to use tax information to enable people to find their lost accounts and to encourage them to combine them. >> thank you. one last question. are there incremental steps that

make it easy or employers to offer annuity options as part of a defined contribution plan? >> this is something that the irs and the treasury department are currently looking not. i think it has done something that policymakers are really looking to do to get people that ability to address, to use an annuity. i am not speaking for the current treasury department or the irs, but i think what they've been trying to do is a lemonade, the difficulties under the current law to go and move into an annuity product. and that is something that i think policymakers have been

lucky not over a number of years. >> thank you very much. as jenkins is recognized. >> thank you mr. chairman for holding this hearing and thank you to all panels participating. i've a question for you, miss molly. to present its 2013 budget proposal includes a proposal capping certain individuals itemized deduction to 28% and the exclusion of deductions under the proposal include the exclusion or above the line deduction for pretax employee contributions to defined contribution plan and contribution to traditional ira. given the tax break is a deferral, not a common right off, wouldn't limiting seduction on the front end, but not when the mounties distributed results in double taxation? and what are your thoughts on how the president's proposal would affect retirement savings rate and also small business

owners decision set up for a maintained retirement plan for their employees click >> i appreciate that question. i was very surprised as he retirement savings included in that proposal because you are right. it would be double taxation if you have someone because this is a deferral. so if you have someone who is at a 31% marginal rate and you are giving them 20% cap on mac, then they are paying 3% now. but when they pull it out, there is no special accounting. i'm not saying there should be because i would be iraq. when you pull it out, they pay taxes again. so it really literally is double taxation and if you're being honest when he talked to an employer, why would they want to put themselves in that position? so i do think it would be harmful. and anything that reduces tax incentives for small business

owner to me i'd label discourage coverage. >> okay thank you you and mr. sweetnam, your testimony mentions following the bush administration's proposal simplifying this area come in many interested parties were concerned about the proposal resulting in fewer savings opportunities being available to small businesses, causing them to opt-out you also mention the 2005 budget proposal it drives some of those concerns. can you elaborate on what you heard during your proposal and what changes you made to the 05 budget and if congress were to move forward on meaningful reforms, what are some of the transition rules that she might advise us to keep in mind? >> well, the two big things that were problems was one in 2004,

we had the lsa and the rsa contribution amount is $7500 we reduced it to $5000. what we have heard from some of the policy folks, particularly after being one, was fed by having that high a tax favored savings amount, some smaller business depot might say you know what, i can put men 7000 and the lsa, 7500. i sheltered everything. i don't need any further savings through an employer provider. the other thing that we do is in the er essay proposal, we try to simplify some of the nondiscrimination rules. one of the things we did was we

pulled out, we eliminated all of the various testing methodologies that are currently available, thinking that was sent occasion. one thing judy said before, one person simplification is another person opportunity to make various changes. and so we listened to time and we just reduced the general complexity of the tests. we didn't reduce some of the opportunities that small businesses that have an order to create more flexible, more flexible types. >> thank you. i yield back. >> thank you, mr. chairman. mr. chairman, i have a

long-standing issue and producer and professionals in this area. i work with phil thomas before he was the chairman of this committee on raising ira rate. if you recall that was not a favorite mr. rostenkowski at the time. and carried the rsa proposal for the clinton administration with bob rubin recalling that the clinton proposal in terms of differentiating itself with the clinton rsa proposal was in addition to social security. the bush rsa proposal was as a substitute for social security and is the auto ira issue for a long period of time. i introduced this bill five years ago. and at least three of the panelists they now have rad endorsed it. and i suspect the other two have some sympathy for it. now this proposal would raise the national savings rate by nearly $8 billion a year. endorsed by brookings and now

with hard work from david john and the heritage foundation, we've developed this proposal. i'd hate to david many times. it's not everyday the massachusetts democrat legislation is endorsed by the heritage foundation. we have done just that. until you will support this legislation. the aarp. between us for a secure retirement. the black u.s. chamber of commerce, part number don't show, texas and i must say with some great disappointment with the still languish like they can't get one republican to sign on to the legislation. mr. hurt her i thought was headed in the right direction. he was headed in the right direction as he began to question and couldn't quite bring himself to say it but came close to the other countries offer without saying i do. now david, why does heritage support proposal?

>> heritage supports is for two reasons and we've enjoyed working with you over the years out over some of my colleagues that has been -- i tell some of them i just went to a bar. we've also enjoyed working with your staff, both melissa initially and kerry gets now. conservatives support the auto ira for two very good reasons. number one is that savings changes behavior. it takes people and it brings them closer to the community. it makes them more future oriented and for a variety of social changes that are very important. crucial that every american can save the alternatives. if we don't have a retirement system that applies to all and allows people to start a one company in mid-two continuously safe, inevitably we will see the

data that jack had initially, where people do not have sufficient retirement savings and they will come to congress and say please, sir, we need a taxpayer benefits. we don't have the money for that right now. >> also endorsed by the brookings institution is important. mr. miller, could you tell me why you've endorsed the ira proposal about the? >> yes, we are very supportive because it really does build on the current employers structure we think once employers -- first of all, people have do have an opportunist at work and we can't do that without the employer. you get over the hurdle we feel once employers are used to doing payroll deduction and feel comfortable with that, it will be easy to approach them if they listen, you've been doing this. can you afford to do more, maybe a simple plan would work for you or if or when kate was there the

system they will feel more comfortable moving up and providing some employer contributions as well. >> requires no matching contribution from the employer. >> in just the way, you know, 30 years ago a different story. but right now with the development of electronic systems would be so we have so little trouble for the employer to make this work. >> particularly good for the small employer. >> mr. hardock, why do you like the proposal? >> we need more auto enrollment and escalation. the proposal would be a big step in that direction as dr. john indicated. it gives incentives to employers to do that and making it attractive to employers to go in that direction is something that i think is well worth the worry, providing incentives, getting more employers to do it in giving employees the option to do the auto ira if they don't have a plan of their own

insoluble. so it expands the reach. i think there's a question how quickly you can get there. >> thank you. mr. buchanan misrecognized. >> thank you, mr. chairman. i also want to thank our witnesses today. as you know we have 10,000 baby boomers retiring every day. they claim for the next 30 years, 20 years. but a lot of them are very uptight, frankly about, you know, planning on retiring with concepts that they had and now they the point where they can retire 60 to 65. they are no thought of him enough money and assets because they like to put in more conservative assets going forward and the other thing is they are not sure if maybe one point they thought the 75 and now my mother-in-law is 92. what can congress do, do you think if anything to help bring more security and dignity? when incentives are what would be one thing we could do that we are not doing to make a

difference? i can tell you i'm slowly getting to that age where a lot of our friends thought they were fined 10 years ago are very, very concerned and they are not sure. any thoughts on that? poster with you, ms. miller. >> yes, thank you. but we were talking about baby boomers for such a short timeframe, i think one thing that you should do is when you look at tax reform, keep those catchup contributions and their because as a baby boomer i can have had a lot more conscience of how much you need to save not but it's too late. it would be very good to keep those options there. looking further down the road, it is important to engage younger people and not a monica moment and not a escalation are critical. but i also thing we need to look more and eat delivery of things. we are all very supportive of all sorts of disclosures.

when people don't necessarily look and we could approach people more something that is in iraq to come it would be easier to plan and for them to get engaged really would like you to enable more electronic delivery. >> research on, i was reading in "usa today" they are talking about where they are at in terms of 60%, an enormous number that are just reliant on social security and they don't have much beyond that. it's pretty scary to think you work 40 years of your life and there's something in place. you have anything you want to add to that? >> let me add two things. first of course is to take this as an object lesson. the fact is if you breach 55 or 60 don't have nearly the flexibility used to have that we need to make sure through the auto ira and and a white furry other thing to make sure this doesn't happen in the next generation. we have a second crisis coming with the baby boomers. the first is going to be not

having enough money in the second is not managing it properly so they run out of money at the time when they are 80 or 85. we need to carefully examine the question of guaranteed lifetime income annuity type products. whether they are ones that kick in at the age of 80 or purchased at the time of retirement to make sure we don't have the same in visuals that are worried now, even more worried when their bank account is empty. >> let's give him a quick question in terms of congress, helping small business. i am concerned there's lots of small employers out there where employees would like to have some kind of retirement. they don't offer it. that's tax-deductible. what incentive can we help for small businesses in terms to make sure that as many will provide 401(k) or whatever else is available. you have any comments on that? >> yeah, many members of

democrats have supported incentives started credit to send the signal and this kind of plan, we will help you with the initial administrative expense. to read more on that front mr. neel has a bill in but others on the committee in the past has supported the concept and it could easily be expanded on because that is where problem isn't but others on the committee in the past has supported the concept and it could easily be expanded on because that is where problem isn't but others on the committee in the past has supported the concept and it could easily be expanded on because that is where problem isn't that are covering. probably because of the cost. it's amazing how expensive is to send out this paper. >> thank you. mr. chairman nigel back. >> thank you. >> thank you, mr. chairman. mr. vanderhei and ms. miller come to you both stay in your testimony that despite what some may claim, studies show that current tax incentives for savings for retirement are quite progressive. what would be the effect on

progressivity if you lower the top marginal rate declined by 8%? >> that is a very complicated question and depends in part on what else you've done when you've lowered the marginal rates to 25%. i mean, it is the fact that at the top rate declines, there is less than done it for tax deferral because you are saving less money when you can tribute. but there are other -- competing ways to save that depends in part on what is happening in capital gains and dividends. if you have no tax to be paid on investment as david would like to see generally, then it becomes very difficult to incentivize an employer to put

in a plan unless you specifically have a targeted tax credit or some other specific benefits to encourage the employer to put in a plan. so i think that this is something that is particularly sensitive to what else is happening. but it is true that as the rate declines, the tentative, the cache that is freed up by putting in this plan also declines in so you'll have to be careful not to give it a double hit certainly. i also needed to increase the contribution limits in order to name an incentive in there for players to put implants. >> i would like to just amplify debate. we had done some work last summer, looking more at the bowles/ simpson proposal and a lot can be simplified to this

proposal especially for the small business owners. you're changing the calculus of what their cost-benefit analysis is a providing that to the employees. and judy hasan or witness testimony a graph or worked on last year that actually shows -- i believe we have as much as 11% decrease in the number of small plan with less than 100 employees because of the 2020 minutes. if that is something you would be interested in, we could very easily modify that to look at what the impact of decreasing marginal tax rate would be apart from the 2020 minutes and i could get back to you and not if you're interested. >> i think we would be interested in that is in all of our proposals that that tax rate be kept at 25%. mr. john, what would be the overall effect on retirement savings for the.10 to 2020

proposal as was proposed by the polls commissioned? >> i'm not a micro or macro economist, so i've not really modeled it. i usually tend to defer to jack unissued along that line. >> okay, jack? >> actually, we have a figure in the written testimony that takes a look at what would happen. i don't think surprising that the biggest hit with the on the highest income quartile. we found for example the people currently dirty six to 45 if it were applied today would have about a 15% reduction on average in their retirement balances. what i think comes as a surprise to many is that the spec and biggest hit actually comes on the lowest income quartile. and that is because of the 20% coming up to 20,000. at one thing that many people

ignore and set off in time people will come back into the workforce later on in their age they may be espouse and they may find that because those catch up or whatever they have the ability to put much more of their income in. we find that they are the ones who typically end up triggering the 20% as opposed to the high income to trigger the 20,000. even for what we find for 36 to 45, almost 10% for the lowest income quartile, 10% reduction in account balances because the 2020. >> that is understated for the lower paid because small-business owners would have about zero senate for putting a plan and in the safe harbor contributions they make for rank-and-file workers would be gone. and so i think that really understates a negative impact. >> thank you, mr. chairman. >> mr. tompkins is recognized. >> thank you, mr. chairman. and thank you for holding this

hearing. it's important in an area where we have a lot of common agreement. this is something we can do to help people, a lot of young folks out there who could really benefit from some good work of this committee could do. i want to follow up on a couple of questions that were asked by other members. mr. buchanan asked about what to do to encourage small-business folks to participate. ms. miller come in your written testimony you mentioned that employers who don't offer any sort of retirement plan, employee site business concerns. can you elaborate on what those business concerns are quite du jour research show any downturn for any of the folks who are offering it, did they jettisoned their programs from the recession? >> i don't have any data on the last piece although i've heard anecdotally the business is -- goes out of business. obviously the plan is coming to

me a small when your resources are trained you will cut back on contributions if nothing else. when employers say they are now putting the planning for business reasons, there are a few that are topline reasons. one is they don't think the employees care and if the employees they give me cash, then the employer to another just give them cash if they have it. the second as if you're small businesses are notorious for not lasting very long. and if you aren't sure you're going to survive, you're hesitant to do some integrally says hey, i've arrived. i can plan long-term, too. and the third is the cost. i think some employers don't understand how inexpensive it is to set up a plan, the most commonly the issue is they don't feel they can afford to make a contribution or to promise to make a contribution. that is why we we are supportive of the auto ira proposal because he can get employers and without

out-of-pocket costs themselves and will think they will find employees do appreciate it and we can get over couple hurdles at the same time. >> mr. neil's bill would speak to that issue. >> absolutely. >> on public record i told him a and then they go cooperative though. i think it's a good one. mr. john cummings done research on retirement savings plans and other countries. is there anything there that really knocked your socks off quite >> are actually a couple both good and bad. if we look, for instance i new zealand, new zealand has a format the auto ira. but even the fact the only 3 million people come as a much centralized foreign. but it works exceedingly well early on. the one that is a huge mistake is the united kingdom.

the united kingdom went through and back in 1997 ben gordon brown increased the taxes of retirement plans by about five pounds a year. the net result obviously was a collapse. the second thing they did as the u.k. continuously tinkers. they come out, set up a program, actually have a brilliant program called mask and the and programs trust that goes into effect this fall except that the government just announced within the last week or so they are looking at a completely different approach and that breeds confusion and distress. >> is there anything we should take from the different form programs which are evaluated on the guy putting in place here? not the ones that work best are the ones that have the broadest coverage and start people john can keep them saving throughout.

australia has a mandatory system. which works exceedingly well. i am not suggest dean the united states would want that line, but the broader the coverage the easier days and it's possible to do a simple system like the ira. and keep it very cheap. frankly we study overseas systems very extensively in developing it. >> thank you all very much. i go back, mr. chairman. >> mr. burge is recognized >> thank you, mr. chairman. obviously the goal in this whole thing is how do you make us template easy to pick the rate plan for each individual? obviously someone's understanding of financial markets and what is best for them and trying to make a lifelong decision rather than a short-term decision. so i was kind of intrigued by the automatic iras. i'm part of the testimony, mr. john cummings talked about simplifying things, but also

having automatic ira. the kind of my question to you, does the simplification comes first? 42 the automatic ira and the simplification after that quite >> i anticipate that given the direction of things that the auto ira comes first. the auto ira is crucial because if people don't save, if they don't get started early on, it doesn't matter if you simplify your not. >> thank you. i just had one kind of out-of-the-box question and it seems like so many people are going through a lot of different jobs today and so kind of the new normally several different careers, several different job and a lot of younger people i know of any two or three different employers in a short period of time. so which time he could analyze the best retirement program and here's what the the employer is offering. has there been anything done under the box and looking at a plan that would just be individuals planned and this

plan would follow the individual can't even though they are employee, but again they would make decisions on what is the right package for them for their working career nsa went in and out of different careers and jobs, employers might pay into individual plan rather than the employer-sponsored separate plan? >> there've been some examinations of that sort of thing. but the key fact here is that most people, especially when starting out don't have the expertise to make that kind of choice in the natural human reaction when you're faced with a choice that she don't understand is the do-nothing. so people stop. that is the value of both an employer-sponsored plan, where you have the payroll deduction and the autoenrollment in the auto escalation. i'm what we find a certain proportion of people he started out in autoenrollment later learned and take more control over their dvds.

>> and the other on the individual plan? >> i think it's very hard to motivate an employer to participate in that kind of an arrangement because the employer, once they have her feel financially secure enough to put in a plan, they're looking at the tax benefits. they're also looking out for works for their company. and what sometimes gets forgotten in talk about a single simple plan, is that employers will use -- they still use vesting schedules. if they are putting in a contribution for workers, it might be fully vested because it is a safe harbor. if there's something more, they don't like the idea giving money to someone coming and going right away. and so, the money won't necessarily all be vested right away. and it will invest after a few years are maybe a graduated schedule years.

and so, that really doesn't work when you have an individual account. so there are things that employer flexibility has under employer-based arrangements that would disappear and i think make them must engage good >> thank you. audio.. >> thank you. mr. reid is recognized. >> thank you, mr. chairman. to follow up on mr. berg's sentiment, one of the issues i see is the need. we talk about employers and the government and here in washington be in the ones to choose best with the individual should do at their future, special and it comes to retirement and i have this attitude appear sometimes that i try to fight every day of washington knows best, trust us we will take care of it. and i want to get to the ways to try to enhance accountability and responsibility to control their own destiny. for the things we could be doing to encourage literacy when it comes to financial planning?

any ideas or thoughts or callous as to where we can really change the mindset of individuals as they go into the work place but being aware that 20, 30 or so common we need to have some been in the bank to take care of by us. is there any proposal and i can share with that and take a real close look at quite >> i have to look at electronic delivery and getting people engaged. there's amazing things going on out there in people having their own individual information setup on their ipod or handing them out when people come in to get enrolled in letting him work through and see what it's going to be like. and yet there are constraints on how everything has to be handled right now that minimizes what you can do. and so at hamas ties -- this market is incredibly competitive

and creative and can't always get to do everything it could do. >> could you give us examples of chris strains, are the regulatory constraints? >> yes, for example right now we have all this paper due out for disclosure on investments. and we support the disclosure. but people are going to be getting a stack of paper and i don't think they're going to read it. and if you are able to come if you had the e-mail address, we just keep a working e-mail address. you can't necessarily use that if they are a routine part of their job and all this other stuff. and even though they may have used her website. so someone uses the website, you should try them to the website to get this information. once they are there, there's some things you can do. people working on games to encourage people to save. you need to be able to get them involved. right now you have to send them

the stack of paper unless they went through certain steps and is a major expense and delay discourages creativity and truly engaging people come especially younger people that are so much into electronics. we cannot deliver this information on their iphone. they're not reading and right now we can't. >> i see you nodding over there. i agree that the julia set as i usually do. the u.k. has something called the platform account, which combined retirement savings account with variety of investment vehicles. one of the things that works exceptionally well over there is because the employer knows how old this employee is at what stage of life they are, they can shoot them little target videos spears of the individual is just a coyote, they can shoot them up

video talking in two minutes about uris which you can do to start saving for your child's future. or if you just married, here is what you can do to start saving for a house. and we founded studies that these works exceptionally well and they work even better if a person who is being recorded is someone who is a coworker or connection to the individual. >> off a semi in high school, elementary school, any thoughts on that? >> yes, my older daughter who is 25 went through one of the finest high schools in the united states have been montgomery county and she took a variety of courses in photography, cooking with amazing results and she didn't have to take a single financial literacy course. >> that's a great point. but that i got back on mr. chairman. >> mr. lewis is recognized. >> thank you very much,

mr. chairman. i were to apologize to members of the panel. i do run out and speak to a group of eight grade student. so they cut me for a while. i heard your testimony and i want to thank you all for being here. and thank you for your service. ms. miller, it is good to see you again. thank you also for all that you do. ms. miller, and many other people who criticize the question of tax incentives for retirement saving are fairly wealthy. these laws favor high income people. do you have any ideas that can further increase participation among low and middle income workers. how we can make it easy for people to save for retirement quiet >> that's a very good question.

if you look a retirement savings incentives, first of all there is a on com nation that is considered. so when you hear a lot of talk about what's cut incentives, let's café. over two and thousand a night is when you're testing for nondiscrimination. someone might make a million dollars, but when you compare percentage of pay in the plan to the lower income persons percentage of pay can use the 250,000. we are to have some in building to limit that. the nondiscrimination rules generally will say that if a business owner wants to put in a maximum of $50,000, those workers are going to be getting a contribution, 3%, 5% depending on arrangement. they will be getting employer money. and it really is additional money. there have been some people who say they will be getting artists

paid anyway. but there is a really good recent look at this by air toter and someone else i forget showing for a income groups if there is a 401(k) plan, it is new money, largely new money. they afflict 89% but for small businesses like 100. it's additional money. these nondiscrimination's do that. it's a matter of getting access to more people and that is why again we are strong supporters of something something the auto ira program that would just make these arrangements available to more workers and just grow what we have here. >> you mentioned that in another time and another. that the banks would stay open and i remember rushing down to bang when i was much younger, had all of my hair and with my wife before the banks closed to get a $2000 honorary.

would have been in that spirit would have been? >> well, that was one of the things that we propose doing in the bush administration simplification proposals. what happened was that we put income limit on who could make contributions to iras. so when you and i was going in you will see in my testimony of two pages worth of charts that talk about who can and cannot

make contributions. before you didn't have that never went to go and then the banks -- the banks could say, on end. and we will set up your ira. that's the difference. that is the difference now. >> mr. chairman. can i yield the balance of my time for the gentleman from oregon. >> there's only 30 seconds, the sugar trondheim in just a few minutes. >> kellaway. >> thank you. mr. paulson is recognized. >> thank you, mr. chairman. who's got a lot of discussions and i appreciate the hearing. one thing we haven't talked about art esops come employer stock ownership programs that enable workers to accumulate savings as compared to some of these others retirement plan and studies that show the value of the retirement accounts is

employed to work for aesop for that from an average $100,000 in 2008 and you compare that to be $5000 average of an employee of the 401(k) account. the statistics show that esops have been tremendously successful when it comes to helping workers save for retirement. if i could just ask you, should congress make sure we protect esops in the context of successful retirement savings vehicles as we tackle tax reform and also attend to simplify the defined contribution retirement system as well? >> when we look at the retirement simplification when i was part of the treasury department, we thought that the esops were perfectly fine and we didn't try to modify them at all. and my personal thoughts are, i

have dealt with esops over my career and they have provided very good then if it's for people. so i think one of the things you're hearing from everyone here is that we shouldn't be cutting back on retirement benefits in esops are an important benefit and i'd take that everybody is fine with continuing on. >> you're nodding your head a little bit too. it should esops be used if the structure served a bit of a model as part of tax reform were just having not encompass? >> i think it is important to maintain them. i'm not sure i can say they are model because when you do with an employer and what they should be doing, when it fit the

situation it's a wonderful thing, but it does know if that is the situation. it sits alongside other retirement programs. >> let me ask a question further panelists. there's been mention of some of the current law of the nondiscrimination that apply to 401(k) plans and make sure low-income workers also benefit from plans. can you talk a little bit about how these rules work for the dave of the small business owner for the contributions that would be required for these rules? anyone? >> i can speak to that. most commonly if you're dealing with the small business use, probably the accountant says go see so-and-so about putting in this retirement plan. they've gone to the point where they are finally making money and coming to the end of the year and the other $30,000 sitting there in the ticket it out sabonis and pale sorts of income tax on the money.

so you can show them how if they put in a qualified retirement plan and make a contribution for themselves and save on that from income tax purposes, they can use close to want some pizza and sub it taxes to make for their people. and that way you stated them, okay you can take the bonus home and write out a check to uncle sam for 28% or 31% with 86. or you can put in this plan and give that money and find out the receptionist amy go win and get the money to your employees. and most times they are very eager to have retirement savings themselves and help employees say this well. but the tax incentives that was a key part of it. you have to show them how it can be better used than to just take it home. >> anyone else? thank you, mr. chairman. >> thank you. mr. blumenauer is recognized.

>> thank you very much, mr. chairman. i apologize. i've been in the budget committee defending the interest of the ways and means committee. >> thank you for the service. >> it's a pleasure. and i'm sorry that i was not able to be more of a part of this. i had a chance to review some of the material and it strikes me as something that would be wary time is well spent. with all of the bakeries that are surrounding tax changes, some of the budget pressures, retirement security seems to me to live very large and they appreciate advice on a petition from the panel members about looking at the big picture, about things that encourage employers to provide a range of choices. i know at times it may be faltering, which is why i have supported the automatic ira

enrollment. it is why in the lead cosponsor on the esop ports appropriate, very powerful. but i was struck or something mr. john said about the experience in great britain. be careful about tinkering about taking about the already confused system with all the best of intentions, and changing it again. he seems to me with your help and advice to mr. chairman, if you have been fearing men at them as they truly are refinements, i am willing to explore all sorts of modifications in the tax code, including in some cases raising taxes on myself and others. but i think the investment that

have been made to in vent retirement savings, insurgents, things that people are relying on. these are things that take a while for the consumer to be educated. in their opportunities for a whole host abundant timid consequences if we are not careful. so i just wanted to ask rest my strong support for the committee working on this for the advice and counsel about refinement at a time when americans have hit choppy water economically, where millions of people have lost what they thought was the value of their home. maybe was artificially later, but they've argued against it were a retirement and college education has been diminished.

i think the advice we are getting here about refinement not tinkering, moving forward is well taken and i hope it is something that we can work on together to strengthen these retirement opportunities, send signals automatically enrolled and send innovative approaches, but have caught me witty seems very, very important to me. i appreciate the courtesy. i'm sorry wasn't what the more, but i think your contribution is very important in this hearing is very important. thank you, mr. chairman. >> and their ways member, dr. price. >> thank you, mr. chairman. and i apologize for not being here. how to thank you for your testimony on what is an incredibly important issue. i want to hold an enemy discussed, but ask mr. vanna hayne and ms. miller a few good -- my sense of the small business folks at home, people i

talk to tell me that there are impediments and obstructions into both the employer and the employee being able to contribute to what might be in a more open, flexible and i think you call a creative plan, ms. miller. if you had to identify the greatest impediment to put in place to eat the employer or employee for setting up a flexible response is retirement plan, what would that be quiet >> well, i will focus on the responsive part of that. one of the major improvements we've had in the retirement system in this country, certainly since 2006 is the increased adoption of automatic enrollment and automatic contributions. for a variety of region, a number of players have adopted a safe harbor approach, the automatic escalation was

fortunately currently has a maximum cap of 10%. i think if you talk to most financial planners, they would say that in addition to it that players mentioned, you need ashley for employees who are certain in this process later in their careers, something more than just a 10% contribution per year. and i think if there were ways to not only first of all high than players increase the default contribution rate as david had our dimension to perhaps 3% to 6% more and allow employees who want to automatically allow a contributions to escalate over time, to go beyond the 10%. >> there is some data in testimony that shows that when you do that, it is like telling

your kid c. isn't good enough grade. we tell them in a may is a great one coming a bit closer eight in the data we have seen shows that if you set that bar higher, even people who don't do the automatic escalation do more. because they see the bar and say that is what i'm supposed to do. >> yeah, one important point to make here is that autoenrollment isn't as popular with small employers as it is with larger ones. the reason is that it is too easy. practitioners to recommend because it's too easy to trip up and you get hit with penalties and i think we need to take a look at some issues that would make it easier for small employers to do it without incurring additional expense. if you're automatically rolling with one of the service to sinai. the small business sometimes you forget that day passes and you didn't do it and you get to the

end of the year and whoever's doing your retirement and says so-and-so should've been involved. well, if they happen to own a mystic few months, that's okay. you can get them signed up. but if they're out for close to a year, the small business owner to do this automatic -- safe harbor correction not only has to put in whatever match they would need, but they have to put in the automatic, contribution, too. so the employee got them their salaries, but they also gotten their money. it's so much hassle they just don't want to bother them that makes no sense to make matches, not just that the contribution in. also small business deals with top-heavy rules, worth over 60% of benefits or 14 people, there is a minimum contribution of 3% of pay which is fine come of this wants to be nice and let everybody contribute to the plan, even if they haven't had

your service income is suddenly they have to make the contribution for everybody, which is their short term they really don't want to. so they really are constrained by some of these things that are particularly difficult for small business and really would be pretty easy to clean up. >> thank you. my sense is there has to be right balance between this competitive and creative market we want and regulation. ms. miller, would you say that balance has been struck right now? >> we have -- there's room for improvement. definitely room for improvement. >> great. i would appreciate each of the panelists, if you desire, to follow-up on that score can identify in areas for the regulatory environment is actually less helpful to employers and employees. >> thank you, dr. price. i'm to thank our panelists for excellent testimony today. some good information was transmitted to us in many good points were made. and with that, this hearing is now adjourned.

>> for this year student camp competition, restaurants to create a video talking about constitutional support them andg why.okookggk today we're going to be seenogok wisconsin to speak a second prize winner, paulg westerberg, an eighth-grader at mckinley come in middle-school. hi, paul. your video was on the full-body scanners and its relationship to the fourth amendment. why did you choose this topic? >> he decided to go with the topic because we wanted something that people could become emotionally attached to. another reason we chose the topic is it appeals to such a variety of people. anybody who has ever traveled by plane before has come into contact with tsa and possiblykko the full-body scanners. >> what was your goal by using the premise of superman on trial during your video? >> we wanted something people were familiar and comfortable with and also wanted to know why

people thought superman was so cool and some people don't like tsa when you're pretty muchkkgkg doing the same thing. >> you interviewed an employee from the department of homeland security. how did he deepen your understanding on this topic? >> actually it's pretty tricky to get an interview from somebody like homeland security or tsa because they are very private about what information they release to the general public. so we are very grateful that mr. darl took the time to take part in our interview. he hoped even my understanding on wave scanners and backscatter technology. >> you also agree several people on personal views on the full-body scanners. how does this help you understand the different sides of the issue like >> they help me understand different sides of the issue by telling me what everyday people think about the scanners.ookkkgo what are their comforts and

discomforts with them. >> what was your favorite part through the entire process of creating this documentary? >> my favorite part would be the interviewing. i got to interact with new people, which i like and i got to gain more knowledge on the topic. >> what would you like others to learn with a watcher documentary? >> you know, i would like others to learn that the scanners are necessary and i would like them ko learn that tsa is makinggogkk efforts to make people more comfortable with these machines. >> coal, thank you for talking with us today. >> here's a portion of cole's documentary, the adventures of superman. >> lois lane is accusing superman by using his x-ray vision and best violating her personal privacy. how does the defendant plead?

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