Briefing Book

White House Conference

SIA - Securities Industry Association 1401 Eye Street, NW Washington, DC 20005-2225 (202) 296-9410 Fax (202) 296-9775 120 Broadway New York, NY 10271-0080 (212) 608-1500 Fax (212) 608-l604 info@sia.com http://www.sia.com For Release: Tuesday, December 8, 1998 Contact: James D. Spellman (202) 296-9410, jspellman@sia.com Margaret Draper (212) 618-0531, mdraper@,sia.com SIA: WHITE HOUSE CONFERENCE WILL ENGAGE NATION IN DEVELOPING BIPARTISAN SOCIAL SECURITY REFORMS Solutions Should Include Personal Savings Accounts, Preserve Basic Guarantees, Offer Choices, Create No New Burdens, Hold Costs To A Minimum Securities Industry Volunteers Expertise, Experience To Help Policymakers Washington, D.C., December 8 - In welcoming the White House Conference on Social Security, the Securities Industry Association today outlined five principles that it believes should guide Social Security reforms and volunteered its expertise on retirement policy, investor education, and capital markets to help policymakers develop long-term solutions. "Americans of all generations believe that the Social Security problem is real and needs to be addressed now," said Marc E. Lackritz, SIA's president. "The White House conference provides a unique window of opportunity to build on that consensus and start forging bipartisan agreement on solutions. It's imperative that our country have a viable Social Security system that will be there for tomorrow's retirees as it is for today's" The solutions developed by policymakers, Lackritz said, should be based on principles that would: promote the preservation of the broad intents of the original Social Security system; and, encourage developing the system to give individuals greater control over their retirement assets, greater choice and flexibility in deploying them, and greater stewardship over their financial futures. These principles as proposed by SIA are: Any solution to Social Security should include some type of personal savings account. Such accounts would increase net savings and introduce more Americans to the basics of savings and investing. This approach would continue the system's fundamental fairness by providing all American wage-earners with the same investment opportunities. Basic guarantees must be preserved. Social Security made the American wage-earner a promise: there must be a minimum guarantee equal to that now provided to America's families. That includes the right now extended through Social Security to change jobs without losing the benefits, assets, or basic rights the system delivers. Social Security reforms cannot change that promise; they must only improve the way in which Social Security delivers on it. Individuals must have choices. If working families are to invest through the Social Security system, they should be allowed to make choices that reflect their differing individual circumstances. Families of different ages, incomes, and preferences will have different approaches to investing for the future. We must recognize and allow for those differences. No new burdens. Changing the system must not become a pretext for creating new burdens for employers. There should be no new payroll taxes and no new reporting requirements or paperwork for employers. The costs must be minimal. Investing in securities to earn a higher return only makes sense if the system's costs don't balloon. The system must be structured with minimal costs. The wage-earner's assets and benefits should not be eaten up in administrative fees. This means that the discipline of competition must be built into any system for private investment of Social Security resources. The securities industry, Lackritz said, has extensive experience in helping tens of millions of Americans plan their investment strategies through Individual Retirement Accounts, 401 (k) plans and other savings programs. "SIA is committed to using its experience and expertise to solve any problems that may arise in the administration of personal savings accounts," he said. "We look forward to engaging in a constructive solution that is vitally important to all Americans. We pledge to help Congress and the Administration resolve issues that may arise as Social Security reforms move toward being enacted," Lackritz said. The Securities Industry Association brings together the shared interests of nearly 800 securities firms to accomplish common goals. SIA members -- including investment banks, broker-dealers, and mutual fund companies -- are active in all markets and in all phases of corporate and public finance. In the U.S. SIA members collectively account for approximately 90 percent, or $100 billion, of securities firms' revenues and employ about 350,000 individuals. They manage the accounts of more than 50-million investors directly and tens of millions of investors indirectly through corporate, thrift, and pension plans. (More information about the SIA is available on its home page: http://www.sia.com.)