Transcript
PETER ORSZAG: We are here to discuss both what has happened and what we hope will happen with regard to strengthening retirement security and making it both easier and more rewarding for American households to save for retirement.
As most of you know, there has been a lot of momentum recently for automatic savings vehicles, and that is going to be a major topic of discussion throughout the morning. The momentum raises several questions: Where are we now? What does the new pension legislation which facilitated further corporate adoption of automatic 401(k)s mean? What other steps should we be taking to move along the path of automatic savings vehicles? And then also, what is the potential impact on important indicators like net national saving? And that is what I want to talk about briefly before introducing our other panelists.
You should have on your seats what the Retirement Security Project is releasing with estimates of several proposals that we have embraced including the automatic 401(k) and what they would do in a rough ballpark sense to net national saving. This type of exercise requires a variety of assumptions, approximations and other guesstimates, and so I do not want to be pinned down to the precise number, but I do want to put forward at least an indicative indicator of the potential impact.
We estimate that the proposals that we could discuss could raise net national saving by about $75 billion a year which is roughly a quarter of the current net national saving rate of about $325 billion a year. That is .6 percent of GDP, and a very significant impact that could come from the aggregate effects of these proposals taken as a whole. In other words, what we are talking about this morning not only matters for individual retirement balances, but could also have macroeconomic consequences.
View Full Transcript »