 Welcome. Thanks for joining us this afternoon at the New America Foundation. I'm Reid Kramer. I direct the asset building program here at the New America Foundation. And this is a public policy program that focuses on innovative ways to promote economic security and social development, especially with policies and programs that promote savings and building up assets over time. So we're very pleased that you could join us for this event facing up to the retirement savings deficit from 401Ks to automatic actually to universal and automatic accounts. That's the title of the session today. And economic security really does depend on being able to access both income and a pool of assets. You build up a stock of assets that you can then access at key points in the life cycle. There's a number of ways to do this, but primarily I think it's highly recommended to use the savings process as opposed to other things like gambling or paying the lottery. The savings process is really key. And we know families have multiple savings needs. They need to address unexpected events like a loss of a job. They need to save to pay for strategic investments like accessing educational opportunities. And of course they need to save for a secure retirement. Retirement is an important objective for many families, but it's just one of many. However, it is one that we do know is coming for most people. And with the Great Recession, we've seen once again what happens when people don't have access to resources when there's a sudden loss of income. So my point is that income and assets are complementary, and the assets play a role of mitigating risks that families face, which is especially true in the retirement years. Of course they're impacted by a lot of broader economic forces. We've seen the fact that when asset bubbles are created and then they pop, it's very debilitating for many families. It's also on the upside, it's I think counterproductive because it makes the savings and asset building process appear a lot easier than it actually is. So building assets takes time and it's best when it happens over the life course. When we start early, when we integrate it into the work process and the pay process. And when we do this, there's actually a number of attractive features of current savings plan structures, such as the 401k and other programs similar. If we look at the current landscape, I think we can see a lot of things that are in flux. Five years ago, we passed legislation that made some modest improvements in the pension landscape and the 401k landscape. We can kind of assess those, but we still have a significant, very significant retirement savings deficit. Estimates about $6 trillion in a deficit. The real crisis of retirement security is not, in my opinion, social security solvency, but it's the fact that fewer Americans are participating in any savings plan. About half of workers are not covered in any savings plan. So we clearly can look at the landscape. We know we're in this shift to define contribution plans. But it's still unclear if the resources in those accounts, in those plans, are going to be sufficient and commensurate to meet the expectations of retirees. We also know that there are these major equity issues that I think are out there with millions of people not participating at all. So to varying degrees, there's recognition of these problems and some progress is being made to address them. A number of very constructive ideas have been put forth. We certainly have challenges in our political process of navigating this landscape, but we're not here to solve those problems today. We're here to have a constructive conversation about some proposed solutions. And we're going to start by focusing on one that was incubated in the think tank world, but has since been adopted by the administration, the Auto IRA proposal. And I'm very pleased to have Mark Evry with us to come and talk about the Auto IRA and to make the case. He's a senior advisor to the secretary of the Treasury and the deputy assistant secretary for retirement and health policy, yes, at the U.S. Treasury. And previously he was principal of the retirement security project along with Bill Gale and Peter Orszag and David John. And he's really one of the most thoughtful people I know on this working in this issue area. So really pleased to have him here. But with all good ideas, we think there are some ways to improve them. And in that spirit, Michael Calabrese is going to offer a critique which emphasizes ways to make the proposal stronger. He's been a colleague of mine here at the New America Foundation for a number of years. Actually he was here almost since the founding of this place in 1999. And he's really added his voice very constructively to the retirement security debate over that time. His remarks are treated a little bit more fully in a paper we're releasing today that's outside at the desk and available on the web shortly. It's titled, the subtitle is from Auto IRA to Universal 401K. So we'll look forward to his remarks. And then we're going to have kind of the panel discussion following these remarks. Really an all-star cast, they'll come up and share their perspectives and talk about alternative approaches. We'll have Bill Gale, who's the director of the retirement security project at Brookings, and worked incubating some of the ideas behind the Auto IRA previously. And has also been promoting another concept of the flat rate deduction scheme that he might share with us. Teresa Gillarducci is going to join us. She is the director of the Schwartz Center for Economic Policy Analysis at the New School in New York, a real leader in this work. Author of a recent book called When I'm 64, The Plot Against Pensions and a Plan to Save Them. And then David Cerdna will join us and he's the director of Federal Affairs at AARP. So they'll all share their perspective as well. So the format is we're going to hear from Mark, Michael, then the panel will come up, make their presentations, and then I'll pop back up to moderate the Q&A. So Mark, welcome. You know what? I'm going to stay down here if that's okay. Can you hear me in the back? Is this mic working? Yes. Great. I'm going to do that partly because I'll try to be quite brief and basically set up this interactive dialogue, starting with Michael's suggestions for how to improve and build on the automatic IRA proposal, then Teresa's ideas which include things like that as well as different approaches which are very creative, Bill Gale and Dave Sertner, and then hopefully all of you. It's a pleasure to be here, read with you and with my four very distinguished co-panelists as well as David John in the audience here who is the co-author of this proposal originally Senior Fellow at the Heritage Foundation. And as you mentioned, read this automatic IRA approach was developed under the auspices of the Retirement Security Project which Bill Gale continues to direct and has been adopted by the Obama administration and introduced as legislation in the House, Representative Neal and others in the Senate, Senator Bingham and Kerry and others, and is in the process of being reintroduced in Congress this fall. I'll give you a brief rundown of what this proposal is. Read's done a good job of motivating it. Here's the problem. I'll pick up with what he said and also rely on my co-panelists who have very persuasive points to make about the need for new solutions to expand coverage and expand retirement security. We have currently, as you know, a system in which employers who wish to sponsor plans, sponsor plans, to find benefit, to find contribution, and employees or non-employees who are not covered by an employer plan, who don't have the opportunity to participate in one as well as some other employees, can use a kind of gap filler, the IRA, the individual retirement account, to engage in tax-favored saving that is in the nature of what an employer plan provides in some respects. Our take-up rate, the percentage of people who could participate, who actually do participate, is something like three-quarters, two-thirds to three-quarters in the 401k universe generally. That's with traditional kinds of enrollment in 401ks. With automatic enrollment in 401ks, that is the opt-out approach where an employee is in unless here she opts out. It tends to go up to 90, 95 percent. Very powerful difference and a very successful way of increasing the eligible, the 401k eligible population who actually use the eligibility to avail themselves of the saving opportunity. But it does not reach the tens of millions of folks who are not employed by an employer that sponsors a plan. The take-up rate for a defined benefit pension is 100 percent of those who are eligible, though an employer is not required to make everybody eligible in the first place, but is required to make a certain proportion of employees pursuant to nondiscrimination rules eligible. The same is true of other employer plans such as profit-sharing plans that are non-matching that involve employer funding, whether or not the employee takes any action. The take-up rate for IRAs, the kind of IRA that we have today, a standalone vehicle that an individual can open with an IRA trustee or custodian, a financial institution authorized to do that and can contribute to, the take-up rate there tends to be in the single digit percentages. A whole order of magnitude smaller than the 401k or DB or other employer plan take-up rate. That means that we have tens of millions of folks who could be saving but aren't largely for reasons that I think are reasonably evident. Some of them don't have enough disposable income to feel that they can put any money away, and that's a sort of fundamental fact. Many others might be able to save a little bit, and we think that in fact many tens of millions are in this category, but it takes initiative. They have to make decisions and go and open an IRA which may require going down to a bank and waiting in line and filling out forms and deciding which type of IRA, a traditional or a Roth, and whatever that means, a complex kind of choice. What investments to invest in? Lots of people are daunted by that, don't understand the investment options very well. There's an almost unlimited array of investment options in IRAs and various other decisions how much to contribute and when to contribute that make it harder than necessary to save. The automatic IRA is designed to make it easy to save. The way automatic enrollment in a 401k makes it easy for an individual to get into the plan and easy to continue saving. There's not a liquidity problem, you don't have to come up with a large amount or enough to satisfy some minimum that a financial institution might have. You have payroll deduction working for you in the employer plan context. It can be a small percentage of every paycheck going into the plan in a relatively painless way. The thought behind this proposal has been to take advantage of those aspects of the current system that work relatively well, this payroll deduction workplace saving that gives the individual immediate access to the saving opportunity, the automatic enrollment in that payroll deduction saving, and the individual account that is portable that doesn't depend on where a person is working that person can keep throughout their working life and throughout retirement. In this case, the IRA is what we've selected as the vehicle partly because it's there. It exists, it's familiar, there are tens of millions of them already. It makes a lot of the choices which one could make in different ways about withdrawal rules, tax treatment, contribution limits, and so forth. Taking those three building blocks and putting them together is really all this proposal is about. Any employer that sponsors a plan goes in peace under this arrangement. An employer that has fewer than 11 employees, 10 or fewer employees is encouraged with a tax credit to adopt automatic IRAs and employers that have more than 10 employees but have not chosen to sponsor any kind of retirement program for their employees would be required to use their payroll system to make available their payroll system for employees to save their own salary reduction contributions in their own individual account. This is not put forward as a total solution or a near total solution to the needs that we have to save more and to expand coverage. There are many virtues of things like defined benefit pensions, lifetime income, pooled investments which this proposal tries in some measure to encapsulate or create a platform for. Pooled investments, there'd be a default kind of investment like the Labor Department's qualified default investment alternatives, be it a target date fund or a principal preservation fund and a couple of other options and those options would ensure that people have the choice to invest in a principal preservation way safely or to invest in an asset allocated way with diversified access to equities and other types of assets. Employers would not have to contribute, indeed would not be allowed to contribute and Michael will be raising an alternative suggesting perhaps employers should be allowed to contribute. There may be suggestions that employers should be required to contribute. This automatic IRA does not do that because the idea is to work with the current employer system to support it and not to in any way compete with it. So the dollar limits are low. The idea is that employers will not have an incentive to abandon a qualified plan whether it's DB or DC 401K in order to have an automatic IRA won't give them an excuse to abandon a plan because IRAs allow people to contribute $5,000 if they're over age 50 and extra $1,000 whereas the 401K allows $16,500 or for people 50 or older $22,000 plus employer contributions that can get the total up to $49,000 and of course other qualified plans likewise allow comparable or greater contributions. So this is intended to fill an itch at the bottom of the savings ladder if you will to take the standalone IRA with its very low take up rate, very small percentage of people who contribute and make it much more accessible, easy to contribute to, automatic for tens of millions of folks including self-employed people to the extent we can without a payroll system it's more challenging but automatic debit and access to IRAs that involve automatic debit so there's regular automatic saving is a way to help those folks as are things like tax refund savings in qualified vehicles. The employers that participate would get a tax credit. The cost to the employer would be a very modest administrative cost, former joint committee staff have written a paper about that, ARP has looked into that as part of its support for this proposal and it seems like an employer would have to do very little beyond what it currently does and the intent is to design the details so that that would be the case it has to withhold anyway for income tax and FICA, FUDA, UI this would dovetail into that. Employees would be able to opt out or opt for a higher or lower level of contribution than the default level of contribution and employees would be able to send the money to an IRA of their choice if not initially later. We'd like employers to be able to select a financial partner at which to have all the IRAs if they want to and if they don't want to to give them an alternative that would let them send the money to one place that doesn't require them to choose an institution. No employer fiduciary liability with respect to investments because the investments would be of a type that's nationally prescribed consistent with what the core 401K or federal thrift savings plan kinds of investment options are today. There are more specifics that one could flesh out but in order to make sure that we allow maximum time for everyone else including suggestions for improvement and questions and concerns I'll pause here and turn it over to Michael. Thanks, Mark. I think all of us really appreciate Mark's efforts first in developing the auto IRA at Brookings with David and Bill and others and now with Treasury trying to keep the issue at the forefront really being the continuing to be a champion for it. So thanks for that. There's little doubt about the need to face up to what the Center for Retirement Research estimates is America's $6.6 trillion retirement income deficit. So all the attention is on budget deficits these days but as I was just hearing about some polling maybe Theresa will talk about that the folks out there are much more concerned about the retirement gap than the budget gap. So Social Security has already surfaced in the debate about deficit reduction but as Reid said at the top the real retirement security crisis is not the solvency of Social Security that's minor compared to the problem that a majority of American adults more than 75 million workers do not participate in any workplace retirement saving plan at all so they'll be overly reliant on Social Security. Only 43% of private sector workers age 25 to 64 participated in 2008 a striking decline from the 50% rate in 2000 and still below the late 1970s. About 85% of Americans without a pension benefit at work are low income, young, work part time or work at small firms. Unlike the days of defined benefit pensions in a 401k nation individuals most choose to save. However, below median wage workers are far less likely to be eligible for a payroll deducted savings plan at work and even when they are the incentives to participate are far from compelling and I'll talk a little bit more about that. As a result the shift from DB pensions which automatically enroll and contribute on behalf of the full time workers who are eligible that shift to 401k plans has coincided with a sharp decline in pension participation among lower wage workers in particular. The bottom half of the income distribution will continue to rely on Social Security for nearly all of their retirement income unless personal asset building becomes far more universal. Unfortunately progress on enacting an auto IRA or any coverage expansion has lapsed into a sort of tactical retreat. A legislative push has been on hold not necessarily for bad reasons first in deference to a focus on enacting healthcare reform which thankfully was done and now because of the fiscal squeeze and the budget cutting agenda of conservatives in Congress. The Obama administration continues to support the auto IRA but it has also dropped an expanded and refundable savers credit from the President's fiscal 2012 budget. Despite today's inhospitable political climate we believe this is precisely the wrong time to trim our sales or back away from proposals to make our retirement savings system dramatically more inclusive, automatic, and secure. While this Congress will certainly not enact progressive pension reform there are two broader debates that could prove to be an opportunity and so we need to be ready with strong proposals. One is Social Security reform. If cutbacks are ever seriously on the table so should be supplemental accounts that leave low and middle income families more secure not less. A more likely opportunity however is tax reform. Each of the major fiscal commissions have agreed the tax expenditures need to be retargeted, reduced, or capped and the retirement savings subsidy is one of those. One of the most expensive programs the government has in fact. In the context of these coming debates the auto IRA as most recently proposed by the administration and in Congress should be substantially more inclusive, more portable, and more likely to generate participation and asset building among the vast majority of middle and low wage workers. So the primary point of the paper that we're putting out today is not to reject in any sense the auto IRA approach it's certainly going totally in the right direction but to highlight five ways to strengthen and improve auto IRAs. So the first is inclusion. Every worker not currently eligible to save in their employer's plan should be included for automatic enrollment and payroll deduction or to be able to contribute directly. In the case of the self-employed or the employees of the very smallest businesses things like auto bank deposits designation of tax refunds or split refunds are ways to do that. Some auto IRA proposals potentially exclude one-third of the workforce. For example, exempting employers of 10 or fewer employees leaves out 18 million workers just that, nearly 12% of the workforce. In addition auto IRA proposals typically exclude all workers at firms that sponsor a qualified plan. However these same firms employ between 10 and 15 million workers who are not eligible to participate in the employer's plan because they haven't satisfied the one-year service requirement. Remember job tenure is averaging 4.4 years now or they are part-time temporary or otherwise contingent workers. There are also 16.5 million self-employed individuals who again need that push. After inclusion the second sort of eye is incentives, stronger incentives. The federal government spends more than $125 billion per year on tax subsidies for retirement saving but 70% of that flows to the most affluent 20% and 40% goes to the top 5% by income. A deduction reduces the tax liability of a top bracket earner by 35 cents for each dollar saved. So you all are putting in 35 cents for every dollar a wealthy person saves. Nearly 45 million low and middle income tax filers who have payroll tax liability but no income tax liability receive no subsidy at all for saving. We should retarget saving incentives with the refundable matching credit deposited directly into the workers account so that it helps build the accumulation. The match rate should be higher for lower wage workers who are least likely unable to save. Bill Gale will describe his similar proposal for a flat rate refundable credit to replace the current deduction. I like his proposal but where I differ a bit is that I would give very low wage workers a dollar per dollar match up to the first $2,000 saved. I think they need both stronger incentives and simply more money in their accounts. A third way to strengthen the auto IRA is by adding a central clearing house to receive deposits directly from employers and from individuals not able to access auto payroll deduction. The clearing house would be a default administrator for small unprofitable accounts although individuals could roll out of it later after they have a certain amount of assets. By creating a career account that is always open it would promote continuous saving and portability particularly if you have complete inclusion. In fact Australia's superannuation guarantee system of sort of mandatory universal 401k which is considered a great success there. They just had some reforms and in fact this year implemented a clearing house after it was discovered that workers, their workers already had an average of more than three accounts each including 6.4 million lost accounts, one for every two workers that had over $12 billion in them that nobody knows quite what to do with. A fourth improvement would be to make sure that inertia is firing on all cylinders in favor of saving. Automatic enrollment is central to the auto IRA concept and very powerful as Mark pointed out getting up to over 90%. But there are additional default features that need to be both required and robust and not left to the discretion of employers. They're not plan sponsors, they're simply facilitating payroll deduction. These include a higher default contribution rate. It should be 6% not the 3% that's currently contemplated. Automatic escalation up to the 10% to 12% level which is considered minimum to have adequacy assuming even continuous saving. Automatic investment in an age appropriate allocation between stocks and bonds as Mark advocates. Automatic rollovers when a worker leaves a job, about half of rollovers, most of the small ones are cashed out. And automatic annuitization so that the default payout option during retirement is at least partially guaranteed monthly payments rather than a lump sum. Bill Gale has a proposal for trial annuities that I think would fit very nicely here and no doubt why he is working on that. Finally, the fifth design improvement would be to allow employer contributions and a worker contribution limit that's higher than today's $5,000 IRA limit. Employers that don't want the burden of administering a 401K may still be willing to make a contribution perhaps as a bonus in a good year. Employment testing would be unnecessary if employer contributions are limited to a flat dollar amount or a flat percent of wages and includes all payroll employees including part-time and contingent workers. In other words, again, it needs to be more inclusive than currently it is for 401Ks. An auto IRA with all five of these more robust features would make our retirement savings policy in our view substantially more inclusive, more automatic, more adequate, and more equitable. So I'll stop there and there's of course more detail in the paper. So we'd like to get our other three speakers up here. They haven't had to stare into the bright lights all this time but expand the conversation. You can use either the podium or from your seat either way. I'll just stay here. Did you stay there? Sure. It was good enough for Mark and Michael. I followed Mark's lead. I also don't want to provoke any undue attention from the gods above. The last time I was in this building, in this room actually, there was an earthquake and so it was with some trepidation that I accepted Michael's. Are you standing up? All right. Thank you. So I want to talk about one proposal that I had put forward with Peter Orszag and John Karuba several years ago, at least a variant of it in a Hamilton project paper. And I recently testified on this as well and so the testimony is out on the counter. What I'm going to talk about this morning, this afternoon, is a little bit of a simplified version of this proposal and let me just give you two items of background before I get into it. In addition, let me say thank you to the organizers for inviting me on this, what was an important enough topic to risk earthquake exposure once again. First thing in the background, RSP has several papers that people might be interested in. There's a paper that Peter Mark and I wrote, I think, in 2005 called the automatic 401k, which takes the idea of going through automatic enrollment, automatic escalation, automatic rollover. It talks about automatic annuitization a bit, but sort of punts on that. Mark and David, of course, have the classic paper on auto IRA. And then Mark, David, Lena Walker, who's at AARP, and I have this paper on trial annuities which tries to think seriously, if you want to do automatic annuitization, it's a really tricky thing. Automatic enrollment, if you get somebody at the wrong contribution level, 6% rather than 3% or 3% rather than 6%, it's no big deal, they can just change it. Automatic annuitization, if you stick someone in the wrong lifetime income product, you can't undo those things by nature of this. So our trial annuity proposal is an idea of how to kind of have your cake and eat it to get people, get a toe in the water without committing themselves for the long term. All right, so that's one point of the background. Second point of the background, on the 401k front, the defined contribution front, regular savings account IRAs, there's sort of two aspects to it as I've looked at it and other people, David and Mark and others have looked at it. One is making saving easier, and that has to do with all the automatic enrollment and stuff like that. And the other is making it more rewarding. And that's what I want to talk about in the time I have today. As Michael mentioned, under current law, when someone contributes to the retirement account, they get an income tax deduction for that. So if your marginal tax rate is 35%, you save 35 cents. If your marginal tax rate is 15%, you save 15 cents. If your marginal tax rate is zero, you save zero. Now, you still get, everyone still gets inside buildup on the account. But in terms of the immediate contribution, the immediate incentive to save hinges on your current marginal tax rate. All right, there are several concerns with this structure. One, it's upside down, the largest immediate tax cuts go to the highest income taxpayers, and many people get no immediate deduction from this at all. They might get the saver's credit, but they get no immediate tax deduction. The second is that the subsidy comes back to the individual cash, rather than supplementing the contribution to the account. If what you want to do is encourage saving, it doesn't seem like the optimal thing to give people cash back, which they're most likely to spend, rather than put the money in account. The third thing is that the upside down structure subsidizes the wrong group, both on saving and equity grounds. The high income households are the ones that at least need the subsidy. And the studies show that 401k contributions by higher income households tend to be more of the asset reshuffling type that is moving funds around, taking advantage of the tax saving. Whereas 401k contributions by lower or middle income groups happen less often. But when they do happen, they are more likely to represent net contributions, net additions to saving. And then the fourth problem is that this approach is quite expensive, which is not ideal in terms of either the medium term outlook or the long term budget outlook. So the new proposal is pretty straightforward. It's in the notion of retargeting existing incentives that Michael mentioned. And as I mentioned, it's a variant of a paper that the Hamilton Project put out and RSP put out several years ago. And it's somewhat simpler version of what I presented at Senate Finance a few weeks ago. And it's really simple. You take away the tax deduction for contributions to retirement accounts, and you replace it with what in the tax community we would call a flat, refundable credit. And in the retirement community, we'd call a government matching contribution. OK, so right now, someone gives a dollar. They get a 15 cent tax deduction from that. Say under this proposal, they give a dollar. They wouldn't get the deduction. But they would get either, say, an 18% contribution to the count or a 30% contribution to the count from the government. So the effects of this proposal relative to the current law, rather than being upside down with the subsidy rising with someone's income, the subsidy is flat with respect to income. So everyone is getting the same initial incentive to contribute. That in combination with the saver's credit would give you a system somewhat similar to what Michael was talking about, where you're subsidizing low-income households almost one-to-one. Rather than coming back to the individual's cash, the match would go into the count. Rather than subsidizing high-wealth asset shifters the expense of low-income households, the contributions would be evened out. And the proposal could generate a lot of revenue. If the matching rate is 18%, which is the equivalent of a 15% deduction, I can explain that if you want, you'd raise about $250 billion over the next 10 years. The matching rate were 30%, which is the equivalent of about a 23% income tax rate for a deduction. The proposal would be revenue-neutral over the next decade. So you can either retarget the proposal, keep it revenue-neutral, or you can actually raise a significant amount of money while still preserving incentives. Either the 18% subsidy level would leave about three quarters of the population either as well off as they are now or better off and would impose tax increases on the top quarter. So there's a range of options. The other effects, the distributional effects, are pretty straightforward. The proposal would shift resources from higher-income households to lower-income households by virtue of the fact that the credit rate was bigger than the tax rate for most households. It should raise private-saving and with it national-saving. As for example, the 18% credit rate would stimulate some new private contributions, and it would raise government savings. The 30% rate wouldn't affect government-saving at all, but it would presumably stimulate a lot of saving by individuals. And there's an interesting link to long-term budget reform here, which I'll mention. If you think that social security and Medicare are going to ultimately face the Budget Act, the Budget Acts, like everything else is going to face the Budget Acts, then you particularly care about doing something to stimulate people to make up some of the gap, to encourage retirement saving. So the proposal is timely in the sense of the sort of budget situation as well. Last thing, let me just conclude. I view this as a relatively modest change to the system. It's just taking the individual deduction and converting it to a matching contribution. There's no change in this version of plan to anything an employer does. Everything else would stay as it is. Contribution limits would not change. Earnings would continue to accrue inside, so they accrue tax-free. Withdrawals from the accounts would continue to be taxed as regular income. The savers' credit would continue to exist. Catch-up provisions would continue to exist. Roth and defined benefit plans would continue to exist. It's just this one change, changing the deduction to a credit that would, I think, improve the distribution of retirement incentives, raise private and national saving, and get more people saving in the retirement system. So I'd be happy to discuss, explain, answer questions. Thank you very much. I have nine points, and I think I only tell you this, because when I say seven, I'll inspire hope in the audience. I'm really glad to be here. I look around the room and I see very effective experts in this field. I see passionate advocates, and I'm just very honored that I was invited. Thanks very much, Michael, and Reed. So I agree with the assessment here, and you heard it in various ways, with Mark and with Michael, a little bit with Bill, that we do have a retirement crisis. I remember a conversation I had with a reporter for the New York Times, Steve Greenhouse, who interviewed a lot of us, who said to me over lunch, I've never had a story like this. Maybe something like this about 20 years ago, but what I'm seeing here is that I talked to the experts on the left, the right, and all these different schools and agencies, and you're all saying the same thing, that low income people, middle income people, and high income people are facing a retirement crisis. Low income people, they're really afraid they're not going to have enough, and they're going to be even more poor than they are now. High income people, they're panicked, that they're going to live too long, and their investments aren't going to pan out, and middle class people have all three worries. Everybody is panicked. Number two, we all agree on the causes of this retirement crisis. We have what turns out to be a poorly designed tax code with the unintended consequences of giving subsidies to people who need it the least, and also tax subsidies that are supposed to be incentives to people who don't need incentives to save for retirement. So it's both inefficient, not targeted to the right people, and it's not very effective to raise retirement savings security. We also have developed over the last 30 years a platform of commercial, individually directed, voluntary accounts in vehicles called 401ks and IRAs. And these vehicles are poorly designed, they are conflicted, a lot of conflict of interest, to the extent that they take income and fees from individuals who are saving in those vehicles and use that to lobby against fee transparency, they are a little bit corrupt, and they also are very lightly regulated. In an era where defined benefit systems have been very heavily regulated and constrained, we see an era where contributions have limitations have only gone up and calls for regulation have been rebuffed. So third, we also agree that the auto IRA is a very good step in the right direction of correcting the tax code and correcting the flaws in the 401k and IRA system. I agree that Calibra's robust design features go even one step beyond the auto IRA platform, skeleton of an idea, and have actually made improvements in areas of increasing contributions by having a default contribution that moves up from three to six, that's in the right direction, by having a more generous savers credit envision, that's in the right direction, to make government subsidies more efficient, to have a default investment option, goes in the right direction of moving away from self-directed accounts towards more appropriate portfolio allocation, and moving towards a default annuities goes much further than what we see now where people can accumulate retirement savings in order to have a secure retirement income for life. That's what the tax code's about, that's what our goals are, and so default annuization goes in the right direction. And last, he, Calibra's provides a design feature that helps employers who have good hearts wanna do the right thing, have a practical business model for providing retirement security, but find the IRA, the 401k, and the DB platform too awkward and not attractive, gives employers an easier way to contribute to their employers, all in the right direction. But as you might guess, I feel that the steps aren't adequate, that they're not moving towards where we need to go. Fortunately, an organization called Retirement USA, which is a coalition of advocates and researchers who are dedicated towards providing secure and adequate pensions for all Americans, have established the principles of what a good pension reform system would look like. There are 12 principles, and they're all very well thought out. I've really combined them into four, and they're in really four categories. Principles that yield adequate accumulation, that's the A. Principles that yield appropriate investments, that's the I, and principles that advocate the appropriate payout. And the fourth, that's the third principle, the fourth set of principles is that the government is good government principle, that government subsidies should be targeted to the right people and incent retirement income. So five, I see that my fifth point is that Calibra's robust design alternatives really don't go far enough in all four areas. First, the contributions are defaulted, it's still a voluntary system. And I'm told by people who want my program to be advocated that I shouldn't use the word mandate, especially when I'm in Washington. So I'm going to use the word universal, but you all know what I mean. The only principle that makes sense to get adequate savings is if there's a mandate just like Social Security and just like in defined benefit systems. People need to save at least 17 to 20% of every dollar they earn in order to have adequate retirement policy. Social Security gets you up to 12, you need to top it up with seven or eight or more. Self-directed investments and commercial accounts that are voluntary have three things wrong with them. They're self-directed, they're commercial, and they're voluntary. If we default our retirement savings into 401Ks and RRAs, they're going to be excessive leakages in fees, in bad choices. And auto annuities means that some people will still opt out of annuities and you have the adverse selection problem of the people that want the annuities are going to have to pay a lot for it and that won't be adequate enough. So there's too many leakages, there's six, there's too many leakages left with even the robust improvements on the auto IRAs. So we need number seven is my seven point, you should all be happy. Is that we need guaranteed retirement accounts. They need it to be universal that people have to put a universal, everyone needs to top up their Social Security with 5% more savings into their retirement accounts. That can be, that's shared by the government, by employers and by people, by individuals. There should be a guaranteed option just like I have in my tie-creft plan. I'm a professor, I can go into tie and I for the past 60 years, me and my colleagues have gotten 2.9% guarantee up to 4.2%. There's a guaranteed range and economist and literary scholars get to put their money there and then we just go do our jobs and don't worry about it. We need to have a guaranteed option. We need to mandate annuities, that's just, oh, mandate universal annuities, sorry. Because any lump sum withdrawals have the adverse election problem and people spend it too fast. Number eight, the politics are such that we may not get anything done in Congress at the federal level, even though auto IRAs and the robust design issues have a federal, and I used to have a federal plan, Social Security collects it and then the TSB distributes it. I've given up, about nine months ago I've gone to the states. Just two weeks ago, it just so happens that I was speaking before a small group of legislators and academics and labor and some employer folks about creating something that the New America Foundation using Mark Ivory's ideas actually incubated in California about five, six years ago. Mark Klein, who is your representative, New America Foundation representative in California was our moderator, to have the possibility that private sector money would be managed by CalPERS, CalSTRS and other robust institutional investors. So today, as we're here, Bill Lockyer, the state treasurer of California is at a CalPERS conference suggesting California guaranteed retirement accounts, that private sector money be collected through the unemployment insurance platform because employers have to pay into that system anyway, sort of the equivalent of Social Security, employers send the check anyway and CalPERS will run the money. This is being discussed in New York state and Connecticut in the state treasurer of Pennsylvania has approached me. There's 50 states, there's many other ways that we could actually design. Something that looks like an odd array, a robust IRA or a guaranteed retirement account. Last, I think the time has come for a universal top up to Social Security. Polling firms that were hired by the Rockefeller Foundation for Rockefeller grantees who were working in this space, reported to us and told us that, just like Greenhouse said, hey, this is the first time in a couple of decades where the people are ahead of the politicians. When we go out there and ask people, do they want the government to solve the jobs crisis, the health insurance crisis or pay attention to retirement security? We were surprised. This is the 2009, the biggest recession since the Great Depression, that people said not jobs, not healthcare, solve this retirement crisis. And retirement insecurity ranked the largest among, wait for politicians, middle class and high income people who are likely to vote. So it is time that at some level of government, we start talking about Social Security Plus and mandating more money dedicated to retirement security. Thank you and again, thanks to New America for having this forum and inviting me here as well. And I do want to echo some of my colleagues here in talking about really the retirement crisis that I think we're facing and we'll face even more so in the future. And just to quickly go back, why that's the case, over the last couple of decades, what have we really seen? We've seen really a, probably a reduction or at least a shrinkage in pension plans and certainly a switchover to 401K plans, which do not appear to be delivering it anywhere kinds of near the security at the traditional defined benefit plans did. Even a typical 401K account balance is under $100,000 to put that in sort of a Social Security term. Social Security lump sum equivalent is about three times that much money. So you can see there's not a whole lot of bang for the buck coming out of many of these plans. Savings rates have been down, except for the last few years when people have been afraid to spend, our savings rates were harping around zero. People's largest or second largest assets, their homes have obviously taken a tumble in value. There's been volatile markets and in fact, fairly flat market over the last 10 years for people who have been trying to save. We've seen high unemployment, which of course has led to more stagnant wages, making it more difficult for people to save. We've seen high healthcare costs, which both squeeze out wages, increases, and the ability to save for people who are working and also consume a lot of the retirement assets when people do retire. And of course, so this, what does it mean? We have a lot more people getting to retirement with a lot less. And of course, they're living longer, very bad combination. So what are the shortcomings that we have in our pension system? Well, I think your nine, I had about 10 shortcomings that people talk about often in our pension system. And they say, well, wouldn't it be great if we could deal with these shortcomings? Well, what are the shortcomings? Well, one, wouldn't it be great if we had a plan that covered everybody? Wouldn't it be great if we had a plan that was completely portable, went with you from job to job? Wouldn't it be good if we had a plan that had minimal investment risk, cause you didn't risk losing in these down markets? Wouldn't it be good if we had a more progressive benefit structure or more progressive subsidies? Wouldn't it be good if we had lifetime protection, so make sure you didn't run out of your money? Wouldn't it be good if these accounts in retirement actually could be adjusted for inflation so they wouldn't lose value over time? Wouldn't it be good if we could make sure you couldn't cash out that money before you retired, so you'd actually would have the money for retirement? Wouldn't it be great if this system really came with fairly low administrative costs? And wouldn't it be good if we also protect spouses in the system? And it would be good if we had employee contributions as well. And by the way, it would be great if we also had broad public support and acceptance of this kind of a system. And so, you know, you tick off all these issues and all these problems and you come back to, well, wait a second, we've got a great system in this country now that does all that. And social security means every one of those objections to some of the current shortcomings of the pension system. So we're having this backward conversation right now about taking the system that works best and trying to reduce it and trying to replace it with supplements from any of these other systems which can fill in, but all have some of the shortcomings. So it's really important as a critical first step when we're talking about retirement security is really sort of the get back to the fundamental. The one plan that delivers the foundation for everybody is social security and we're having a backwards conversation about how do we reduce benefits in that system rather than how do we maintain them? I haven't even heard anybody talk about me. That's a good way to increase benefits but even just talking about trying to maintain the benefits that we have. When we've done polling and asked people about social security benefits and say, well, do you think social security benefits are too high, too low, or about right? You get about a 50-50 split between too low and about right. I mean, nobody says social security benefits are too high. So given what, and we know that public strongly supports social security. We know that crosses age lines and income lines and party lines and so we really need to fundamentally to protect the social security benefit as the foundation. Now still, social security benefit on average only pays about $14,000 a year. So it is not an overly generous benefit by any measure and so we do need to try to supplement social security. I mean, the reality is today that we have roughly one in four retirees live on social security basically for all their income, 90% or more. And everybody understands social security is the most important low income program we have in this country in terms of keeping people out of poverty. But people, I think, forget sometimes how important social security is for middle income people and by middle income I'm talking about way up the income scale at least until you get to the top 20%. Social security will be by far the largest source of income for any of those folks in that broad middle. And the average senior state has an income of roughly $20,000 so that gives you a sense of what a $14,000 social security benefit means for most people in terms of income protection. So it's really critical to have that solid base and any of these kinds of accounts we're talking about as supplements will really work, I think, fundamentally much better when you have that solid base. It's a little better when you have a solid base that's a guaranteed lifetime inflation protected base to then have a supplemental account that perhaps has a little more investment risk that perhaps has some people get access to it before retirement or do some of the other things that we know basically cut against having a good supplement in retirement. So it's really pretty critical. Now some of the supplemental plans we're talking about in ARP has endorsed concepts, for example, like the auto IRA are meant to fill in and substitutes and to build on the current system we have with social security as a base and then we have other supplemental plans like IRAs and 401K plans. Now those plans certainly have their shortcomings in terms of the number of people sign up and use them but we try to build on some of the things we know that have happened out there in the real world. For example, why are 401K plans used a lot more than IRAs? Well, of course they're very simple and they're done through payroll deduction. That's the way people mostly like to say, take the money out of my paycheck, I don't wanna see it. That way it works the best. So any of the supplemental plans that we're talking about that build on using that kind of payroll deduction mechanism and having this done automatically are gonna work a lot better than something like an IRA we have to every April or so with your tax return come up with the money to contribute to an account. That's not gonna work as well. But still these amounts are probably gonna be small given all the other problems we've been seeing and I've outlined. But a lot of people think, well if it's small it's not important. Well, I would disagree with that. I think given where we are and the needs and the fact that Social Security is modest even having a relatively small additional supplemental account is critical. I mean it would be great if we can get that money in early and build it over a lifetime but even if we have small amounts going in or we don't even start putting money in until a little later when people actually start thinking about retirement building up smaller supplemental accounts are really gonna be pretty critical. And I'm all for using all the, some of the strategies that have been already mentioned up here, particularly the, the, you know, I fall Ben Franklin for this because he talked about, you know, a penny served, saved as a penny earned. It should have been a penny saved as a penny compounded. It would have been a lot better. But using the power of inertia is really important. So making sure that when people do nothing they do the right thing as opposed to today when people do nothing they do the wrong thing in terms of automatic enrollment and putting you into good default options. For example, even maybe default payout options can really make a lot of sense and help. And we also do have a savers credit on this country that is in part designed to go with things like supplemental plans like automatic iris because they will encourage people like a match of people who have modest incomes to contribute to plans. And, you know, the savers credit of course is fairly modest and it does cut out fairly low in the income scale and it would be nice if we could expand that. But those will help and send people to save as well as put more money in plans. And so those are all sort of critical pieces. But I do have to emphasize again, these pieces only work when you have the strong base of social security. So whenever we talk about retirement security it's always, I think, important to go back and think about that base and what we're doing to that base before we even move on to the next step of the supplement. So thank you. All right, excellent. A lot to chew on here. And I want to give, actually, Mark an opportunity to respond to some of those comments and get some exchange with the panel and take some of your questions. But actually, first, I wanted to start with something where David really ended, which is kind of focusing on some of the automatic features that are out there. I think there's great promise here. We know that enrollment is really foundational. And we also have learned a lot of insights from the behavioral economics field and defaults are very powerful. They really set a lot of the trends and inertia is very powerful as well. So we've got to get the defaults right. And let's start with that kind of discussion. Maybe Mark, we know a range of ideas that are out there. The current policy had a 3%. We've had a critique of six. A little bit of your insights on that issue and where some of the policy discussion can go from there. Sure, Reed. Happy to address that. I think we would all like to see people saving at much higher rates to the extent that a defined benefit kind of pension or other non-elective pension does not already cover their needs and double digits, as folks mentioned. 10, 12, I think, Michael, you were referring to that, or indeed higher percentages of pay are really what people need if they're relying on a defined contribution plan for most of their supplement to, as David said, the critical foundation of social security. The choice of a default contribution rate is really a matter of what the market will bear in terms of what people can get used to. In the 401k world, in the late 90s, Treasury defined this notion of automatic enrollment, approved it under the 401k laws and illustrated it by way of promoting it with a 3% contribution rate. The 3% wasn't thought by us to be adequate. Our thought was this is a bit of a revolutionary idea. We want to introduce it gently and make sure that we don't get ideological or political blowback that could upend the whole concept from the outset. And whether it was necessary to illustrate it at 3% or not, it seems to have helped to have the whole idea go over well and we have such broad, now ideological buy-in to the concept of enrolling people automatically and giving them the choice to opt out or opt for a lower or higher contribution. In 401k's, to your point, Michael and Reid, we've encouraged and Bill Gale, David, John, Peter, or Zag and I have encouraged and when I and Peter were part of the retirement security project as Bill and David still are, 6% or 5% starting contribution rates for 401k plans. You don't get much of a drop-off. Very little opt out increase when you start at five or six rather than three. And escalation. Every year add another percent or 2% could be when people get raises and if employees want to opt out of the escalation, they can. Let it escalate past 10% if the employer is willing to do that. So people get used to the idea. It's all a matter of where one wants to strike a balance in terms of gaining acceptance and retaining acceptance. That's why the automatic IRA legislation authorizes the regulators to use a, between a two and 6% contribution rate instead of the initial sort of placeholder default of 3% consistent with Michael's thought here and to escalate over time. If we can start with that, if there is enough of a consensus, that's great, but a lot of these people have never saved before. And a lot of the employers, they haven't sponsored a plan. And so their willingness to go along with this when they're not 401k sponsors to begin with may be much greater if we start gently. Yep, comments? The only good counter argument I've heard on a higher initial rate is that in 401k, they'll say, okay, there's not much drop off from five or 6%, that is the average, just under 6% in 401ks. But some people will say, well, that's because the typical employer matches 50 cents on a dollar up to 6%. But I'm thinking that about the other features that if we have a strong tax matching credit up to $2,000, then for example, if you're matching, whether it's dollar per dollar or 50 cents on the dollar, the first $2,000, then for somebody who's earning 33,000, that's 6%. So they have to save 6% in order to, or they're leaving money on the table, just like somebody in a 401k. So that makes the 6% level more reasonable. And the notion of a robust matching contribution in the form of a tax credit is something that I think is really an important idea and something that has traveled as a separate legislative proposal on Capitol Hill from the automatic IRA, but one that as Michael and Bill and others have described has often been thought of in tandem as one helps make saving easier, the other helps make it more remunerative for the people who need that additional financial incentive. All right, we will take questions from the audience. Actually, we're gonna steal one of the mics from up here and pass it around. So let me know if you have questions, just flag them for me, raise your hand. I actually, before we wanted to ask Bill a little bit about his proposal, he kind of described it as simple. It's not fundamental. You kind of talked about the continuity, but it does seem like it would be a lift and it could be done, though, in the context of a tax reform discussion that might be emerging in the foreseeable future. I also think we might be able to use this opportunity to simplify some of the complex rules that are associated with these types of accounts, like IRAs, where we have a lot of different uses, qualified uses for these accounts, and there is some concern that kind of commingle retirement with other things like saving for home ownership or paying for education that caused some complexity and some call it leakage, but those are the rules. So how do you see your proposal working in kind of a tax reform discussion and what else would you like to see as part of that process? All right, thanks. The reason that I think of it as a simple proposal is precisely because it doesn't delve into any of those. It doesn't change the structure of IRAs. It doesn't change the withdrawal rules. It doesn't change the 401K structure or all the stuff that David raised about. Wouldn't it be nice if it doesn't deal with any of those? It's not that those things aren't important issues. They are. They're very important. But this particular proposal, which Michael asked me to talk about today, just deals with the deduction of the credit thing. So I think that's in some ways an advantage in the current setting because it's sort of clean. It doesn't get into the whole set of debates that are interesting, but that might hold it up. But it does introduce some equity kind of issues that are gonna be part of the tax reform discussion as well at some point. That's right, and it introduces a national saving issue and a budget reform issue and so on. Okay, all right, let's start right here and in the back and other hands. Let's see, there you go, okay. Hi, I'm Dr. Caroline Poplin. My late husband was Martin Slate, the director of the pension benefit guarantee corporation in the Clinton administration. And my question is, the proposals all sound fine. The context always seems to be the American people aren't saving enough. I just wonder with a 49% median household income, $49,000 median household income, whether a 10% contribution per year is really realistic while everything else is going up. Housing costs are going up, insurance costs are going up, health insurance costs are going up, tuition is going up. So how do you get the savings process started? That's what you wanna know. Well, it's easy enough to start at one or 2%. The question is, can you save enough to ensure a decent retirement? Okay, Teresa? We've all been really concerned about not decreasing consumption of people who are strapped for all the reasons that you've mentioned. And that's the reason why all of us here envision the tax subsidy, which is very substantial at higher incomes at five, the latest figures, I was 5,700 for the very top, actually be redistributed so that the tax credit would pay for most of the contributions of those low-income folks. Yeah, that's one reason I'd like to see in what I described, see money coming from three sources, some money coming from, obviously the worker is going to have to contribute, but then the employer, to the extent they can match, and of course, a matching tax credit. Teresa's guaranteed retirement accounts have all three baked in, and I think we'll need all three. That way, you could get to the 10% potentially with the worker putting in 4% when they're down in income around 33,000. And again, I'll go back to just two things I said. One, to the extent that it's coming out of the paycheck, automatically, people will become accustomed to what they have and what they can spend and it'll become part of their everyday expenses that can be done. At a 10% level, at that level, maybe not, but going back to what I said earlier, given what people are gonna have in retirement, having a consistent saving even of 3% over a lifetime is gonna make a big difference to them at the end because they're not gonna have much else. I mean, we hear a lot of complaints from people when they get to retirement. The one complaint we never hear is, you know, I save too much in my lifetime. Nobody says that. Yeah, so just to follow up on that, there is a fundamental trade-off between consumption now and consumption later and part of the reason that the government faces these big medium-term and long-term deficits is because government programs have promised things that we as a society have been, for whatever reason, been unwilling to pay in current tax revenues. The flip side of that is the individual situation where Michael mentioned the retirement crisis, which is the same issue. People, if you think, have liabilities to themselves if you wanna think it that way, that they're not willing to set aside money for right now or not able to set aside money for right now. And it's the reason these things are so pervasive and so big is precisely the issue you mentioned. It's a hard trade-off to make, and we shouldn't pretend otherwise. I'd like to challenge my colleagues, too, to think about the redistributive effects of a guarantee. If we don't have a guaranteed option and everybody has to construct their own portfolios, you're going to have lower-income people choose safer options, and therefore taking another sacrifice of their current consumption. So if you care about those bottom three quintiles, then a guarantee and the redistribution of the tax subsidy then helps those families now and later. Also think it makes sense to start the process as early as possible, and at the New America Foundation, we promote the idea of starting at birth, give every kid an account when they're born and use that as the savings vehicle. That could be another discussion. Just before you go to the next question, just on a personal note, many of you may not have had the pleasure of knowing Marty Slate, but Dr. Poplin's late husband was really an outstanding public servant and thought leader in this area was one of the senior people at IRS in the pension field, headed up their pension division and was the executive director of the Pension Benefit Guarantee Corporation. So it's very appropriate that Nick, we remember him on this occasion. Yes, thanks for acknowledging him, thank you. Okay, back there and then we'll move through. I agree that any little bit of savings is good savings, but if you're going to have investment options for people to put their money into, you can put your money into it. There are plenty of people who are at this point on the market drop last year had put a ton of money away and put it in investment accounts. And when they got ready to retire, it wasn't quite what they thought it was going to be because of the investment aspect. So absent of putting it in a guaranteed rate that has inflation protection to it, you talk about giving people an option, but you can still do all of that you're saying to do. And if they put it in an investment account, even if it's in a life cycle fund, if it's invested in equities, there could be a chance of the money still decreasing in value. So is the solution just to allow just one fund with a guaranteed rate with inflation protection or? Maybe, Teresa likes that one. Yeah, that's the wobbly leg of the stool. Comments? That's a good idea. It's interesting to think about how some other countries have dealt with this. There's sort of a range of options at one end from you're on your own, you put your money in the account and whatever the market does, that's what you get. That's the yo-yo. The yo-yo, yes, you're on your own. The other end is a guaranteed, they're supposedly guaranteed return, which moves the risk to the government or whoever's guaranteeing that return. A third option, and David, correct me if I'm wrong here, but the Netherlands in particular has these, I would describe them as pooled, defined contribution plans, which kind of gives people I don't know, kind of a time averaging effect that is a way of reducing the variability while at the same time at an individual level, while at the same time as giving individuals access to the investment expertise that comes from a pooled resource. I'm not advocating that as a specific alternative so much as highlighting the idea that there's a range of issues here and you're absolutely right to focus on the rate of return uncertainty and the availability of investment options. And it seems like this is an area where A, we could do a lot better and B, we might be able to learn something from other countries who have faced similar issues. We are generally behind the curve on these issues relative to other countries. At least that's my impression. I really had to say we don't have to go to Europe to find those examples. We have them in Ticreff, I just said, it ranges at 2.9 to 4.2. The trustees over 60 years smoothed out the fluctuations of the financial markets. Also the state of Indiana, Ohio, Wisconsin and the somewhat Nebraska has this option for their public employees that they can have their 401k type money run by the DB institutional investors and those rates of returns are smoothed out too. So there's an American example. We don't have to be all Frenchy. Oh, yeah, yeah, okay, there in the back, sorry. Because it does seem like Congress is not doing anything, I was really interested in the reference. You're saying it's a do nothing Congress? Yes, yes I am. I was very interested in the mention of the states going to the states and I had a couple questions. One, process-wise. Two, does it only include public employees? And three, is there somewhere we can get more information? This idea was hatched here at the New America Foundation and also in the brains of Mark Evry. The idea was a private sector money would be run by the institutions that states are already set up which are good institutional DB managers. We've always talked about it as that everybody deserves access to BlackRock, to State Street Bank, to Barclays Global Investments, to hedge funds, to private equity, to some of the more sophisticated real estate funds. And now 401k and IRA participants don't have access to any of those professional investors and at the fees that institutional investors do. So it's private money. Yes. My name's Lee Young. I think of retirement saving the purposes for them to really save and really obtain the fund at the end when they need it. The problem is I wonder if you have a study the existing program, whether it is a TRCRAFT or whether it is a 401k or IRA, whatever. So I just wonder if because current system, the financial institution, they really take away people's property including all those savings account. And if you can also protect their home ownership or their other savings account or checking account, if you can improve the financial institution which is now in big trouble. So I just wondering if you have studied these type of things, whether they're consumers or taxpayers really get something. Other than that, the taxpayer will be forced to tighten their waste belt and eventually even when they are older or even they are, what I mean is the distribution at the end of 70 and a half, they don't get anything. And even they are dead, the younger generation still don't get anything. Yeah. All right, David. What I wanted to mention is we did a certain, obviously a bad economy obviously hurts everybody and everything but one of the things that we saw in a survey we did recently was that one out of four people had exhausted all their savings. So when you run into financial troubles and individual, you're gonna begin to tap into your savings including your retirement savings. So it's not just the devastation of people sort of losing a job and not being able to save anymore but actually having negative savings that they're digging into what they have. So we have a lot of people in this country without any form of savings whatsoever right now. All right, we're gonna take one more question right here in the front. Thanks for your time and from the panel and from the audience. Thank you. Thank you, Don first with the American Academy of Actuaries. I wanna ask you, the creation of all these universal accounts would create many, many small accounts. One of the criticisms of small accounts is that they're often very expensive and that the fees are very high. So I wanna ask the question in two regards. Would you propose or support any type of mandatory fee structures or mandatory transparency of fees so that people really knew what they were paying for these things? And secondly, would you encourage in any way any economies of scale through very large providers or are you gonna let every local bank offer these mandatory accounts which I would expect would be relatively high cost? Yeah, I think assets under management is obviously a key to the game so you can enable some cross subsidy to occur and that happens in the thrift savings plan at the federal level and it happens in some of the larger 401k plans. Comments on that, Theresa, Michael? Yeah, definitely the transparency whoever is managing but that's why I was saying that we need a clearing house, essentially a TS thrift savings plan approach and at least initially where the deposits are directed. And you could have an option where people after it reaches a certain size you could have the option to roll it out. Maybe there's a window each year if you wanna roll it to a private to a commercial provider and actually the original bills that were introduced on the auto IRA back in 2007 were based a little bit more in that respect on the pension rights center proposal which was to have a clearing house and so they would have set up a TSP too to manage these small accounts with extremely streamlined simple just like TSP just a handful of index funds and very few bells and whistles, et cetera. And I think that's the place rather than let the employer choose a financial institution for you and you end up in the Australia situation where you have three, four, five accounts after 20 years let all the money go to that clearing house and then give the individual the choice to roll it out later. Maybe the 2007 legislation said after your balance was at least 15,000 you could have that option periodically but that would be a much more efficient way to aggregate and it doesn't mean you can't contract that out to the private sector to manage that's what TSP does more or less anyway. And Michael's clearing house idea is described in even a little bit more greater detail in the paper and but essentially it really builds on this savings plan model as a way to kind of aggregate the auto IRAs that are out there. All right, well thanks to the panelists thank you for your time and good afternoon. Thank you.