ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS

Subcommittee on Social Security

Shaw Announces Hearing on
Social Security and Pension Reform: Lessons from Other Countries

Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on Social Security of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on Social Security and pension reform: lessons from other countries. The hearing will take place on Tuesday, July 31, 2001, in room B-318 Rayburn House Office Building, beginning at 10:00 a.m.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing.

BACKGROUND:

Social insurance systems worldwide have enjoyed enormous success in reducing poverty among the elderly and the disabled, but, due to long-term demographic trends, are projected to face financing strains in the years ahead. In the next 30 years, one in four people in the developed world will be aged 65 or older, compared with one in seven today. Several countries, including the United Kingdom, Australia, Sweden, and Chile have responded to the challenges posed by an aging population by using individual accounts as part of a package of reforms to reshape their retirement programs.

President Bush formed a commission to develop recommendations for restoring fiscal soundness to Social Security. Among the principles guiding this commission is that "modernization must include individually controlled, voluntary personal retirement accounts, which will augment the Social Security safety net." Numerous Social Security reform proposals introduced by Members of Congress include individual accounts. As the United States considers options to save Social Security, lessons can be learned from the experiences of countries that are implementing or have already implemented personal retirement accounts as part of their retirement programs.

Several countries have used personal accounts in different ways to reform their retirement programs. The United States can learn from their decisions about creating individual accounts and the issues associated with administering such a system, including centralized versus decentralized administration, investment choices and risk protections, pay-out options at retirement, and distribution of the accounts at marriage, divorce, or death. While these choices are a reflection of a country's culture, values and previously existing social insurance system, they also influence the administrative costs, rates of return workers experience, and the public's acceptance of the new system.

In announcing the hearing, Chairman Shaw stated: "The United States is not alone in struggling to address the financial challenges of retirement programs while insuring adequate benefits. The graying of the global population will put tremendous pressure on the public health and pension systems of industrialized nations. Without reform, the cost of financing old-age programs will grow at an unsustainable rate and consume a significant portion of these nations' national budgets. Given our shared challenges it makes good sense to learn from one another, particularly as more and more countries are using personal accounts as part of their strategies to reform their public retirement systems. Knowing more about their experiences will help us forge our own plan for strengthening Social Security."

FOCUS OF THE HEARING:

Witnesses will provide descriptions of other country's (primarily the United Kingdom, Australia, Sweden, and Chile) retirement systems after reform, with particular focus on the design of individual accounts, extent of choice in investments and payout of accounts, account administration, investment regulation, and consumer education. Witnesses will also discuss how reforms evolved in their countries and factors contributing to decisions regarding centralized versus decentralized administration and the degree of choice in investments and account payouts. To the degree possible, witnesses will provide information on administrative costs, rates of return on investments, and how reforms affected retirement income in their countries.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed record of the hearing should submit six (6) single-spaced copies of their statement, along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, with their name, address, and hearing date noted on a label, by the close of business, Tuesday, August 14, 2001, to Allison Giles, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Social Security office, room B-316 Rayburn House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, typed in single space and may not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address, telephone and fax numbers where the witness or the designated representative may be reached. This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press, and the public during the course of a public hearing may be submitted in other forms.

Note: All Committee advisories and news releases are available on the World Wide Web at "http://waysandmeans.house.gov".

The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.