We're not saying that the proposals in your bill are better or worse than the current topheavy rules. We're not saying that at all. We're simply saying that there are a number of current topheavy rules that now regulate small firm plans.

A number of the proposals in your bill would likewise regulate the small firm plans. You need to take a close look at where those conflict and where those are consistent.

If they're consistent, there's obviously no problems.

If there are conflicts, either in the terms of the substance of the regulation or the way that they are applied or enforced, then we want to take a look at that.

Mr. CLAY. Well, you know-our proposal is to stimulate discussion.

Our main point is to increase the number of people who are covered. And as I understand it, the reason the complicated rules were placed in the topheavy area was to make sure that both those at the top and those at the bottom enjoyed the rights of pensions.

And, so, what we need is some kind of a recommendation as to how we can make it more equitable and still protect the greatest number of people.

Mr. SWAIN. That's right.

And I want to reemphasize that our question on that is not a disagreement with the principle that drives topheavy rules. We quite agree that there has to be some fairness of treatment between those highly paid and less highly paid employees.

Our issues really gets to the administrative issues of the complexity of the changeover to a new set of rules.

Just as a-it's a little bit off the point, but not too far off. In the various small business conferences we've been having around the country, people get together and they debate a tax, whether the House passed tax bill, or the administration's tax bill, or whatever ought to be ought to be passed or not passed. And the consensus has not been so much about the tax bill or about anything particular in a tax bill, but we have consistently had recommendations saying that we would-we would-the small business community would support a reform of the tax laws if that reform were accompanied by a provision that said there would be no changes, no technical corrections, no further reforms, no changes, period, for a span of at least 5 years, so that the small firms could take whatever rules are in effect, and work with them, and plan around them.

And that's really-that's really the most important point that we can bring to you today, that any changes, whether-no matter how good they are in substance, any changes-in fact, this is, in effect, a new regulatory scheme. Any changes are necessarily from a perspective of small employer that doesn't have an accountant or a lawyer in-house to write this stuff up are not good changes because they've got to go out and hire somebody to redo it again.

And, so, if you're going to make these changes, which you believe are driven by good and important policy reasons-and we're not disagreeing with those policy reasons-you need to make them in the least burdensome way possible. That's really our point.

Mr. CLAY. Thank you.

Mrs. Roukema.

I do appreciate your observations on the administrative questions. And, of course, this is what we've been trying to get in the legislation, particularly in the Retirement USA.

We'll go over your testimony. Thank you.

Mr. CLAY. Mr. Chandler.

Mr. CHANDLER. Thank you, Mr. Chairman.

I apologize for being late. You're one of the few chairmen in the Congress that starts a committee on time. It catches us off guard in that 15-minute slack.

I worked fairly late last night on an opening statement. And because of that there's a compulsion to make you listen to it. But I won't because

Mr. CLAY. Without objection

Mr. CHANDLER. Let me just say that I really appreciate your leadership on this issue.

And I also want to compliment the staff people who worked on developing this legislation, because it was a bipartisan HouseSenate task force. And certainly Phyllis Borzi and Russ Mueller both deserve special recognition in that regard.

So, I just want to conclude by saying that I'll do whatever I can to help you and our ranking member, the gentlelady from New Jersey, to forward this legislation and achieve the goals that I know we all share.

[Opening statement of Hon. Rod Chandler follows:]

OPENING STATEMENT OF HON. ROD CHANDLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

MR. CHAIRMAN, LET ME BEGIN BY THANKING YOU FOR HOLDING
THESE HEARINGS ON THE NATIONAL RETIREMENT INCOME POLICY ACT
AND ON THE BILL KNOWN AS RETIREMENT USA. I AM A SPONSOR OF
BOTH BILLS AND BELIEVE, AS I KNOW YOU DO, THAT THE GOVERNMENT
OF THE UNITED STATES NEEDS A RATIONAL, WELL-CONSIDERED POLICY
FOR THE PROVISION OF RETIREMENT BENEFITS TO ITS CITIZENS

A POLICY WHICH NOT ONLY RECOGNIZES A CHANGING WORKPLACE, BUT
ALSO MEETS THE NEEDS OF TOMORROW'S GENERATIONS.

THE LAW GOVERNING RETIREMENT PROGRAMS OF TODAY IS ONE WHICH HAS EVOLVED OVER THE YEARS. IT HAS DEVELOPED IN RESPONSE TO THE CHANGING REQUIREMENTS OF AN EVER-OLDER AMERICA. AND IT HAS BEEN THREATENED BY THOSE WHO LOOK PRIMARILY AT FEDERAL REVENUE COLLECTIONS WHEN CONSIDERING CHANGES. AS WE DELIBERATE,

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OUR ATTENTION MUST, OF COURSE, BE DRAWN TO REVENUE CONSIDERATIONS.
BUT THE FAR MORE IMPORTANT CONSIDERATIONS ARE ADEQUACY OF

RETIREMENT INCOME, BROAD COVERAGE BY A VOLUNTARY SYSTEM AND
FAIRNESS TO PARTICIPANT, EMPLOYER AND TAXPAYER ALIKE.

THE PROBLEMS WE FACE IN PROVIDING DECENT RETIREMENT FOR AMERICAN WORKERS IS ENORMOUS AND THERE ARE SIGNS OF CONSIDERABLE TROUBLE AHEAD. CONSIDER THE FACT THAT IN 1900 THE LIFE EXPECTANCY WAS BUT 47 YEARS AND A MERE 4% OF THE POPULATION WAS OVER 65. BY 1985, MODERN MEDICINE AND SANITATION HAD STRETCHED THE AMERICAN LIFE EXPECTANCY TO 74 AND 12% OF THE POPULATION HAD ACHIEVED AGE 65 OR OLDER. PEOPLE LIVE LONGER. THEY ARE HEALTHIER. AND THEY REQUIRE A STREAM OF RETIREMENT INCOME UNDREAMED OF AS NECESSARY 8 DECADES AGO.

ADD TO THIS THE IMPACT OF THE POST-WORLD WAR II
"BABY-BOOM" AND THE PROBLEM FOR TODAY'S YOUNGSTER'S BECOMES
ACUTE. JUST LOOK AT THE HISTORY OF THE DEPENDENCY RATIO
AND ITS PROJECTIONS. IN 1950, FOR EVERY INDIVIDUAL RETIRED
THERE WERE 13.8 PEOPLE WORKING. TODAY, THERE ARE 3.2 WORKERS
FOR EVERY RETIRED PERSON - AND AT A TIME WHEN LONGEVITY IS
GREATER AND EXPECTATIONS FOR LEISURE, SECURITY AND HEALTH

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BEAR IN MIND THAT BY THE YEAR 2030 THE RATIO OF

WORKERS TO THE RETIRED WILL BE 2 TO 1..... TWO PEOPLE WORKING FOR EVERY RETIREE.

KNOWING THAT, WE HAVE NO RIGHT TO LEAVE TO THIS YOUNGER GENERATION THE BURDEN OF CARING FOR US WHEN WE ARE OLD. WE CAN AND MUST PLAN AND PROVIDE FOR THOSE RETIREMENT YEARS OURSELVES.

THUS FAR MY REMARKS HAVE CONCERNED WORKERS AND THEIR NEEDS. I BELIEVE THIS MUST BE OUR PRIMARY CONCERN. YET TESTIMONY DURING THESE HEARINGS WILL UNDOUBTEDLY REVEAL THE VERY LEGITIMATE CONCERNS OF EMPLOYERS.

WE HAVE A VOLUNTARY, PRIVATE PENSION SYSTEM IN THE UNITED STATES AND I BELIEVE WE WANT TO MAINTAIN IT. THAT IS

WHY WE MUST BE EXTREMELY CAUTIOUS: CAREFUL NOT TO KEEP TOO

GREAT A COST ON BUSINESS; CAREFUL THAT WE NOT DROWN PLAN-SPONSORS IN PAPER WORK AND REGULATION; AND CAREFUL THAT FREQUENT CHANGES NOT MAKE PLANNING IMPOSSIBLE.

THE TREND TODAY IS AWAY FROM DEFINED BENEFIT PLANS

THE RETIREMENT VEHICLE WITH THE GREATEST SECURITY FOR