To help Americans save more, President Clinton pledged Thursday to expand tax-free accounts and make 401(k) programs easier to join and administer.

"We have an obligation to deal with this issue and deal with it now," the President said at a White House summit on retirement savings. "We have to increase personal savings."

Effective immediately, companies may structure 401(k) plans so employees are automatically enrolled unless they specifically opt out, the President said. He predicted the move would boost 401(k) participation rates to 90%, up from the current 67%.

"It sounds like a small thing," he said. "But it could cause a large number of individuals to get started with saving."

President Clinton also said Congress should immediately change the tax code to reduce the maximum vesting period for 401(k) plans to three years.

"Eventually, we will have to find a way to let people invest without the vesting period," the President said, explaining that people who change jobs frequently never fully qualify for retirement benefits.

The President also urged Congress to offer a $1,000 tax credit to small businesses that create retirement plans. Currently, only 24% of employees in companies with fewer than 100 employees receive these benefits, he noted.

Earlier at the summit, House Speaker Newt Gingrich said he would try to reduce the paperwork companies must complete to establish retirement plans. "Government regulation ... makes it unnecessarily expensive for small businesses to operate pension plans," the Georgia Republican said.

To expand tax-free savings accounts, the President proposed allowing employees at companies without pension programs to contribute to individual retirement accounts through payroll deductions.

He also said he is committed to expanding tax-free savings accounts, but told the 239 summit delegates that he was unsure how to best accomplish that goal. "I invite you to give me your best ideas," he said.

In an interview following the President's speech, Senate Majority Leader Trent Lott said he supported expanding tax-free savings accounts and promised to work with the White House to boost savings rates. "We tried to expand those last year," he said, adding the administration opposed the idea at the time.

Rep. Gingrich said he expects legislation encouraging personal savings to pass the House by spring 1999, although he did not specify what would be in the bill.

Financial services industry executives at the meeting strongly supported calls to simplify the creation and management of retirement plans.

"If we create laws and regulations making it easier for employers to establish pension plans, we will see a significant increase in retirement plans," said Richard L. Prey, senior vice president for pensions at Principal Financial Group, Des Moines.

"The rules are very onerous," agreed Thomas J. McInerney, president of Aetna Retirement Services, Hartford, Conn. "Anything the government can do to make plans simpler to set up and administer would be great."

John G. Turner, chairman and chief executive of ReliaStar Financial Corp., Minneapolis, said he strongly supports providing tax credits to small businesses that create retirement plans, noting that high setup costs have been the biggest impediment his company has encountered in trying to convince business owners to start programs.

Federal Reserve Board Gov. Susan M. Phillips said banks would have an easier time entering the 401(k) and pension business if Congress enacts a financial reform bill allowing banking companies to underwrite insurance and own securities firms.

"We really do need the legislation even if banks do not like some of the provisions," Ms. Phillips said.

While Marshall N. Carter, chairman and CEO of State Street Corp., Boston, also supported the moves, he said they would mainly help established providers of 401(k) plans that have the technical expertise and economies of scale necessary to profitably run retirement plans.

Thursday's meeting was the first of three congressionally authorized summits on retirement savings. The others will occur in 2001 and 2004. After the open session with President Clinton, the delegates met behind closed doors and are expected to report the results of those discussions today.

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