Federal Trade Commission Consumer Advocacy Act

Mr. President, with over 77 million baby boomers beginning to retire in 2008, a serious retirement challenge is looming in our country. Moreover, with Americans living longer and a growing numbers of retirees facing the challenge of managing their own retirement savings, we need to provide them with better retirement options. In response, I rise today to offer legislation aimed at assisting people to maintain their financial independence and their standard of living throughout their retirement by making it easier for them to secure a steady income for life.

In recent years, the focus of the ``retirement security'' debate in Congress has almost entirely been on the need to accumulate a nest egg to fund retirement. Congress is doing much to encourage personal saving and employer-provided retirement plans. I am proud of both our successes and our continuing efforts in these areas. Encouraging greater savings is an important step; however, it is not enough.

Unfortunately, there has been little attention paid to the retirement income or ``payout'' phase of the retirement security equation. The risk of outliving one's savings is one of the biggest problems facing retirees. I have heard it said that Americans perceive the retirement savings ``finish line'' to be the point of retirement. But retirement is just the beginning of a very different kind of race, one of unknown duration. If Americans are going to fully enjoy their retirement years, we need to ensure that as many Americans as possible will have a stream of income they cannot outlive. We have some control over when we retire. However, we have very little control over how long we will live.

For most Americans, a ``secure retirement'' means maintaining their standard of living through retirement and the means to deal with life's challenges from the first day of retirement to the very last. For the majority of Americans, that requires a steady stream of income that, combined with Social Security or other retirement income, covers basic living expenses--from housing expenses to medical bills, taxes to transportation, food to clothing. Yet, Americans today are facing a serious and growing challenge to retirement security.

At the same time Americans are living longer, the future of private and public retirement programs, as well as financial markets, is increasingly uncertain. Fewer Americans are covered by traditional pension plans, and Social Security currently replaces on average only about 42 percent of earnings. This means it's increasingly up to each individual to manage their retirement savings to last their lifetime. And exactly how long will that period in retirement be? It depends. Of course none of us know how long we will live; research shows most Americans vastly underestimate their longevity.

According to the Society of Actuaries, a male age 65 has a 50 percent chance of living beyond age 85 and a 25 percent chance of living beyond age 92. Indeed, the biggest risk we face in retirement is the longevity risk--that is, living longer than our retirement savings lasts. In order to meet this challenge, Senator Conrad and I are introducing legislation to encourage the use of retirement vehicles that pay a guaranteed lifetime income.

Under the Retirement Security for Life Act that Senator Conrad and I are introducing today, a tax incentive would be enacted that encourages retirees to provide themselves with a guaranteed lifetime income that they can't outlive. Specifically, the proposal would exclude from Federal taxes one-half of the income payments from an annuity purchased with after tax dollars (a so-called non-qualified annuity). Importantly, we have proposed a cap on the exclusion so that no more that $20,000 could be excluded in a year. For a typical American in the 25 percent tax bracket, this would provide an annual maximum tax savings of up to $5,000. I believed that this modest tax incentive will enable some retirees to consider annuitizing a portion of their nest egg so that they have a guaranteed lifetime of income.

This legislation has a wide range of support from organizations representing women, minorities, farmers and small businesses. Many in these groups do not have access to traditional employer provided pension. As we tackle the challenges of retirement policy, we need to ensure that all Americans have adequate financial security to meet their basic needs during retirement. Personal savings and responsibility are the keys to a balanced national retirement security policy. Please join me in supporting our proposal as a crucial step in providing a secure retirement for all Americans. I ask unanimous consent that the text of the legislation be printed in the Record.

Mr. President, I am pleased to join my friend and colleague, Senator Gordon Smith from Oregon, in introducing legislation that can help seniors enjoy a more secure retirement. The good news is that Americans are living longer but it also means that people have to plan for a longer period of retirement. A successful retirement income plan is a challenge even for the savvy investor. How much more difficult is this task for the millions of Americans with limited investment experience?

For years Congress has encouraged people to save for their retirement. Through the tax code, we encourage asset building through home ownership. We provide significant tax incentives for employer- based pension plans and for dedicated retirement savings programs by individuals, such as IRAs and 401(k) plans.

One of the biggest threats to retirement income security for baby boomers is their own longevity. It will not be easy to manage their accumulated assets so that they will last a lifetime. Unprecedented numbers of Americans are now living into their 90s and even past 100. Today, actuaries tell us that

about one in six 65-year-old men and one out of three 65-year-old women can expect to live into their 90s.

Consequently, people are going to spend more time in retirement than previous generations. Over the course of the 20th century, the percentage of men in the workforce aged 65 years or older dropped from about 66 percent to less than 20 percent. Now our society confronts the impending retirement of 77 million baby boomers. Many of them will not have the guaranteed monthly retirement checks that many of their parents enjoyed as a result of employer-based pension plans. Traditional defined-benefit pension plans have given way to defined contribution plans, which have shifted the retirement income security risk from the employer to the individual.

Of course, there are still many Americans who have no access at all to employer-provided pension plans. Some have never been in the traditional workforce; others work in seasonal jobs or part time. In my state of North Dakota, as well as in rural and farming communities across America, there is an acute need for retirement vehicles that will provide a secure lifetime payout. Others who could face difficulty in securing retirement income are widowed individuals--both men and women--who suddenly find themselves having to make a life insurance benefit or proceeds from the sale of a business or family home last a lifetime.

The proposal we are introducing today will provide a valuable tool for helping people avoid the risk of outliving their assets. Specifically, we are proposing a tax incentive to encourage Americans to available a portion of their assets annuitize for retirement. If they annuitize--in other words, elect to receive their money from an annuity in a series of payments for the rest of their lives, no matter how long that may be--they would be able to exclude from income a portion of the annuity benefit that represents the accumulation in the annuity above and beyond the original investment. The tax benefit is capped to ensure that tax sheltering activity is not encouraged and that the incentive will be effective for people who would benefit most from securing a lifetime income stream.

This proposal we offer today would apply only to life-contingent, nonqualified annuities. A life-contingent annuity that is subsequently modified to a fixed-term payout would be subject to a recapture tax.

Baby boomers represent an unprecedented challenge to our retirement security policies. They should have a wide range of options available for responsible retirement planning. Our proposal focuses on non- qualified annuities because it is important to have this option considered as part of the larger retirement income security debate that Congress should have before baby boomers begin retiring in large numbers. Options for making qualified plans more secure should be part of that debate as well.

I hope that the 109th Congress will tackle this matter promptly because time is short. That first wave of baby boomer retirees begins in 2008--just over 36 months from today.

Mr. President, today I rise to introduce a bill to create a new government reward hotline designed to solicit tips from Spanish-speaking immigrants and other groups that are more likely to be the silent victims of consumer fraud.

The hotline will allow anyone with knowledge of a fraud scheme involving deceptive advertising to get a reward for reporting it directly to the experts who work at the Federal Trade Commission.

This legislation addresses the unscrupulous businesses that target certain communities because they know the victims are less likely to report crimes. It will further the efforts of the Federal Trade Commission to combat this problem by creating an Office of Consumer Advocacy and Outreach within the Federal Trade Commission which will administer programs and services that make it easier for victims in these communities to hold wrong-doers accountable.

A Federal Trade Commission survey from earlier this year revealed that nearly 25 million adults in the United States, or 11.2 percent of the adult population, were victims of fraud, and that certain communities were more likely to fall prey to fraudulent schemes. For example, the survey found that Hispanics are twice as likely to be victims of fraud as non-Hispanic whites. A study conducted by the National Institute of Justice concluded that immigrant victims report crimes less frequently than other victims. The factors cited as contributing to this underreporting included language barriers, cultural differences, and a limited understanding of the United States Justice system.

During this past year the Federal Trade Commission has levied an increasing number of complaints against deceptive Spanish-language advertisements, including fraudulent driving permits and junk computers. Two of these complaints were filed against businesses in South Florida that targeted Spanish speakers with advertisements for ``scientifically unfeasible'' weight-loss pills.

The Office of Consumer Advocacy and Outreach created by this bill will provide information to targeted consumers in these communities on how to protect themselves against fraudulent schemes and where to seek redress if they become a victim. The Office will work with law enforcement to track and investigate fraud schemes that target immigrants, the elderly, minorities and other communities.

One of the ways the Office will work to increase reporting of fraud by Spanish-speakers, for example, will be to publicize the reward program through a Spanish-language public service advertising campaign produced by the Federal Trade Commission that warns against consumer fraud and provides the number for this newly created anonymous hotline.

Additionally, the Office will work with law enforcement to increase their level of participation in the Consumer Sentinel database system. This database, currently in existence, collects information from local, State and Federal agencies on consumer complaints to assist in the tracking and investigating of consumer fraud issues.

Mr. President, today I rise to introduce a bill to create a new government reward hotline designed to solicit tips from Spanish-speaking immigrants and other groups that are more likely to be the silent victims of consumer fraud.

The hotline will allow anyone with knowledge of a fraud scheme involving deceptive advertising to get a reward for reporting it directly to the experts who work at the Federal Trade Commission.

This legislation addresses the unscrupulous businesses that target certain communities because they know the victims are less likely to report crimes. It will further the efforts of the Federal Trade Commission to combat this problem by creating an Office of Consumer Advocacy and Outreach within the Federal Trade Commission which will administer programs and services that make it easier for victims in these communities to hold wrong-doers accountable.

A Federal Trade Commission survey from earlier this year revealed that nearly 25 million adults in the United States, or 11.2 percent of the adult population, were victims of fraud, and that certain communities were more likely to fall prey to fraudulent schemes. For example, the survey found that Hispanics are twice as likely to be victims of fraud as non-Hispanic whites. A study conducted by the National Institute of Justice concluded that immigrant victims report crimes less frequently than other victims. The factors cited as contributing to this underreporting included language barriers, cultural differences, and a limited understanding of the United States Justice system.

During this past year the Federal Trade Commission has levied an increasing number of complaints against deceptive Spanish-language advertisements, including fraudulent driving permits and junk computers. Two of these complaints were filed against businesses in South Florida that targeted Spanish speakers with advertisements for ``scientifically unfeasible'' weight-loss pills.

The Office of Consumer Advocacy and Outreach created by this bill will provide information to targeted consumers in these communities on how to protect themselves against fraudulent schemes and where to seek redress if they become a victim. The Office will work with law enforcement to track and investigate fraud schemes that target immigrants, the elderly, minorities and other communities.

One of the ways the Office will work to increase reporting of fraud by Spanish-speakers, for example, will be to publicize the reward program through a Spanish-language public service advertising campaign produced by the Federal Trade Commission that warns against consumer fraud and provides the number for this newly created anonymous hotline.

Additionally, the Office will work with law enforcement to increase their level of participation in the Consumer Sentinel database system. This database, currently in existence, collects information from local, State and Federal agencies on consumer complaints to assist in the tracking and investigating of consumer fraud issues.

Mr. President, last month we celebrated National Adoption Month. In 2003, Americans opened their hearts and homes to over 20,000 orphaned children born overseas. In order to adopt these children the families had to submit extensive paperwork and work with three federal agencies in order to be approved to adopt a foreign born child and to be able to bring that child home to America. The Intercountry Adoption Reform Act that I am introducing today along with Senators Landrieu, Craig, and Inhofe streamlines the process families go through to adopt a child from overseas by eliminating unnecessary paperwork and consolidating the federal functions into one office.

Last November, I introduced the first version of the Intercountry Adoption Reform Act, known simply as the ICARE Act, along with Senators Landrieu, Craig, Inhofe, Bingaman, and Smith. Over the last year we have received many comments about the bill from groups representing adoption professionals as well as comments from the administration. In response to these comments, we have revised our original bill to incorporate many of the suggestions provided to us and to address some of the concerns expressed.

Two major changes have been made. First, we have added enforcement provisions. We revised the bill to make clear that the new Office of Intercountry Adoption (OIA) will have the ability to protect children, birth families and adoptive families from fraud and abuse through enforcement provisions. It also clarifies that the OIA can work with the Department of Homeland Security and the Department of Justice to enforce the provisions of the Act. Second, we added provisions to provide a smooth transition from the

current adoption process to the new and improved process. These provisions ensure that all adoption cases filed prior to the opening of the OIA would be processed under the current rules. Any cases filed after the opening of the OIA would be processed under the provisions of