Keating Wants U.S. Commission On Long-Term Savings

Keating says he appreciates the Presidents interest in savings, but the incentives should be for long-term savings. LSAs, he says, are not good public policy.

He terms LSAs "overnight spending accounts." If the government provides the same incentives to short-term savings as it does to long-term savings, people will put their money in short-term accounts, according to Keating.

Those who think that individuals will behave differently, he says, "simply do not understand human nature." The reality is that people who put money in an overnight spending account will spend it, he says.

Moreover, Keating says, LSAs could have a detrimental impact on employer-based pension plans.

Under the law, he notes, qualified pension plans must cover workers of all wage levels. If LSAs are enacted, Keating says, and workers begin to move money out of long-term savings vehicles, it could lead to employment-based plans becoming disqualified.

"The LSA concept is not a good one for employer savings plans," Keating says.

Keating says long-term savings are vital for the nation as well as the individual. It is long-term savings, he says, that allow the nation to invest in infrastructure and other vital concerns.

Reproduced from National Underwriter Life & Health/Financial Services Edition, January 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.