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Many of the laws governing employee pensions today were enacted decades ago at a time when workers had much less control over their retirement savings.
Even before the Enron and Worldcom collapses, I led an ongoing effort in the House Education and the Workforce Committee to modernize the Employee Retirement Income Security Act of 1974, the federal law governing employee pension and benefit plans. Initially, I sponsored and the House passed bipartisan legislation that could have helped at least some of Enron's employees preserve their retirement savings: the Retirement Security Advice Act, which would give employees access to professional investment advice about their 401(k) plans. Unfortunately, the Senate never acted on the bill.
Financial troubles and pension terminations at an increasing number of major American corporations have underscored the need for fundamental pension reform. The outdated federal pension laws don’t reflect reality of today’s economy. When pension plans are terminated and the financial burden is placed on the federal government, workers and taxpayers both stand to lose. When pension plan terminations occur, the burden is assumed by the federal Pension Benefit Guaranty Corporation, which has an operating deficit of about $23 million. As the financial condition of the corporation continues to worsen, the prospect of a multi-million dollars taxpayer bailout looms larger with each passing day.
In 2006, I authored the Pension Protection Act, which passed with strong bipartisan support in the U.S. House and was signed into law by President Bush. This bill reformed outdated worker pension laws and protects the retirement benefits of American workers and retirees. Workers and retirees deserve pension laws that protect their interests, and the Pension Protection Act represents a package of balanced reforms that safeguard the retirement security of millions of Americans and protects taxpayers from a potential multibillion-dollar bailout of the Pension Benefit Guaranty Corporation.
The Pension Protection Act:
• Tightened funding requirements so employers make more cash contributions to their worker pension funds;
• Closed loopholes that allow underfunded plans to skip making cash pension payments;
• Prohibits employers and union leaders from digging the hole even deeper by promising extra benefits if their pension plan is significantly underfunded;
• Strengthens disclosure to give workers and retirees more information about the status of their pension plan;
• Protects multiemployer pension plans for workers and their employers;
• Restricts “golden parachute” executive compensation arrangements while the retirement security of rank-and-file workers remains at risk;
• Gives workers new access to face-to-face, personally-tailored professional investment advice; and
• Shields taxpayers from a possible multi-billion dollar taxpayer bailout of the federal Pension Benefit Guaranty Corporation.
The bottom line is rank-and-file workers in the United States today have greater control over their pensions and retirement savings than ever before. By updating our laws, we will help millions of working families prepare for a much safer and more secure retirement.