House to Vote on Bill for Pension System

Submitted by PAAMember on December 15, 2005 - 11:00am. ::
This is IMPORTANT folks! Pension reform would be another GREAT platform for the Democrats - i.e. - to disallow these corporations to use their pension funds as a huge bucket of $ they can spend to fund their overseas ventures and such which is exactly what our federal government has done with the bucket of $ set aside for social security. If they'd quit raiding it, we wouldn't be in this fix.

Most government and academic institutions subscribe to a pension plan that is INDEPENDENTLY managed and totally and completely separate from the entity itself - if Rice were to go out of business tomorrow - they couldn't touch my retirement $ as it is in my personal account and has NOTHING to do with the institution, even though they have contributed towards my retirement.

this is how it should be! The bill below seems very short sighted and not nearly enough.

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http://news.yahoo.com/s/ap/20051215/ap_on_go_co/congress_pensions

By JIM ABRAMS, Associated Press Writer1 hour, 18 minutes ago

The House will try to infuse new life into the nation's financially fragile, employer-based pension system with legislation requiring companies to meet their obligations to retirees while shielding the federal agency that takes over abandoned pension plans.

The bill scheduled to come to a vote Thursday would set guideposts for companies that don't have enough money in their pension funds to catch up. Defined-benefit plans, which give retirees a fixed amount based on salary and years of service, are now underfunded by up to $450 billion, putting in question whether promised benefits will be available when workers reach retirement.

The Senate passed its version of pension reform last month, and House action would be a step toward what could be the most important retirement security legislation of President Bush's second term
in office. Prospects currently appear dim for movement on the top retirement priority for the White House, overhauling the Social Security system.

House-Senate negotiations on a compromise bill probably won't take place until Congress reconvenes next year. A House vote this year became a reality only after Republican leaders on Tuesday announced that the United Auto Workers, after winning several concessions, was now actively supporting the legislation.

The backing of unions desirous of protecting retirement benefits for their workers is crucial to winning needed Democratic votes. A majority of Democrats are still expected to oppose the bill.

Rep. Sander Levin (news, bio, voting record) of Michigan, a senior Democrat on the House Ways and Means Committee, said he believed the bill would impact negatively on manufacturers, "both in terms of the short-term competitiveness of companies and the long-term terminations of worker pensions."

White House
press secretary Scott McClellan said Wednesday that Bush supports pension reform but has "made clear he was not going to sign anything that would weaken our pension systems."

The Pension Benefit Guaranty Corporation, the self-financed federal agency that insures pension plans for 44 million workers, has seen its single-employer participants drop from 95,000 in 1980 to less than 30,000 today as companies drop defined-benefit plans or replace those plans with 401(k) programs and other defined-contribution plans.

The PBGC now has deficits of $22.8 billion, mainly a result of having to assume the benefit responsibilities of bankrupt airline and steel companies. The concern is that the agency will have to turn to taxpayers for a bailout if that deficit continues to increase in coming years.

The House and Senate bill would help restore solvency to the PBGC by raising the annual premium companies must pay from $19 to $30 per employee.

The House bill
would require employers with underfunded plans to meet a 100 percent funding target, phased in over five years starting in 2007. It would set up an interest rate formula thought to more accurately measure a company's pension liabilities and require accelerated contributions if a plan is less than 60 percent funded.

It would clarify the law governing hybrid plans such as cash balance plans under which employers set aside money each year for an employee with a guarantee that it will grow at a specific rate.

The House, unlike the Senate version, also takes up some non-pension retirement issues, including encouraging employers to offer automatic enrollment in 401(k) plans and allowing taxpayers due an income tax refund to ask the IRS to deposit a portion of that refund in a retirement account of their choosing.

___

The bill is H.R. 2830.

On the Net:

Congress: http://thomas.loc.gov/

PBGC: http://www.pbgc.gov/


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