Providing for Consideration of H.R. 2830, Pension Protection Act of 2005

PROVIDING FOR CONSIDERATION OF H.R. 2830, PENSION PROTECTION ACT OF 2005 -- (House of Representatives - December 15, 2005)

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Mr. McGOVERN. Madam Speaker, millions of Americans who work in the private sector are relying on having an employer-sponsored pension plan when they retire. An important part of the American dream is to have a nest egg that people can tap into during their golden years so that they are not forced to literally work until they die. American workers have fought for and earned the right to pay into a pension system that will provide an income once they retire. Unfortunately, there are serious problems with America's private pension system.

Madam Speaker, pension security is an important issue, one indeed which should be addressed by this Congress, but pension security must be addressed in the right way and it deserves to be addressed in a democratic way.

Bankruptcies in the airlines, steel, and the auto parts industries, for example, are straining the abilities of the Pension Benefit Guaranty Corporation, or the PBGC, to guarantee the private pensions of workers in these industries. The PBGC was created as an insurance system for America's private pension plans. It exists to make sure that America's workers will receive a pension when they retire, even if the company they work for cannot pay that pension.

Now, while there are real problems in some industries, like the steel industry, there are also serious cases of pension dumping, where a corporation claims it cannot fulfill its obligations and dumps its pension onto the PBGC. The net effect is a real strain on the PBGC and ultimately a crisis in the pension system.

The PBGC is an insurance policy for America's workers. It is a safety net should a company not be able to pay its pension obligations. But it is not supposed to be a dumping ground for corporations who want to boost their bottom line and just do not feel like paying the pensions they promised their workers. It is this looming crisis in America's pension system that brings us here today.

Now, no one believes we should sit and wait while America's pension system crashes around us, but we need to address this problem in the right way, and regrettably, Madam Speaker, the Pension Protection Act the Republicans have concocted is not the right way.

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Mr. McGOVERN. Madam Speaker, we will have an opportunity to debate the substance of this bill, I guess not only during the rule but afterwards, but I am still kind of baffled as to why this bill has to be brought to the floor under a closed rule, why the ranking Democrats on the committee of jurisdiction could not even be given the courtesy of being allowed to offer an alternative. This is unbelievable to me, that a bill of this importance would come to the floor and we are entirely shut out.

And speaking of being shut out, the gentleman from Indiana (Mr. Visclosky) had four amendments to be brought before the Rules Committee. He waited patiently and testified before the Rules Committee. Four good amendments, and all four of those were dismissed routinely as well.

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Mr. McGOVERN. Madam Speaker, the gentleman from Georgia just gave a nice speech, but nobody on that side has explained why on this very important issue that the Democrats and people with alternative views should be entirely locked out from participating in amending this bill. This is an outrage.

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Madam Speaker, once again, we heard an interesting speech but no explanation as to why we have to bring this bill to the floor under a closed process and why we are shut out from even offering an alternative.

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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

The gentleman from Indiana tells us we should all be happy because the Education Committee deliberated on this and there were votes in that committee. I should remind the gentleman that there are 49 members of the Education Committee. There are 435 Members of the House of Representatives.

The gentleman gets all upset when Mr. Miller talks about the fact that it is important for us to be an example to Iraq about what democracy is, and that there are elections in Iraq and, you know, here we are engaged in an undemocratic process here today. But I will say this. At least in Iraq everyone has an opportunity to vote. Here we are being denied an opportunity deliberately on this floor on an issue that impacts millions and millions of our fellow citizens. This is an outrage. You know, I am amazed that people on the other side, who only a few years back would decry a closed process like this, have now come to embrace this process. This has become the norm in this House, and it has to stop. This is not democracy. This is not a deliberative process. This is a closed process where legitimate, important debate on important issues is being denied routinely.

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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

Let me just again say to the gentleman from South Carolina who just spoke, what we are asking for here is an opportunity to offer what we think is best. We disagree with you. We disagree with your approach. Not only do we disagree with your approach, the AARP disagrees with your approach.

AARP,

December 12, 2005.

DEAR REPRESENTATIVE: AARP is writing to express its opposition to a number of critical elements of H.R. 2830, the Pension Protection Act of 2005, scheduled for House consideration this week. We share the goal of enacting new pension funding rules that will require employers to fully fund their pension plans and provide new revenue for the Pension Benefit Guaranty Corporation. These changes are long overdue and should be enacted into law as soon as possible. However, we cannot support legislation that would clarify the legal status of cash balance pension plans without providing protections for older, long-service workers involved in cash balance plan conversions and without including a prohibition on all discriminatory age based ``wearaway.'' We are also deeply concerned that this bill would, for the first time, permit defined contribution pension plans to provide investment advice subject to inherent financial conflicts.

1. Cash Balance Pension Plans

AARP believes that cash balance plans have a role to play in the private pension system if--and only if--they are designed and adopted in a manner that protects the millions of older workers who have given up wages in exchange for traditional defined benefit pensions.

Cash balance pension plan conversions change the rules in the middle of the game, and older, longer-service workers are at considerable risk. They generally lose out on larger late career benefits, have less time to accumulate benefits under the new cash balance formula, and are less able to leave their current job if benefits are cut because they typically have fewer job prospects.

H.R. 2830 does not protect older and longer-service workers that are involved in cash balance pension plan conversions. The bill represents a step back from the Administration's legislative proposal, which would eliminate wearaway (both normal and early retirement) and provide transition rules to protect some benefits for current workers. The recently passed Senate bill includes similar protections. The current legislation clearly fails to recognize the need for transition rules to protect promised benefits and fails to protect the most vulnerable older, longer service workers.

H.R. 2830 would not only lower the bar for transition protections for older workers set in the Administration proposal, but would lower it substantially below the ``best practices'' followed by companies involved in conversions over the past few years. Many employers--recognizing the harm to older workers--have adopted transition rules, such as the choice to remain under the old plan formula, or have ``grandfathered'' older, longer service workers under the traditional plan. As recent reports by both the General Accounting Office and AARP confirm, most employers have adopted transition practices designed to protect the benefits that older and longer serving employees have earned. Any legislation should ensure these protections for older workers, not undercut them.

2. Investment Advice

AARP shares the Committee's goal of increasing access to investment advice for individual account plan participants, but we oppose the elimination of the conflict-of-interest protection. The approach advanced in this bill would, for the first time, permit plans to provide advice subject to inherent financial conflicts. This is inconsistent with the Employee Retirement Income Security Act's (ERISA) longstanding protections for plan participants. While we agree that individualized advice can be helpful, such advice must be subject to ERISA's fiduciary rules, be based on sound investment principles, and be protected from conflicts of interest.

H.R. 2830 would turn back the clock and replace ERISA's prohibition on conflicts of interest with a weak disclosure model--an inappropriate and unnecessary step given today's marketplace. Over half of existing plans already provide investment advice to their employees through financial institutions and firms that do not have a financial conflict. In fact, most large financial service providers have already developed alliances with independent advisors to make such advice available.

Rather than permit advice subject to financial conflict, Congress should encourage more employers to provide independent advice by addressing the key barrier--employer liability. Potential employer liability is by far the most important reason that advice is not offered. Congress should clarify that the employer would not be liable for specific investment advice so long as the employer undertook due diligence in selecting and monitoring the independent advice provider. It is in the best interest of both the plan and participants to enhance the independent advice market, and we urge Congress to adopt this approach.

AARP urges you to stand with us in opposition to these critical provisions in H.R. 2830 in order to provide protections for older workers that are necessary, reasonable and fair, and to ensure that employers provide quality investment advice without the potential for conflict. If there are additional questions or you need further information, please feel free to call me or have your staff contact Frank Toohey at (202) 434-3760.

Sincerely,

William D. Novelli,
Chief Executive Officer.

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Mr. McGOVERN. Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, there are numerous problems with this bill. This bill, as Republicans have drafted it, makes the pension crisis worse. This bill would cause many employers to freeze or terminate pensions. This bill does nothing to protect the struggling American Continental, Delta, and Northwest Airline employees and retirees. This bill does not stop companies from dumping pension plans in bankruptcy or protect the United Airline employees and retirees. The bill would freeze and cut worker pension benefits. The bill does not ensure fairness between workers and executives. I mean, I could go on and on and on.

The bottom line is that many of us who have been on the side of workers consistently have deep concerns about this bill and what its impact will be on working families. We think that this bill should not only be much better, but, in fact, this bill, as it stands, will be harmful to American families. And there will be a debate about that, but absent from the debate will be what we want to propose, what others in this House want to propose, what other ideas may be.

Let me just say to my friends on the other side of the aisle that you are not perfect. You are not always right. In fact, you are usually wrong. And when it comes to workers, you are usually wrong, in protecting workers' rights. To allow a bill this important to come to the floor without a single amendment being made in order, to allow this bill to come to the floor and shut us out and gag us is unconscionable.

For the life of me, I cannot understand what the hesitation is by the leadership on that side of the aisle to allow us to be able to deliberate on this bill, to have a give and take, to be able to offer an amendment, to be able to have an up-or-down vote.

The distinguished chairman of the Education Committee, when he was before the Rules Committee last night, said he had no problem with our offering an alternative. I commend him for that. I mean, that is the way this should be. We disagree. We have honest disagreements. We should be able to work them out in a deliberative way on the House floor. But here we are on a bill that impacts millions and millions of Americans, a bill that we believe adversely impacts millions of Americans, and we are totally shut out of this. It is not because of lack of time. We have plenty of time today. And the immigration bill seems all messed up; so we even have more time than we thought. But the fact of the matter is this important kind of legislation should not come to the floor under a closed process. This is outrageous. This has become the norm in this House.

And I would simply say to my colleagues on the other side of the aisle, someday the tables are going to turn. You are going to be in the minority again, hopefully sooner rather than later. I hope nobody over there cries and shouts and complains if a bill comes to the floor under a closed rule.

Defeat this rule.

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Mr. McGOVERN. Mr. Speaker, will the gentleman yield?

Mr. BOEHNER. I yield to the gentleman from Massachusetts.

Mr. McGOVERN. I can say why do you bring most of the bills that you bring to the floor that I think adversely impact American workers, from repealing worker protections and worker benefits.

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