With the Country Facing a Pension Crisis, House Bill Makes Retirement Security Harder for American Workers, Says DeLauro
Thursday, December 15, 2005
With the Country Facing a Pension Crisis, House Bill Makes Retirement Security Harder for American Workers, Says DeLauro
WASHINGTON, D.C. - Congresswoman Rosa L. DeLauro (Conn.-3) today said the pension legislation that passed the U.S. House only makes retirement savings harder for American workers. DeLauro noted that the country faces a pension crisis, with the federal Pension Benefit Guaranty Corporation (PBGC) facing a deficit of $23 billion. The PBGC insures defined benefit pension plans and may have to absorb almost $15 billion more in pension claims from the bankruptcy filings of large airline and automotive companies.
"When we talk about pensions and why reform is so badly needed, we should remember who it is that depend on them most," said DeLauro. "These are people who have worked all their lives and are looking to enjoy their later years with some measure of financial security. Government must do its part to guarantee that their employers will honor their end of this bargain."
The pension legislation debated today allows companies to switch their defined pension plans to cash balance pension conversions, which cut benefits for long-serving employees and older workers. The bill will not stop companies from handing their defaulted pensions over to the PBGC, and does not provide any relief for the airline industry.
The Congressional Budget Office found that the bill would increase the PBGC's deficit by $9 billion dollars over the next ten years. PBGC's own analysis found that the Republican bill's provisions would increase the agency's financial shortfall by $2.5 billion. The agencies concluded that the House bill worsens the pension crisis by increasing claims on the federal government by billions of dollars, thus boosting the chances of a massive taxpayer bailout and the loss of billions of dollars in employee and retiree benefits.
"Companies do have obligations to their workers," said DeLauro. "Reforming our pension system is possible only if we ask employees and employers alike to share in the benefits and the sacrifice. This bill does not do that."
House Democrats offered a strong proposal to protect workers' pension benefits, which would help airline workers. The bill would ensure that executives do not get bonuses as workers see their pensions cut, to prevent what happened in 2002 when a U.S. Airways CEO took his pension in a lump sum of $15 million just six months before the company filed for bankruptcy, which resulted in the termination of the pilots' pension plan.
http://www.house.gov/delauro/press/2005/December/pension_bill_12_15_05.html