Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - January 31, 2005)

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By Mr. GRASSLEY (for himself and Mr. BAUCUS):

S. 219. A bill to amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to protect the retirement security of American workers by ensuring that pension assets are adequately diversified and by providing workers with adequate access to, and information about, their pension plans, and for other purposes; to the Committee on Finance.

Mr. GRASSLEY. Mr. President, I rise today along with my colleague, Senator BAUCUS, the Ranking Member of the Finance Committee, to re-introduce the National Employee Savings and Trust Equity Guarantee Act--or the NESTEG bill as we call it in the Finance Committee. The NESTEG bill would reform our pension and retirement savings laws in several important ways. For example, NESTEG would require companies to allow their employees to diversify out of company stock, a provision that the Committee adopted in response to the events at Enron which saw employees' retirement plans vanish almost over night. The NESTEG bill also includes other important participant protections, including enhanced disclosure requirements, new rules governing so-called blackout periods, and faster vesting of employer contributions. In addition, NESTEG expands the portability of retirement plan assets so that workers can keep money saved for retirement, and simplifies pension laws and regulation. The NESTEG bill also responds to the uncertainty in the rules governing defined benefit pensions by permanently adopting the yield curve as a replacement for the 30-year Treasury rate.

Last year, the Finance Committee unanimously approved the NESTEG bill. This year, I am looking forward to seeing it signed into law. This bill first began in the wake of the outrageous events that went on in the wake of the collapse of Enron and corporate scandals at other companies. Over the past few years, the Finance Committee has worked diligently to enact reforms in a number of areas of the law to make sure that events like that don't happen again.

The important pension protections in the NESTEG bill are one remaining area for reform. The headlines have died down, but workers' pensions are still too vulnerable to company failures. Thus, a central piece of this bill would allow employees to diversify their retirement plans so that they are not overly concentrated in company stock. Diversification is one of the hallmark principles of sound investment strategy, and promoting diversification should be a hallmark of our pension laws.

But the NESTEG bill is not just a bill that responds to Enron-like situations. The NESTEG bill includes other important improvements to 401(k) and other defined contribution plans as well. The bill makes it easier for employees to transfer amounts from one plan to another, thereby making sure that plan assets remain saved for retirement. And the bill includes provisions designed to make it easier and more cost effective for small businesses to sponsor a retirement plan. Small businesses are vital to our economy, and we need to encourage a level playing field so that workers at small businesses throughout our country have the same access to retirement plans as workers at Fortune 500 companies.

The NESTEG bill also would remove a major source of uncertainty plaguing our pension system by enacting the yield curve as a permanent replacement to the 30-year Treasury rate for pension funding. Workers need reliable pension funding, and employers need a reliable basis on which to calculate pension payments. The NESTEG bill also gives plan sponsors more flexibility to fund their plans well in good times, and restricts the ability of companies with severely underfunded plans to promise more benefits to work. The Administration has recently come forward with additional pension funding reform proposals, and I look forward to examining those reforms as the Finance Committee considers legislation in this area this year.

Retirement security is a topic that is going to get a great deal of attention this year. We know we need to increase long-term savings in America, and we know that there are ways that we can improve our private retirement system. The reforms in the NESTEG bill that I am introducing today with Senator BAUCUS represent an important step forward in improving Americans' retirement security. As we debate retirement security issues this year, I look forward to working with my colleagues to achieve the goal of ensuring that all Americans achieve a secure retirement.

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