February 11, 2008
The Honorable Harry Reid
United States Senate
528 Hart Senate Office Building
Washington, D.C. 20510-2803
Dear Senator Reid:
With the recent ruling by the U.S. Treasury Department that allows companies to freeze the pensions of older workers, many retirees can no longer restrain their anguish over the Executive Branch’s repeated circumventing of acts of Congress. Yet, there is no evidence that leaders of Congress are taking any action to thwart these blatant incursions into the Congressional domain.
Based on my reading of news reports, Treasury’s ruling validates some pension plan rollbacks that were intended to protect the retirement nest eggs millions of employees and retirees. In addition, Treasury’s action could tip in favor of corporations the outcome of long-running lawsuits filed by pension plan participants against a number of major companies claiming age discrimination due to changes made to their pension plans.
The heart of the issue is whether employers who change from defined benefit pensions to cash-balance plans can freeze the growth of older workers' pensions for months or years following the change while younger workers' pensions continue to grow. (This is know as “wearaway.”) Many companies allow employees to remain in the old plan for a time, but this only delays the onset of wearaway. The Treasury ruled that the decades-old laws that effectively prohibit companies from temporarily freezing pension growth don't apply when the freeze is delayed.
Treasury’s ruling allowing years with “zero accruals” is inconsistent with the very strong statements against wearaways in the Pension Protection Act of 2006 that you and other members of Congress toiled over for months. Special interest groups have undone your work through compromising efforts with the Executive Branch. On behalf of the more that 2 million men and women represented by the National Retiree Legislative Network (NRLN), I am asking what you intend to do as a leader of Congress to counteract Treasury’s ruling and provide the full measure of protection to employees and retirees that was intended by Congress when it passed the Pension Protection Act of 2006?
It appears to retirees that there is another situation where the Executive Branch has run roughshod over the intent of Congress. This is the Equal Employment Opportunity Commission’s recent publishing of its rule in the Federal Register that allows employers to reduce or eliminate healthcare for retirees when they turn 65 and become eligible for Medicare. More than 10 million American retirees who rely on employer-sponsored healthcare and prescription drug plans stand to be hurt by the EEOC’s rule. The EEOC is overstepping its authority. The agency is attempting to legislate rather than protecting older Americans as required by the 1967 Age Discrimination in Employment Act (ADEA). How can the EEOC that was created to prevent discrimination issue a policy that discriminates on the basis of age?
On behalf of the NRLN’s members who reside in all 50 states, the NRLN would like to hear what you as a Congressional leader will do to reverse the EEOC’s rule. To do nothing is a statement by Congress that it cares little about defending the substance of the laws that it enacts. It says that a willing Administration under pressure from special interests can subordinate the intent of Congress through the writing of rules and regulations.
The NRLN looks forward to hearing from you on these two issues and learning what leadership you intend to provide to uphold the laws that were written to help workers and retirees, not harm them as the Treasury’s and EEOC’s rules are going to do. If you or a member of your staff would be interested in discussing these issues with the NRLN, please contact Marta Bascom, our Executive Director in Washington, D.C. at 703-863-9611.
Bill Kadereit, NRLN President