December 12, 2005
The Honorable George W. Bush
President of the United States
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear President Bush:
The National Retiree Legislative Network is a non-partisan, grassroots
coalition of retiree associations dedicated to securing federal
legislation that protects pensions and health care benefits. Our nearly
2 million members were delighted to read news reports about your speech
in Kernersville, NC where you called on American businesses to live up
to their pension promises to workers and retirees. We applaud your
strong message to corporate America to properly fund their pension
plans. Also, we laud your saying that Congress needs to “straighten up”
rules that would weaken pension funding.
I have written to the U.S. House of Representatives leaders and to the
members of the Committees on Ways and Means and Education and the
Workforce to express the NRLN’s disappointment over the news that a vote
on pension reform legislation in the House is unlikely this year. We
still hope that the House will find a way to pass its bill before it
adjourns for the year.
We hope you will follow up your pension promises speech with a concerted
effort to get the House to immediately pass its bill, but with some
important revisions. In addition to the stronger funding requirements
that you are insisting upon, we would at a minimum like to see the
following improvements made:
· Older workers must be protected when their defined benefit plans are
converted to cash balance plans. Benefit “wearaway” discriminates
against older workers and must not be legalized either retroactively or
prospectively. Any conversion formula must leave both younger and older
workers on equal footing in terms of actual annual contributions to the
new cash balance plan. On this issue the House should accept the Senate
provision – which offers some protections to older workers – and in no
case should Congress retroactively legalize conversions to cash balance
plans that occurred prior to this legislation.
· Benefit Restrictions in the bill should prevent employers from
modifying pension plans to use plan assets to pay for layoff allowances,
shutdown, or other restructuring costs, except where such are negotiated
as part of a collective bargaining agreement. Severance costs are not
pension plan benefits and, particularly at a declining company, can
weaken the plan and endanger the retirement security of all other
Should the House not make these important revisions to H.R. 2830 before
it goes to a joint conference committee with S. 1783, we hope that these
improvements and stronger pension plan disclosure requirements will be
included in the conference version of the bill that will eventually come
to you for your signature.
Once meaningful pension reforms are enacted early in 2006, we urge you
to then turn your attention to calling for legislation that will protect
retirees’ health care benefits that were promised to them by their
employers. As you know, unlike
pension benefits that are considered earned or vested under the Employee
Retirement Income Security Act (ERISA), companies are not legally
required to set aside funds to meet retirees’ health care obligations.
Companies can also change their medical benefits for retirees at any
time, leaving retirees at the mercy of their former employers, many of
whom have demonstrated they are merciless.
care benefits are not welfare benefits. Retirees earned their health
care benefits as deferred compensation through decades of loyal service
to their employers, who are now walking away from their commitments.
Such protection is contained in H.R. 1322, the Emergency Retiree Health
Benefits Protection Act of 2005, which the NRLN assisted in writing.
However, this bill has not gained any Republican co-sponsors.
The NRLN is open to other options that would attract broader support,
but no support at all is totally unacceptable to our largely Republican
membership. Mr. President, we would welcome input from you or your staff
on how we might address the deterioration of employer-provided health
plans, combined with soaring health care costs, that have created an
ominous cloud over today’s retirement landscape. Shifting of healthcare
premiums and replacement of cancelled defined plan coverage has eroded
or will erode more than 20% of the financial base of retirees on fixed
incomes. This is shifting the U.S health care burden to all taxpayers.
As retirees become an ever-larger piece of our economy, the dilemma we
face is a recipe for long-term economic disaster.
Please urge Congress to establish minimum health care funding and
vesting requirements similar to those governing pension plans under
ERISA. It seems to the NRLN that such an approach, accompanied by tax
incentives to help companies with the transition to the new requirements
and pre-tax premium deductions for retires, would place retiree health
care benefits on an equal footing with pension plans. This would head
off the rapidly approaching crisis that threatens millions of workers,
retirees and our economy.
In closing, I want to return to the issue of pension reform legislation.
It would be a travesty if Congress should fail to pass pension reform
legislation early in 2006. Our members cannot understand why the
enactment of pension reform has taken so long when you support
meaningful legislation and both the House and Senate have a Republican
majority. Retirees are old enough to remember when Lyndon Johnson was
President and how he used the Democratic majority in the 89th Congress
to push through his “Great Society” legislation. Just as important to
today’s workers and retirees is the need for new regulations that create
a “New Horizon” for retirees and workers alike.
President, National Retiree Legislative Network
Ken Mehlman, Chairman
Republican National Committee