Talking Points

Pension Reform Legislation Improvement Issues to discuss with Senator Mike DeWine or members of his staff:

(Please print a copy to use in discussions with members of Congress)

I am a retiree from __________________ and live in ________________.   I’m one of the more than 2 million retirees affiliated with the National Retiree Legislative Network. 

As a member of the Pension Reform Conference Committee, you are in a unique position to be of great service to the workers and retirees of Ohio and America.  On the other hand, you can do great damage to the security of pension plans if you listen to the lobbyists for corporations that are seeking to shirk their responsibilities.

I’m particularly concerned that you do the right thing for workers and retirees on the following issues:

            --Support the prospective provision in the Senate bill eliminating “wearaway” for normal and early retirement and oppose any effort to retroactively legalize cash balance conversions.

            --Oppose the lowering from 125% to 115% of the Section 420 threshold for transfers of money out of pension plans.

            --Urge strengthening of pension plan disclosure requirements.

            --Require that investment advisors for 401K plans have no potential conflicts of interest.

I’d like to provide some specifics about the Cash Balance Conversions and the Section 420 Transfers as follows:

CASH BALANCE CONVERSIONS 

I strongly support the prospective provision in the Senate bill eliminating “wearaway” for normal and early retirement.  It is extremely important that this provision be included in the final bill.  I oppose any provision that would weaken these protections for retirees.

I also strongly oppose any and all efforts to retroactively legalize cash balance conversions.  The legal risks associated with the conversion of defined benefit plans to cash balance plans were well-known to employers when they undertook these conversions and yet they were still willing to move forward.  As a result, thousands of older worker have suffered the “wearaway” of earned benefits as well as the loss of early retirement benefits.  Congress should not change the law retroactively to protect those companies that acted unfairly and unlawfully. 

SECTION 420 TRANSFERS 

I strongly endorse the principle of a 100% funding target.  However, since markets are inherently volatile, I believe that an existing surplus should not be drained.  I am adamantly opposed to the Senate provision (Sec. 1331 of the Senate bill) which modifies Section 420 of the Internal Revenue Code to lower the transfer threshold of the plan surplus from 125% to 115%.  The 125% rule created a cushion of protection of 35% that should not be changed.

A longer maintenance of cost period, as proposed, and promises to restore funding levels to 115% will do little good if the employer’s deteriorating financial situation impairs its ability to fully fund the plan.  This inability to fund (top off) could result in more plan terminations or freezes.

Given the long-term financial impact that the pension reform bill will have, this may well be the most important piece of legislation you deal with on behalf of workers and retirees.  I will be waiting to learn from you whether you are devoted to safeguarding pension plans.  Or will you side with the corporations who are looking for ways to get out of providing to workers and retirees the pensions and benefits we have earned through years of our labor?

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