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Retirees Network Urges Conference Committee
To Revise Proposed Pension Reform Legislation
NRLN Identifies Issues of ‘Great Concern’
(WASHINGTON, March 16, 2006) – As negotiations get underway in the U.S. Senate and House conference committee on pension reform legislation, a national retiree organization is calling on conferees to revise several provisions being considered.
“These issues are of great concern to our membership,” announced A. J. “Jim” Norby, president of the National Retiree Legislative Network (NRLN). “We have communicated these concerns to the conferees as soon as they were named, to other members of Congress and to President Bush,” he reported.
According to Norby, “The NRLN strongly opposes the retroactive legalization of cash balance conversions which have resulted in thousands of older workers suffering the ‘wearaway’ of earned benefits promised to them by their employers for years of loyal service. The legal risks associated with the conversion of defined benefit plans to cash balance plans were well-known to employers when they initiated these conversions, so Congress should not change the law retroactively to shield against lawsuits those companies that acted unfairly and unlawfully. Under no condition should Congress retroactively legalize conversions to cash balance plans that occurred prior to this legislation.”
The NRLN also opposes a proposed change to Section 420 of the Internal Revenue Code that would lower the funded threshold for the transfer of dollars out of a pension plan from 125 percent to 115 percent, giving corporations a windfall. “This is a recipe for more pension plan failures in the future,” Norby noted.
The NRLN has encouraged conferees to strengthen transparency and disclosure provisions that protect pension plan participants. Specific NRLN proposals include:
· Requiring pension plan administrators to provide upon request, all relevant and updated documents that participants and retirees need to evaluate the plan’s financial status.
· Modifying Employee Retirement Income Security Act (ERISA) Section 104 to provide for the disclosure of documents related to a pension plan’s financial health, asset allocation, investment guidelines and proxy voting guidelines. This information would be made available to plan participants upon request.
· Releasing information disclosed as part of an underfunded pension plan’s ERISA Section 4010 filings to the federal Pension Benefit Guaranty Corp. (PBGC) to pension plan participants within 30 days of a written request.
“The effective hiding of nonproprietary disclosures involving the financial viability of a pension plan undermines the entire purpose of pension reform legislation,” Norby said.
The NRLN also supports a provision passed by the Senate to encourage investment advice for 401(k) plan participants. At the same time, the organization criticized a House of Representatives measure that permits the 401(k) plan provider to advise participants on investment options that vary in terms of commission and cost. “Inevitable conflicts of interest would result if this approach is advanced into law,” Norby said.
A final concern voiced by the NRLN is the failure of both the Senate and House to address the removal of pension plan assets to pay non-benefit layoff allowances, severance pay and other corporate expenses, 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 participants,” Norby explained.
“We applaud President Bush for his recent comments to the National Newspapers Association where he restated his call on American businesses to live up to their pension promises to workers and retirees,” Norby added. “At the same time, we call for his support to help achieve these much needed improvements to ensure this legislation achieves true pension reform.”
Based in Washington, D.C., NRLN is dedicated to securing federal legislation that will guarantee the fair and equitable treatment of retirees in private and public sector health and pension programs. NRLN represents a non-partisan, grass roots coalition of retiree associations with a combined membership of more than 2 million men and women who are seeking to protect their pension and health care benefits. For more information, visit the NRLN Web site at www.nrln.org.
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