PRESS RELEASE


NRLN Endorses Effort

To Derail Proposed IRS Regulations

[Also see IRS Testimony]

FOR IMMEDIATE RELEASE 

National Retiree Group Endorses Effort

To Derail Proposed IRS Regulations

Conversion from a defined benefit plan to a cash-

balance plan may decrease pensions by 50 percent

 

(WASHINGTON, Jan. 2, 2003) – A Washington-based coalition of retiree organizations dedicated to protecting the pension plans and retirement benefits of their members, is urging the withdrawal of proposed Treasury Department regulations pertaining to “cash-balance” pension plans.

“The proposed regulations would enable thousands of companies to convert their traditional defined benefit plan to cash-balance plans, resulting in a pension pay cut for millions of older workers,” according to A. J. “Jim” Norby, president of NRLN.

 “The General Accounting Office estimates that the annual pension benefits of older employees can drop by as much as 50 percent after a company converts from a traditional defined benefit plan to a cash-balance plan,” said Norby.  “Older employees who have worked for many years with one company and who plan to continue working for additional years for the same employer would realize the greatest negative effect from a switch to a cash-balance plan,” he noted.

More than 800 age discrimination complaints are currently pending before the Equal Employment Opportunity Commission based on cash-balance conversions that occurred during the 1990s.   These complaints, along with concerns voiced by the Pension Rights Center, the AFL-CIO and other employee groups, led to a Treasury Department moratorium in 1999 on pension plan conversions, said Norby.

In an announcement issued in December of 2002, the Treasury Department deemed that cash-balance pensions do not violate federal age discrimination laws.  “If this view is allowed to stand and the moratorium is lifted, the floodgates will be open for companies to resume conversions to cash-balance pension plans,” said Norby.

The NRLN supports an initiative by several congressional members who have drafted a letter to President George W. Bush urging the withdrawal of the proposed cash balance plan regulations.  The letter also requests new regulations that clarify the rights of older workers to a secure pension.

“This position is consistent with the NRLN’s commitment to protecting the pension plans and retirement benefits of its members through legislative action.  This proposed regulation by the Treasury Department is just another example of how retirement plans are being amended and watered down by legal interpretations and regulations that do the average retiree more harm than good,” said Norby.

Norby further said that the NRLN believes that remedial legislation is essential to protect older workers in cash balance conversions.

In 2002, the NRLN championed the introduction of HR1322 – The Emergency Retiree Health Benefits Protection Act of 2002 – and its companion bill (S2904) in the Senate.  That legislation remains the association’s priority during in 2003.

“When enacted, the proposed legislation will protect benefit plans from being changed after retirement and provide some recovery for retirees already affected,“ said Norby.

Based in Washington, D.C., NRLN represents nearly 2 million retirees from Association of US WEST Retirees, Association of BellTel Retirees, Prudential Retirees, Monsanto Retirees, Raytheon Retirees, along with groups from Boeing, GE, GM, IBM, Johns Manville, Portland Electric (Enron), SNET, Western Union and others.  For more information about the organization or about HR 1322, visit the NRLN Web site at www.nrln.org.

 

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