Update on NRLN Legislative Issues

TO: NRLN Grassroots Network - February 12, 2006

FROM: Bill Kadereit, NRLN Vice President - Legislative Affairs

The purpose for this email is to bring you up to date on NRLN legislative issues and to alert you to the support we will need from you in the coming weeks. This will be another important year for us to work on passing federal legislation on pension law reforms, preservation and funding of retiree health care and more affordable prescription drugs.

As you may recall, on November 16, 2005 the U.S. Senate passed S.1783, the Pension Security and Transparency Act of 2005. On December 15, 2005 the U.S. House of Representatives passed H.R. 2830, the Pension Preservation Act of 2005. A few weeks after the Senate bill was passed, we discovered that at the 11th hour a provision was added to the bill, with out public discussion, that would lower the funding threshold from 125% to 115% for IRS Section 420 transfers of funds out of pension plans. When the provision was discovered, we requested that you write to your Senators and 1,476 of you sent letters to your Senators through our online Capwiz system.

Late last month, the NRLN negotiated an agreement with two influential unions to jointly sign and deliver to Senate and House leaders a letter opposing the lowering of the Section 420 threshold. The unions partnering with the NRLN were the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW). The two-page letter stressed that we are strongly united in our belief that the Senate provision would be extremely harmful to retirees; would not in any way address the nationwide problem of rising healthcare costs, and is contrary to prudent pension reform. Accompanying the letter was a white paper by actuary Andy Lang. This recognized expert in pension plan governance explained why he is not in favor of any provision that permits defined benefit plan assets to be withdrawn prior to the satisfaction of all obligations to the plan participants. He stated that any law that permits money to be siphoned off from a defined benefit system before all promised benefits are taken care of, regardless of the reason, weakens the future financial viability of the plan.

A joint Senate and House conference committee will be appointed soon--possibly as early as this week--to work on the differences in their two bills. When the conference committee members are identified, each will be presented with the NRLN’s package presenting our position on the Section 420 transfer. In addition, we will attempt to gain other important improvements in the pension reform legislation. We will oppose retroactive legislation of cash balance plans and promote provisions which protect older workers from discrimination. We will push for stronger disclosure and reporting requirements for pension plans. We particularly want rules that will require the release to plan participants, upon request, of PBGC Form 4010 (for underfunded companies) and the disclosure of plan asset allocation and investment/proxy guidelines.

Once we gain insights into how the conference committee views the improvements we want made, we will be calling on members of the NRLN Grassroots Network to send letters to their legislators. You can be certain that when we ask you to take action it is very important to America’s retirees.

While the pension reform legislation is the most urgent issue for the NRLN, it is certainly not our only issue. I encourage you to go to the NRLN Website at www.nrln.org and read the NRLN 2006 Legislative Agenda which begins on the Home Page. If you haven’t accessed the NRLN Website during the last few weeks, I think you will find the new design more informative, attractive and easier to navigate.

I want to thank you for being part of the NRLN Grassroots Network, for your active support in the recent past and I look forward to the support you will provide in getting very important legislation enacted to protect pensions and improve protections for company-provided health care.

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