Date: 1995-10-25
Speaker: GENE GREEN (democrat)
Chamber: H
State: Texas

Mr. Speaker. I am only in my second term in Congress. but I remember last year one of the issues I heard a great deal was how many Members of Congress when we passed one of those massive bills has read the bill. I would like to throw that down today as a challenge for the folks who happen to be watching tonight. Mr. Speaker. in that they would look at both H.R. 2491 and H.R. 2517. and tomorrow we are getting ready to vote on this bill. I am sure the reason all our colleagues are not here is they are pouring over the pages of these bills tonight before they vote on them and I hope they would because if they had the chance to look at this. they would also see one section I am going to talk about tonight. This morning. members of the Committee on Ways and Means and the Committee on Economic and Educational Opportunities that I am a member of and the Committee on the Budget held a press conference in a joint effort to alert American workers and retirees what effect the bill will have on their pension plans. Several weeks ago. Republicans in the Committee on Ways and Means proposed changes in the Internal Revenue Code allowing employers to take assets from pension plans and use them for any purpose. This dangerous proposal would allow companies to take money from employee pension plans that they say are more than 125 percent funded. Those excess pension assets. the funds not needed to pay immediate pension benefits. can be used freely for purposes that may not certainly be in the interest of those retirees or potential retirees. Allowing companies to strip socalled surplus pension assets from the employee pension plans would take us back to the early 1980s. when companies took away $20 billion from over 2.000 pension plans. -covering nearly 2.5 million workers and retirees. Prior to the 1980s. the reversions of pension assets to employers were almost nonexistent. Pension assets were returned to employers only after the plan had been terminated and after all benefits to plan participants were paid. However. as pension assets grew because of the inflation in the late 1970s and the rising stock market of the 1980s. corporations began to take these excess pension funds. In fact. in 1983. the Reagan administration Issued guidelines making pension reversions easier. in other words. to get at that pension increase. From. 1982 to 1990. over $20 billion was taken from the over 2.000 retirement plans covering those 2.5 million workers and retirees. From 1982 to 1985. the size of the reversion grew rapidly: $404 million reverted in 1982 alone to $6.7 billion reverted in 1985. As retirees were left without adequate retirement. Congress took strong action to stem the tide of the pension reversions or the raiding of the pension funds. Beginning in 1986. Congress imposed a series of excise taxes. A 10percent excise tax on the amount of the reversion was in the Tax Reform Act of 1986. a 15percent excise tax in the Technical and Miscellaneous Revenue Act of 1988. and in the Omnibus Reconciliation Act of 1990 a 20percent tax was on employers who established a successor plan with similar benefits or they had to pay a 50percent tax if no successor plan was established. So they could not just come in and raid the taxes. the pension plans from 1986 to So with these congressional measures. the number and size of the reversions substantially fell. So today we see increased pension plans. the assets of the pension plans that. by the way. Mr. Speaker. they are investing in our country. We hope they are investing in jobs and in our country. So it is for savings. but that money is not sitting somewhere and not earning money because we want those retirees to earn from the benefits of our country. The effect of the reversion on the American worker in the Republican proposal would encourage employers to take billions of dollars out of these pension plans. leaving them possibly with insufficient funds to protect the future of current retirees. Money previously set aside for workers retirement would now be pocketed by these same corporations and used for any purpose over that 125 percent. The removal of these funds from pension plans increases the risk of loss to workers. retirees and their beneficiaries at a time when the need to make sure we have a strong pension system is great. when we worry about if social security is going to be there. And we all talk about that Social Security is not where people can survive on but it is just a beginning. and here we are going to hurt private pension plans by allowing employers to take money from them. Pension plans are not the employers money. Workers pay into those pension contribution funds and oftentimes accept lower wages. and I did that in the 1970s. We actually accepted. when I was in the printing business. a lower amount in our paycheck to make sure we paid into the pension plan. So today. Mr. Speaker. I am now a beneficiary of the printers pension that I do not know how much I will receive when I am 65. But under the current pension and tax regulations. pension funds are in trust to be used only for the exclusive benefit of workers and retirees and should not be considered as piggy banks. This irresponsible provision encourages efforts to pilfer workers pensions. This proposal is bad public policy. A pension plan with excess assets today can quickly become underfunded if those assets are taken away. Because most pension plans are tied to the stock market. any downward turn will have a negative effect on the plan. In addition. a reduction in the interest rate of 1 percentage point. together with an asset reduction of 10 percent. reduces the funding level from 125 percent to 96 percent. The American public must let the majority Republicans in Congress know that pension assets are held in trust for -the exclusive benefit of plan participants and their beneficiaries. Taking money away from pension plans will reverse the progress made to increase the national savings rate. Let us not permit companies to take pension assets from the American worker. Let us ensure that pensions will be safe and available for those who saved for their retirement. Mr. Speaker. in closing I would hope that our majority tomorrow would realize what it will do to the future of the pension plans and. hopefully. the U.S. Senate will change that or. as Secretary Reich said today. this is veto bait in this bill.