DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 2007 -- (Senate - August 03, 2006)
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CONFERENCE REPORT ON PENSIONS
Mr. KENNEDY. Mr. President, we are in the final moments of working through a rather important amendment. I thought I would use a few of those moments, until the floor manager returns, to address an issue that we are going to be dealing with within the next 2 days. I am not sure how much time we will have. That is the conference report on pensions which I urge the Senate to accept.
I want to quickly review exactly what our pension conference came back with. It requires the companies to fund pension promises, help workers save through automatic enrollment, making the Saver's Credit permanent. This automatic enrollment will ensure that workers will be enrolled in 401(k)s. And this legislation ensures they will be able to get good advice. The advice will be objective.
The Saver's Credit is going to be made permanent. That is probably the most that can be done for low-income individuals. The bill helps protect our airline workers' pensions. It give workers timely and accurate information on pension plan finances. It protects workers and businesses in multi-employer pensions. It protects older workers' early retirement benefits from erosion. That is important. It gives workers access to unbiased investment advice. It adopts post-Enron worker pension protections. It penalizes corporate executives who line their pockets when workers' pensions suffer. It provides greater retirement security for widows and former spouses.
Pensions are important because when we look at retirement security, it is a three-legged stool. We have Social Security, the bedrock of retirement; private pensions, and then private savings. Private savings are at an all-time low. We will, obviously, maintain the integrity of Social Security, but the other aspect is private pensions. Only 50 percent of workers today have pension coverage at work, and only 21 percent have a defined benefit plan.
Pensions are enormously important. We have had approximately $8 billion in pension savings that have been lost in the last 5 years. So if we did not take these steps, the prospects in terms of workers' pensions would have been very threatening.
We will make this recommendation at an appropriate time, when the leaders are here. The chairman of our conference is our friend and colleague, Senator Enzi, who has done an extraordinary job during the course of the whole pension conference. As always, he is a man of good judgment and patience. The conference lasted longer than any of us believed was necessary. Nonetheless, we have a product that we are prepared to defend.
We had great unanimity in the Senate when we passed the earlier bill 97 to 2. Even those two individuals expressed reservations, and we were able to address their primary concerns.
This is not the legislation that I think Senator Enzi or I would have drafted, quite frankly. But it is a solid recommendation. It will make an important difference to millions of workers, particularly those in the multi-employer plans and also single-employer plans. It will make an incredibly important difference to some of the airlines. Quite frankly, I was disappointed that we didn't treat American and Continental Airlines more fairly in the final recommendations. Without moving ahead at this time on the pension legislation, we have the prospects of one of the major airlines dropping their pension program, with more than 150,000 workers losing their pensions.
So this is going to be enormously important. We are not going to spend a great deal of time on this, as we are dealing with Defense appropriations, which is incredibly important; and we are going to be dealing with the estate tax proposal, which has been set by the majority leader. But we will, in the next 2 days, deal with this legislation.
It is extremely important. If there are Members who want additional information, I am sure Senator Enzi and I will be more than willing to provide it.
Americans who have worked hard and played by the rules for a lifetime deserve a secure retirement. They deserve to be able to enjoy their golden years, to spend time with their families and to rest after a lifetime of hard work. We need to be sure that they have the income they need to meet their costs for gasoline, prescription drugs, and other needs of daily living.
But what they see each day is corporations such as Enron that callously disregard their workers retirement needs. They see airlines that are going bankrupt, leaving their workers with a fraction of the pensions they thought they had earned. They see other companies facing economic hardship that reward their executives while cutting the pensions of their workers.
The Pension Protection Act, which we are considering this week, will help over 100 million Americans. This legislation makes sweeping changes to strengthen guaranteed pensions and to increase workers' ability to build a secure retirement.
This legislation is the result of years of work on these complex issues by both the House and the Senate. Last year, we worked closely on the HELP Committee with our chairman, Senator Enzi, and subcommittee chair, Senator DeWine, and its ranking member, Senator Mikulski, to develop a bipartisan way to deal with these issues, and we worked closely as well with Chairman Grassley and Senator Baucus of the Finance Committee. Last fall, the Senate approved our comprehensive legislation by a vote of 97 to 2.
For months, the conference committee has struggled to reach agreement with the House, and last month we were finally able to reach a compromise on the key pension elements of the bill, which are reflected in the measures we are considering today.
Before I turn to the merits of the Pension Protection Act, I must say that while I support this legislation and the compromise it represents, I cannot support the process used in this conference, particularly the systematic exclusion of Democrats from the negotiations. Republicans allowed only two of the 11 Democratic conferees to participate in the talks, denying the American people the views and contributions that these able legislators could bring to the table. The American people elect us to serve them, and refusing to allow elected officials to do their job is a fundamental attack on our democratic system of government.
As we all know, millions of Americans are increasingly concerned about their retirement security, and it is long past time for Congress to act. Many workers cannot save enough toward retirement. The personal savings rate has now fallen below zero because wages are stagnant, but costs are soaring for basic necessities such as gas, housing, health care and education.
Social Security is under attack, and private pensions are in trouble too. In the past 5 years, over 700 pension plans have failed, with workers losing approximately $8 billion in pensions they had worked so hard to earn.
Many workers today rely solely on their 401(k) accounts as their pensions. But these accounts don't offer real retirement security. Many of those workers do not have any money in their 401(k)s.
Those who do are not saving enough. Half of workers close to retirement have less than $61,000 in their accounts. And those who rely on these accounts face the constant risk that their investments will perform poorly.
This is why this legislation is needed. Companies need to keep their pension promises to workers. Workers deserve to know the true financial state of the health of their pensions. And companies need to offer benefits that give more workers the ability to earn a secure retirement.
A core problem that we have tackled in this bill is the need to strengthen the defined benefit pension system, which today provides secure pensions for nearly 45 million workers and retirees. These pensions grant a known monthly retirement benefit for life, and are insured by the Federal Government.
Workers rely on these plans for a secure retirement. They have earned their pensions over a lifetime of hard work, foregoing raises and other benefits to keep them. But as many workers at Bethlehem Steel and United Airlines suddenly discovered, their companies stopped contributing money to these pensions, and the employees paid the price when the pensions collapsed. This includes workers like James Roberts, of Harrisburg, PA, worked for 33 years in a steel plant. When Roberts' pension had to be bailed out by pension guaranty agency at the Federal Department of Labor, his pension was cut by one-third, to only $14,916 a year. Our headlines have been full of stories like these in recent years.
The legislation solves this serious problem by requiring companies to put more funds into their pensions and to do so in a fair and predictable way.
It also recognizes the power of public disclosure and the urgent need for more effective oversight of pension plans. Under current law, workers receive little financial information about their pensions, and what they do receive is often years out of date. They have earned these pensions, and they deserve to know whether the funds are there to pay them.
The Pension Protection Act ensures that workers and retirees receive up-to-date information each year about the status of their pensions. By opening up the books of pension funds, they will be able to monitor the true health of their retirement.
The bill also provides incentives to keep pensions financially healthy by tying executive compensation to pension health. Executives should not be able to feather their own retirement nests, while workers lose their nest eggs. The bill penalizes executives who put company funds into their own retirement trusts, when the pensions of rank and file workers are underfunded.
We also need to recognize the growing role of defined contribution pension plans in our retirement system. Over 40 percent of workers participate in such plans today, and for many of them it is their only pension plan.
Our legislation encourages them to save more under these plans by automatically enrolling them in these pensions and automatically increasing the amount they can save. Automatic enrollment can drastically increase the number of workers who start saving for retirement--it would immediately help up to 5.9 million American workers whose companies already offer pensions but they are not participating.
Workers in the lowest income brackets benefit the most. One study projects that automatic enrollment could more than double the percent of lower income workers who are building a retirement when their employer offers a pension from only 42 percent to over 90 percent.
The Saver's Credit provides critical incentives to help hard-working Americans contribute to their retirement plans and helps over 5 million workers each year. This legislation makes that credit permanent and indexes it so this incentive will continue to be meaningful for workers into the future.
Also, as employees assume greater responsibility for pension investment choices, they need the best information possible about their choices. The Pension Protection Act encourages companies to provide nonbiased investment advice to their employees so they can maximize their retirement savings.
Our bill also helps to improve the portability of pension savings. By making it easier for workers to move retirement savings from one type of pension to another when they change jobs, we encourage workers to keep these savings for retirement instead of spending them.
In addition, the bill addresses the needs of nearly 10 million workers and retirees who receive pensions through multiemployer plans. These are the workers who clean our office buildings and hotel rooms, sell us our groceries, build our homes and schools and highways, and deliver goods across the country. Many of them are in industries where they move from job to job and would not be able to earn any pension at all without a multiemployer plan, since their employers, particularly small businesses, could not afford to offer a pension on their own.
The majority of these pensions are in strong financial shape. But the recent economic downturn and the weak stock market have put some of them in financial difficulties similar to those facing single-employer pensions. We owe it to these employees to protect their pensions now, instead of acting only when they are about to fail.
Under this legislation, employers and employees must work together and agree on a plan to restore these pensions to financial health. Employers would be protected from unforeseen payment increases and new excise taxes, which could cost many workers their jobs.
The bill also addresses the special needs of workers who help to keep America safe. We improve retirement security for public safety workers by expanding options to pay for retiree health care and long-term care. We also allow reserve and national guard members to draw on their retirement savings without penalty when called to active duty, and we give them an opportunity to replace these savings when they return to civilian life.
The pension crisis in the airline industry also deserves our immediate attention. Our airlines have faced unprecedented challenges since 9/11. Natural disasters have reduced travel. The industry is suffering from record-high fuel prices. These costs are driving companies into bankruptcy, putting the retirement of hundreds of thousands of workers and retirees at risk.
Workers at United Airlines and U.S. Airways saw their pensions slashed when their companies filed for bankruptcy and then turned over their pension plans to the Pension Benefit Guaranty Corporation. We need to help hundreds of thousands of other workers avoid the same fate.
The bill provides a way for these airlines to keep their pensions, by offering companies a specialized payment program and a transition period to adjust to the new rules. Hardworking people like Sean Reardon, a mechanic with Delta Airlines in Boston, deserve to keep their pensions, as do thousands of other workers in Massachusetts.
Our legislation also addresses new types of pensions, like ``hybrid'' pensions, which play a growing role in our retirement system. These pensions provide a guaranteed pension, and the benefits are attractive to younger workers and to others, such as parents caring for children, who move in and out of the workforce.
Older workers, however, can lose out when their companies switch to these plans because they lose a large portion of the benefits they were promised. Some companies have been taking advantage of the conversion process to eliminate early retirement benefits that workers have already earned.
This legislation gives companies clear guidance about the future legal status of these plans, but allows workers who have been harmed in the past to continue to pursue their rights. And it contains clear protections against such ``wearaway'' or erosion of older workers' benefits. The bill also makes these pensions more portable, so that they better serve a mobile workforce.
As we learned from the Enron, WorldCom and other corporate scandals, employees forced to invest in company stock are at huge risk. Despite all the publicity, many workers continue to overinvest in company stock, jeopardizing their retirement security because their job and their retirement depend on the fate of their company.
The bill protects them by preventing employers from overloading 401(k) plans with company stock. It also warns employees when they place too much of their retirement funds in one investment.
The legislation also includes important provisions from the Women's Pension Protection Act that Senator Snowe and I introduced. Retirement security is essential for all Americans, but we often fail to meet the needs of women on this basic issue. Women live longer than men, but they continue to earn far less in wages over their lifetimes. They are also much less likely to earn a pension. These differences translate into seriously inadequate retirement income for vast numbers of women.
According to the most recent data, only 22 percent of women age 65 and over are receiving private pension income, and for those who do, half of them are receiving less than $4,500 a year compared to $9,600 for men. Minority women are in even more desperate straits--only 21 percent of African-American women and 9 percent of Hispanic women receive a pension. These disparities are a major reason why nearly one in five elderly single women lives in poverty.
Our legislation gives them greater retirement security. Widows will receive more generous survivor benefits and divorced women will have greater ability to receive a share of their former husband's pension after a divorce. These are long overdue improvements in the private pension system, so that retirement savings programs will be more responsive to the realities of women's lives and careers.
Employees and their families rightly expect Congress to protect their hard-earned pensions. This legislation is a major start toward meeting this basic challenge in our 21st century society. I urge my colleagues to support the Pension Protection Act.
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Mr. KENNEDY. Mr. President, just to take a moment of the Senate's time, first, I am very grateful to the floor managers, Senator Stevens and Senator Inouye, and particularly Senator Roberts for the opportunity to work with him on a matter which I think is of underlying importance.
We have worked out language which would require an updated national intelligence estimate on Iraq. The last one that was prepared was 2 years ago. The assessment would address whether Iraq is succeeding in creating a stable and unity government, and whether it will address the Sunnis' concerns, the prospect for Iraq's ethnic, religious, and tribal divisions reconciliation, the progress for controlling severe sectarian violence that could lead to civil war, whether Iraq has a credible plan to disarm and demobilize and reintegrate the militias, and whether the Government is working to obtain a political commitment from the political parties to ban militias.
For the sake of our men and women in Iraq and for the sake of our Nation, we need this kind of assessment from the intelligence community so we can adjust our policy.
John Adams, the great leader from Massachusetts, said: Facts are stubborn things. We should have an update on the facts as our intelligence agencies see them and have them available to the decisionmakers and to the administration.
I very much appreciate the cooperation of Senator Roberts and others in working out language which I think carries through the purpose of the initial amendment and I think will be enormously valuable and helpful to us in charting the course for our Nation in the future.
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Mr. KENNEDY. I want to join, as the ranking member of the Immigration and Refugee Committee, in support of what the Senator from Illinois has stated. The idea of temporary status has been longstanding. We have extended it in circumstances which do not even compare to the conditions that we have seen now in Lebanon. So I have joined being a cosponsor of that amendment.
It can be done administratively, as the Senator from Illinois and others have pointed out. We certainly welcome that. If you look back in the history of that, you will find that legislation in a number of instances was introduced and then the administration moved, and moved rapidly, when it was brought to their attention. That certainly ought to be done now in the most expeditious way.
Second, I welcome the opportunity to join the Senator on the humanitarian aid and assistance. We had an opportunity to talk to the representatives of the NGOs on several different occasions over the period of these past days, as well as with the representatives of the Israeli Government. There is a process now to try to extend humanitarian aid and assistance--both from the point of view of the Israeli Government but also in support of U.N. agencies and nongovernmental agencies.
There are supplies that are in the area that need to get through. I think that needs focus and attention and support by all of the interested parties. But what we are basically talking about with the Defense appropriations is hopefully there will be a meaningful cease-fire that will take place. What the Senator from Michigan is talking about now is to reflect the concern for Lebanon and what has happened to that country, reflecting the fact that we here ought to extend humanitarian aid and assistance.
I commend her. I think this makes a great deal of sense. I hope the amendment will be accepted.
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