Pension Protection Act of 2006
PENSION PROTECTION ACT OF 2006 -- (House of Representatives - July 28, 2006)
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Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 30 seconds just to correct the record.
The legislation does not require the funding of these plans. Executives can continue to get benefits out of these plans if they are only 60 percent funded. The gentlewoman from California was correct. Workers can only get benefits if they are 80 percent funded.
So the executives can continue to draw down the assets of the corporations, but the employees cannot.
Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts (Mr. Neal), a member of the Ways and Means Committee.
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Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker and Members of the House, this is a complicated piece of legislation and Members of the House and Members of the Senate have struggled with it for some period of time. That struggle really hasn't been completed yet because this legislation was taken from the conference committee and it is here tonight to be passed unilaterally within the House and be presented to the Senate in the future.
It is difficult to understand all of the things that have been done in this legislation, certainly for the Democratic Members of the House since we were not included in this conference committee. We were not invited into any of the sessions, nor was the information shared with us as it was developed during the conference committee because they chose to run it simply on a partisan basis among the House conferees.
But I think it is clear to understand also that this legislation does, in fact, as my colleague from Massachusetts said, miss a number of opportunities. And that is why we are concerned with it tonight.
We understand the changes that have been made that allow companies to continue to underfund those pension plans and then increase the contributions that those plans will have to make in later years, and it is pretty clear that as businesses sit down and make the decisions about the allocation of resources and they look at those increased contributions, the burden will really push them in the direction of freezing or terminating their plans. That is why we see the quote that was given this last day or so, ``We will see an unprecedented number of companies freezing their plans in 2007 because they will recognize the difficulties of the new pension regime.'' That comes from the American Benefits Council, which deals with so many of these plans, because this tilts the table toward the decisions by companies to terminate or to freeze those plans.
And if that happens, of course, we have been warned now, under this legislation by the Pension Benefit Guaranty Corporation that as they contribute less to those plans and then make that decision, it also heightens the likelihood that these underfunding problems will become worse, according to this legislation as represented to us by the Pension Benefit Guaranty Corporation. And they also make it clear
the Pension Benefit Guaranty Corporation that absorbs these plans on behalf of a safety net paid for by other plans that as they suffer from a huge deficit, a $23 billion deficit, they expect that this legislation that is before us tonight will add some $2 billion to that deficit over the next 10 years.
But there are other decisions that the conferees could have made or that you could have made in drafting this bill as you brought it to the floor. You could have erred on the side of working people. You could have made a decision that in these plans that are distressed and underfunded that we would, in fact, treat the employees and the executives alike. But we set two different standards. We said that if your plan is not 80 percent funded, then the employees can get no additional benefits in terms of their retirement out of that plan. But if a plan is only 60 percent funded, executives can continue to draw and add on and accrue pension benefits. So we have set two different standards here. Both people, I assume, are working very hard for the success of that corporation. One is just going to get treated entirely differently than the other. It is a matter of simple fairness. A matter of simple equity. But when we see the greatest disparities in the history of this country for a long time now, when we see these disparities, this bill increases those disparities between the executives and the employees.
You could have made a decision not to harm the pilots that were harmed after 9/11 because they were forced to retire early. Federal law made them retire at 60. Then 9/11 and the high fuel costs come along, and that drives United Airlines into bankruptcy, a bankruptcy I didn't agree with, but they went into bankruptcy; so you lost 40 percent of your pension. PBGC took over their plan, but you lost an additional amount because you retired at 60. Those pilots had no chance. We could have taken care of them in this bill. One would have thought that that was somewhat of a humane thing to do, a compassionate thing to do. They were victims of 9/11. They were victims of the downturn in the travel economy after 9/11. They were victims of high fuel costs. They did not do anything wrong, and Federal law forced them to retire. But we just blew off their cause in this legislation.
The issue of older workers, a missed opportunity there, to make sure, as we transition from defined benefits plans to cash balance plans, that we would protect the oldest of those workers, the closest to retirement, that we would make sure that they would be taken care of because, as we know, people who are 55, 60 years old, 5 years from retirement, have very little opportunity to accumulate the kind of economic resources that are necessary to match the retirement that they were expecting. You didn't have to do it. It was recommended by the administration.
The Secretary of Treasury, former Secretary Mr. Snow, said it should be done. He said he did it in his corporation at CSX. He voted to do it as a member of the board of Verizon. It was done by Honeywell. It was done by Wells Fargo Bank. It was a compassionate thing to do. They still realized the savings that they wanted by changing their pension plans, and I do not object to their doing that. I just thought that we could make an effort to try to protect those people who the GAO tells us would lose almost half of their benefits with those kinds of conversions. But that was not done in this legislation.
So I really think that we ought to understand that those kinds of decisions really do harm a number of people that could have been helped in this legislation, a significant number of people that could have been helped in this legislation. And we could have done some more to try to help keep these plans out of the PBGC.
We could have also made sure that before people went to bankruptcy in the manner in which United did, that they would have made the last ditch effort, the kind of effort that we just talked about earlier, where airlines made these kinds of efforts to freeze their plans, but they did not. But I think before we rush to bankruptcy and then we turn these plans over to the PBGC and maybe ultimately to the taxpayer that there ought to be a burden, there ought to be a showing, there ought to be evidence that, in fact, you made every effort. I am not asking you to destroy the company. I am asking you to make the kind of effort that we saw others make but they chose not to make it at United, and as a result of that, those machinists, those flight attendants, the pilots, the ramp workers, and so many others have taken such a serious hit on their pension benefits with no ability to recover. So those are my objections to this legislation.
We started this session with an unprecedented attack on Social Security. And as people started to look at that attack, and they saw the Federal privatization of Social Security, they started to look at their own pension plans, and they realized, as what we are doing with here today, that their own pension plans are very insecure. There is probably no employer in this country that can tell you that that pension plan will be there for their employees 75 years from now, 65 years from now, and be paying out 80 percent of the benefits. So people have come to realize that they need retirement security. And I do not believe that this legislation provides that kind of security that individuals need.
I recognize the transitions in pension plans. I recognize the changes in pension plans. But I really think that this legislation, in many ways, was drafted looking in the rear-view mirror as opposed to the future of these plans and how we encourage savings and how we encourage participation.
There is no question this legislation deals with some of those issues, but I do not believe that we did the kind of job that will serve us well in the future.
And I would encourage Members to oppose this legislation. We will have a motion to recommit, a motion that will protect those older workers, a motion that will treat those airlines the same. If they all freeze their plans, they should get the same number of years to do that, and we think it will provide them a greater margin of safety if they do that, and provide for that kind of transition and the protection of those pension plans as they originally requested, as the Senate originally voted to do. But the conferees didn't go there, and certainly this legislation being offered in the House tonight didn't go there. But that will be offered in a few minutes.
I urge opposition to this legislation.
Mr. Speaker, I yield back the balance of my time.
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Mr. GEORGE MILLER of California. Mr. Speaker, this motion does two things. First, it sends the pension bill back to committee to include all of the airline protection provisions that were included in the Senate-passed pension bill. Second, it seeks to send back to the committee to add the Senate-passed provisions providing for the transition protections for older workers affected by cash balance conversions.
Both of these are critical to protecting America's workers' pensions and their retirement security. All across America, employees are worried sick about their retirement nest egg. They have seen big airlines like U.S. Air and United cut and run on their obligations to pay promised benefits and are wondering if they are next.
The House bill protects Delta and Northwest and enables them to extend their pension payments over 17 years at the plan's interest rate. However, the bill only provides American and Continental a 10-year payment and at a much lower interest rate, making their pension payments much higher. We would extend the same period of time, work-out time, for the airlines if they chose to provide for the freezing of their plans.
The bill does nothing for airline pilots who are forced to retire at age 60 and who received PBGC pensions reduced by 35 percent because of their age. All airlines were hurt by 9/11 and the skyrocketing fuel prices and the downturn in the economy.
It would be devastating to hundreds of thousands of workers across the Nation if more airlines were permitted to dump their plans into the PBGC. When this happens, the big losers are the employees. Look at what happened to the pilots at United, for example. They had vested pension benefits cut in half. The average pilot lost $1,270 a month. That is why we offer these protections.
Finally, the motion would report back this pension bill to provide for the
protection of older workers who are facing conversions in cash balance plans. This means the older workers who the companies are now putting on notice that they will lower their benefits will now get a substitute plan called a cash balance plan.
Despite overwhelming votes in support of protecting older workers' pensions in the House and Senate, Republican leadership has excluded these vital transition protections. Many workers will lose hundreds of dollars a month in expected retirement benefits. Many of these workers will be in excess of 50 years of age, and it is highly unlikely they will be able to recover the retirement benefits that they have been counting on for many years, that they signed a contract for in exchange for their labor with their employers.
Today, the Congress is getting ready to tell them they are not going to make the employers live up to their agreements, and we are not going to even provide a transition to soften the economic blow when those agreements are changed.
Here is what AARP CEO William Novelli said about the backroom Republican deal for older workers: ``AARP cannot support legislation that would undermine the age discrimination laws and prevent the reduction of pension benefits for older workers, thus discouraging older workers from continuing to participate in the workforce,'' unless they get a second job to make up for the loss of their retirement, of course. ``Our members and older workers in general care a great detail about these issues.'' That is why we brought this motion to recommit.
Again, time and again the House and Senate have voted to provide these protections for older workers. We would have carried that message to the conference committee, but we were not allowed into those discussions and apparently the conference committee couldn't hear the Members of this House on the bipartisan basis that voted overwhelmingly to provide these protections, both to the airlines and to the older workers.
Mr. Speaker, I yield back the balance of my time.
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