"With America's pensions under attack, Congress is considering bi-partisan pension reform. The must pass legislation to mandate that pensions are not under-funded and make sure that companies that short change their workers pension are heavily fined.
The legislation was bottled up last year when Washington Republicans tried to couple common-sense pension reform with President Bush's scheme to privatize Social Security. As part of his 2005 proposed budget, Bush proposed to make it easier, through tax advantages, for companies to switch from traditional pension plans to cash balance schemes. Cash-balance plans are pensions that, instead of guaranteeing a stream of monthly payments in retirement as traditional pensions do, provide hypothetical accounts for individual employees that grow each year with contributions.
It is the duty of Congress to protect America's workers pensions." Yvette Clarke
PENSIONS ARE SEVERELY UNDERFUNDED
PBGC Protections for 44 Million Pensioners Are at Risk Due to Pension Defaults and Rules Allowing Employers to Underfund Plans. The Pension Benefit Guarantee Corporation is a federal corporation that guarantees payment of pension benefits for 44 million American workers and retirees participating in 29,000 private "defined benefit" plans. PBGC's pension funding rules are intended to ensure that plans have sufficient assets to pay promised benefits. However, recent terminations of large underfunded plans, along with continued widespread under funding; indicate weaknesses in these rules that may threaten retirees' incomes, as well as the viability of the insurance program maintained by the PBGC-which reported a deficit of $23.3 billion in 2004.
UNDERFUNDING COMPANIES HAVE ESCAPED RESPONSIBILITY
63 Percent of Employers Each Year Make No Cash Contributions to Pension Plans. According to the GAO, "62.5 percent of sponsors of the largest plans each year on average made no cash contribution because the rules allow sponsors to satisfy minimum funding requirements through plan accounting credits that substitute for cash contributions." Effectively, plan sponsors rely on an "outdated" system of credits in order to avoid making contributions to their plans.
SOCIAL SECURITY MORE CRUCIAL THAN EVER
Because of Switchover to 401(k)s and the Danger to Traditional Pensions, Protecting Social Security Is Even More Crucial. In the past 2 decades, personal investments and pensions have become more and more dependant on financial markets. For example, traditional defined-benefit pensions have been replaced with 401(k)s. Social Security is the only sure thing left. It is still a guaranteed benefit that is not dependant on market fluctuations.
Let this legislation move forward.