[Congressional Record Volume 141, Number 35 (Friday, February 24, 1995)]
[Extensions of Remarks]
[Pages E437-E438]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     THE PENSION REFORM ACT OF 1995

                                 ______


                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                       Friday, February 24, 1995
  Mrs. KENNELLY. Mr. Speaker, I rise today to introduce the Pension 
Reform Act of 1995.
  There can be no doubt that the status of women in America has changed 
dramatically in this century with these changes having profound 
implications for the long-term economic security of women. Whereas, 
heretofore extended families cared for the aged, both male and female; 
women today are increasingly likely to be alone as they age due to the 
disappearance of the extended family, mortality rates, and the 
increased incidence of divorce and single parenthood. And when one 
considers the average woman earns 68 cents for every dollar earned by 
the average man, it is easy to understand why the poverty rate is so 
much higher among older women than older men, 15 percent versus 9 
percent. Even more striking is that the median income of women aged 65 
and older is $6,425, 56 percent lower than the median income of older 
men--$11,544.
  The Retirement Equity Act of 1984 made an important start. It 
improves the chance of widows actually receiving a pension by offering 
survivors protection to employees as soon as they become vested and 
requiring a wife's notarized signature before her husband can sign away 
her right to receive a survivor's benefit. The law also makes it easier 
for a divorced wife to get a share of a court-awarded pension directly 
from a former spouse's pension plan; lowers the age at which plans 
begin counting service for vesting credit, and extends the amount of 
time women can take off for child-rearing without losing credit for 
prior service.
  But the Retirement Equity Act didn't go far enough. Women divorced 
before its passage have no pension rights. That means that a 56-year-
old woman divorced in 1980 is now 65 and has no pension rights. That 
means we could have a whole new class of poor elderly women. The 
Pension Reform Act of 1995 would allow pensions not divided at the time 
of divorce, to be divided now, pursuant to a court order thereby 
effectively making the Retirement Equity Act retroactive. The Pension 
Reform Act of 1995 would also require the division of pension assets 
prospectively unless a domestic relations order provides otherwise.
  The Tax Reform Act of 1986 continued the trend of enhanced retirement 
security for women. It reduced the vesting period, the period of 
service which must be completed before an employee has a nonforfeitable 
right to a pension, to 5 years for
 single employer pensions. This means that employees must be 100 
percent vested after 5 years of service or, using an alternative 
vesting schedule, 20 percent vested after 3 years and 20 percent for 
each year thereafter. In general, therefore, employees who have been 
covered by an eligible pension plan for 5 years and work at least 1 
hour after January 1, 1989 are automatically vested. This change is 
particularly important for women as it is estimated that approximately 
1.9 million additional workers are now entitled to pensions. 
Multiemployer pension plans however, are not covered by these new 
vesting rules. The Pension Reform Act of 1995, would extend the 5 year 
vesting period to these types of plans as well. This provision was 
contained in H.R. 4210 and H.R. 11 in the 102d Congress--both were 
vetoed by the President. It was also contained in H.R. 3419, which was 
passed by the House of Representatives, but ultimately never reached 
the President's desk for signature. It is my hope that we can at least 
enact this provision this year.

  Faster vesting also leads the way to greater portability; the ability 
to carry one's credit for service in an employer-sponsored pension plan 
from job to job. This is of particular importance to women as they are 
much more likely to change jobs and interrupt their participation in 
the work force at one or more times in their lives.
  The Tax Reform Act of 1986 also limited integration, a little known, 
but potentially devastating, mechanism whereby employers may reduce 
pension benefits by the amount of Social Security to which an employee 
is entitled. Although originally intended to offset the employer 
contribution to Social Security, integration has often had the effect 
of eliminating an employee's entire private pension. In 1986, after 
much struggle, it was determined that Social Security benefits do not 
adequately replace the preretirement earnings of low- and middle-income 
workers. Today, therefore, the law limits integration and assures that 
all eligible employees receive some minimum level of benefits. However, 
this protection only applies to benefits earned in plan years beginning 
after December 31, 1988. The Pension Reform Act of 1995 would extend 
this protection to all benefits earned since January 1, 1987 and 
eliminate integration entirely by January 1, 2000.
  Under current law of the Railroad Retirement Act a divorced spouse 
may receive a divorced spouse annuity at age 62 if the employee has 
attained age 62 and is receiving an annuity. The Pension Reform Act of 
1995 would amend the Railroad Retirement Act by 
[[Page E438]] eliminating the language that suspends the payment of a 
divorced spouse annuity when the employee although he or she is age-
eligible, chooses not to receive an annuity.
  I would urge my colleagues to support this vital piece of 
legislation.
  Thank you.
  

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