[Congressional Record Volume 141, Number 166 (Wednesday, October 25, 1995)]
[House]
[Pages H10833-H10834]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 PREVENT THE RAID ON AMERICAN PENSIONS

  The SPEAKER pro tempore (Mr. Weldon of Florida). Under a previous 
order of the House, the gentleman from Texas, Mr. Gene Green is 
recognized for 5 minutes.
  Mr. GENE GREEN of 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 so-called surplus pension assets from the 
employee pension plans would take us back to the early 1980's, when 
companies took away $20 billion from over 2,000 pension plans, covering 
nearly 2.5 million workers and retirees.
  Prior to the 1980's, 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 1970's and the rising stock market of the 1980's, 
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 10-percent excise tax on the amount of the reversion 
was in the Tax Reform Act of 1986, a 15-percent excise tax in the 
Technical and Miscellaneous Revenue Act of 1988, and in the Omnibus 
Reconciliation Act of 1990 a 20-percent tax was on employers who 
established a successor plan with similar benefits or they had to pay a 
50-percent tax if no successor plan was established. So they 

[[Page H10834]]
could not just come in and raid the taxes, the pension plans from 1986 
to 1990.
  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 1970's. 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.

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