[Congressional Record Volume 141, Number 176 (Wednesday, November 8, 1995)]
[House]
[Pages H11913-H11914]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  2115
       SUPPORT THE BIPARTISAN EFFORT TO PROTECT AMERICAN PENSIONS

  The SPEAKER pro tempore (Mr. Bilbray). 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, later tonight my colleague, the 
gentleman from North Dakota, Earl Pomeroy, will come before the House 
on a special order for an hour, and talk about his concern and his 
experience as a former insurance commissioner in his State on the 
effort to 

[[Page H 11914]]
support and protect American pensions. I rise tonight to talk about 
that and congratulate my colleague in his effort.
  About 2 weeks ago--October 27--the Senate, by an overwhelming vote of 
94 to 5, agreed to drop the pension reversion provision from the budget 
reconciliation legislation. In a bipartisan show of support for the 
working people of this country, the Senate said no to allowing 
companies to pilfer the savings of Americans.
  Today, I join my colleagues in urging the chairman of the Ways and 
Means Committee to delete the House pension reversion provision from 
the budget reconciliation legislation. This type of provision does not 
belong in reconciliation. This provision should be addressed separately 
and the committees with jurisdiction and substantial interest should 
have time to hold hearings on the proposal.
  This Republican proposal will allow companies to take money from 
employee pension plans that they say are more than 125 percent funded. 
These excess pension assets--the funds not needed to pay immediate 
pension benefits--can be used freely for purposes that are certainly 
not in the interest of retirees.
  Allowing companies to strip so-called surplus pension assets from 
employee pension plans will take us back to the 1980's, when companies 
took away more than $20 billion from over 2,000 pension plans, covering 
nearly 2.5 million workers and retirees.


                     history of pension reversions

  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 with the rising 
stock market in the 1980's, corporations began to take the excess 
pension funds.
  In 1983, the Reagan administration issued guidelines making pension 
reversions easier. From 1982 to 1990, over $20 billion was taken from 
2,000 retirement plans covering 2.5 million workers and retirees. From 
1982 to 1985, the size and the number of reversions grew rapidly: $404 
million reverted in 1982 to $6.7 billion reverted in 1985.
  As retirees were left without an adequate retirement, Congress took 
strong action to stem the tide of pension reversions. Beginning in 
1986, Congress imposed a series of excise taxes: a 10-percent excise 
tax on the amount of the reversion 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, and 20 percent 
tax when the employer established a successor pension plan with similar 
benefits, or a 50 percent tax if no successor plan was established. 
With these congressional measures, the number and size of reversions 
fell substantially.


               effect of reversion on the american worker

  This Republican proposal will encourage employers to take billions of 
dollars out of pension plans, leaving them with insufficient funds to 
protect current and future retirees. Money previously set aside for 
workers' retirement will now be pocketed by corporations and used for 
almost any purpose. The removal of these funds from pension plans 
increases the risk of loss to workers, retirees and their beneficiaries 
just at a time when the need for a strong private pension system is 
great.
  Pension funds are not the employers' money. Workers pay for pension 
fund contributions with lower wages. Under 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 employer piggy banks. This irresponsible provision encourages 
employers to take 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 to 96 percent.


                               conclusion

  The American people have spoken. Taking money away from pension plans 
is wrong. Let's not permit companies to take pension assets from the 
American worker. Let's ensure that pensions will be safe and available 
for those who saved for their retirement. I urge the reconciliation 
conferees to delete this dangerous provision.

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