[Congressional Record Volume 143, Number 19 (Thursday, February 13, 1997)]
[Extensions of Remarks]
[Pages E259-E260]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              COMPREHENSIVE WOMEN'S PROTECTION ACT OF 1997

                                 ______
                                 

                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                      Thursday, February 13, 1997

  Mrs. KENNELLY of Connecticut. Mr. Speaker, I rise today to introduce 
the Comprehensive Women's Protection Act of 1997.
  Senator Moseley-Braun and I introduced this legislation last year and 
were extremely gratified that several provisions were enacted. We hope 
to build on those successes because there is much more work to be done, 
particularly for the women of America.
  For instance, less than one-third of all women retirees over age 55 
receive pension benefits compared to 55 percent of male retirees. Yet 
the typical American woman who retires can expect to live approximately 
19 years. Sadly, over one-third of elderly women living alone live 
below the poverty line and three-fifths live within 150 percent of the 
poverty line. Women's pension benefits depend on several factors 
including: participation in the work force, lifetime earnings relative 
to those of current or former husbands, and marital history.
  There has been a long-term trend toward greater labor market 
participation by women. In 1940, only 28 percent of all women worked 
and less than 15 percent of married women worked. By 1993, almost 60 
percent of all women worked and married women were slightly more likely 
than other women to be working. The growth of women in the work force 
is even more pronounced for women in their prime earning years--ages 
25-54. The labor force participation rate for these women increased 
from 42 percent in 1960 to 75 percent in 1993. For married women in 
this age bracket labor force participation increased from 35 percent in 
1960 to 72 percent in 1993.
  Not only are more women working, they are staying in the work force 
longer. For instance, 19 percent of married women with children under 
age 6 worked in 1960; by 1993 60 percent of these women were in the 
work force. Similarly, 39 percent of married women with children 
between the ages of 6 and 17 were in the work force in 1960 and by 
1993, fully 75 percent of these women were in the work force.
  Women's median year-round, full-time covered earnings were a 
relatively constant 60 percent of men's earnings until about 1980. 
Since that time, women's earnings have risen to roughly 70 percent of 
men's. This increase will, in time, increase pension benefits for women 
although this change will be slow because benefits are based on average 
earnings over a lifetime.
  A woman's marital status at retirement is also a critical factor in 
determining benefits. The Social Security Administration projects that 
the proportion of women aged 65 to 69 who are married will remain 
relatively constant over the next 25 years, and that the proportion who 
are divorced will more than double over this period. There are 
tremendous inequities in the law with respect to the pension of a widow 
or divorced spouse. For instance, only about 54 percent of married 
private pension plan recipients have selected a joint and survivor 
option, which, in the event of their death, will continue to provide 
benefits to their spouse.

  The face of women in America today has changed; it's time our pension 
laws recognize those changes. The bill before us today does just that. 
Representatives Connie Morella, Elizabeth Furse, Corrine Brown, Julia 
Carson, Sheila Jackson-Lee, Marcy Kaptur, Nita Lowey, Carolyn Maloney, 
Carrie Meek, Juanita Millender-McDonald, and Loretta Sanchez have 
agreed to be original cosponsors. We would welcome others. A section by 
section follows. Thank you.

                       Section-by-Section Summary


                        Section 101--Integration

       Problem--Social Security integration is a little known, but 
     potentially devastating mechanism whereby employers can 
     reduce a portion of employer-provided pension benefits by the 
     amount of Social Security to which an employee is entitled. 
     The Tax Reform Act of 1986 limited integration so as to 
     guarantee a minimum level of benefits, but the formula only 
     applied to benefits accrued in plan years beginning after 
     December 31, 1988. Low wage workers are disproportionately 
     affected by integration and are often left with minimal 
     benefits.
       Solution--Apply the integration limitations of Tax Reform 
     Act of 1986 to all plan years prior to 1988, thereby 
     minimizing integration for low and moderate wage workers. In 
     addition, eliminate integration entirely for plan years 
     beginning on or after January 1, 2004. The lag between 
     enactment and 2004 is designed to be a transition period for 
     employers. No integration would be permissible for Simplified 
     Employee Pensions for taxable years beginning after January 
     1, 1998.


Section 102--Application of Minimum Coverage Requirements with Respect 
                     to Separate Lines of Business

       Problem--Current law allows companies with several lines of 
     business to deny a substantial percentage of employees 
     pension coverage. The employees denied coverage are 
     disproportionately low-wage workers.
       Solution--Require that all employees within a single line 
     of business be provided pension coverage to the extent the 
     employer provides coverage and the employee meets other 
     statutory requirements such as minimum age and hours.


         Section 103--Division of Pension Benefits upon Divorce

       Problem--Pension assets are often overlooked in divorce 
     even though they can be a couple's most valuable asset.
       Solution--Using COBRA as a model for the process, provide 
     for an automatic division of defined benefit pension benefits 
     earned during the marriage upon divorce, provided that the 
     couple has been married for five years. The employee would 
     notify his or her employer of a divorce. The employer would 
     then send a letter to the ex-spouse informing him or her that 
     he or she may be entitled to half of the pension earned 
     while the couple was married. The ex-spouse would then 
     have 60 days, as under COBRA, to contact the employer and 
     determine eligibility. If a Qualified Domestic Relations 
     Order (QDRO) dealt with the pension benefits, then this 
     provision would not apply.


   section 104--clarification of continued availability of remedies 
 relating to matters treated in domestic relations orders entered into 
                              before 1985

       Problem--In response to both the greater propensity of 
     women to spend their retirement years in poverty and the fact 
     that women were much less likely to earn private pension 
     rights based on their own work history, the Retirement Equity 
     Act of 1984 gave the wife the right to a share of her 
     husband's pension assets in the case of divorce. This law 
     only applied to divorces entered into after January 1, 1985.
       Solution--Where a divorce occurred prior to 1985, allow the 
     Qualified Domestic Relations Order (QDRO) to be reopened to 
     provide for the division of pension assets pursuant to a 
     court order.


  section 105--entitlement of divorced spouses to railroad retirement 
        annuities independent of actual entitlement of employee

       Problem--Under the Railroad Retirement System a divorced 
     wife is automatically entitled to 50% of her husband's 
     pension under Tier I benefits as long as four conditions are 
     met: 1) the divorced wife and her husband must both be a 
     least 62 years old; 2) the couple must have been married for 
     at least 10 consecutive years; 3) she must not have remarried 
     when she applies; and 4) her former husband must have started 
     collecting his own railroad retirement benefits. There have 
     been situations where a former husband has delayed collection 
     of benefits so as to deny the former wife benefits.
       Solution--Eliminate the requirement that the former husband 
     has started collecting his own railroad retirement benefits.


   section 201--extension of tier ii railroad retirement benefits to 
        surviving former spouses pursuant to divorce agreements

       Problem--The Tier I benefits under the Railroad Retirement 
     Board take the place of social security. The Tier II benefits 
     take the place of a private pension. Under current law, a 
     divorced widow loses any court ordered Tier II benefits she 
     may have been receiving while her ex-husband was alive, 
     leaving her with only a Tier I annuity.
       Solution--Allow payment of a Tier II survivor annuity after 
     divorce.


   section 202--survivor annuities for widows, widowers, and former 
spouses of federal employees who die before attaining age for deferred 
                           annuity under csrs

       Problem--In the case of a husband dying before collecting 
     benefits, his contributions to the Civil Service Retirement 
     System are paid to the person named as the ``beneficiary.'' 
     The employee may name anyone as the beneficiary. A divorce 
     court cannot order

[[Page E260]]

     him to name his former spouse as the beneficiary to receive a 
     refund of contributions upon his death, even if she was to 
     receive a portion of his pension.
       Solution--Authorize courts to order the ex-husband to name 
     his former wife as the beneficiary of all or a portion of any 
     refunded contributions.


 section 203--court orders relating to federal retirement benefits for 
                  former spouses of federal employees

       Problem--Currently, under CSRS, if the husband dies after 
     leaving the government (either before or after retirement 
     age) and before starting to collect retirement benefits, no 
     retirement or survivor benefits are payable to the spouse or 
     former spouse.
       Solution--Make widow or divorced widow benefits payable no 
     matter when the ex-husband dies or starts collecting his 
     benefits.


 section 301--small 401(k) plans required to provide annual investment 
                        reports to participants

       Problem--Current law requires that pension plans file an 
     annual detailed investment report with the Treasury 
     Department and make it available to any participant upon 
     request. Pension plans, including 401(k)s, with fewer than 
     100 participants and beneficiaries are not required to file 
     or make detailed investment reports available to 
     participants. 401(k)s, unlike traditional pension plans, do 
     not have the plan sponsor guaranteeing their pension benefits 
     nor do they have PBGC pension insurance. Consequently small 
     401(k) participants bear the investment risks, but are not 
     told what the investments are.
       Solution--The Secretary of Labor must issue regulations 
     requiring small 401(k) plans to provide each participant with 
     an annual investment report. The details of the report are 
     left to the Secretary.


           section 302--section 401(k) investment protection

       Problem--Under federal law, a traditional defined benefit 
     pension plan may not invest more than 10% of its assets in 
     the company sponsoring the plan. The purpose of the 
     limitation is to protect employees from losing their jobs and 
     pensions at the same time. The 10% limitation does not apply 
     to 401(k) plans, despite their having become the predominant 
     form of pension plan, enrolling 23 million employees and 
     investing more than $675 billion.
       Solution--Apply the 10% limit to employee contributions to 
     401(k) plans--unless the participants, not the company 
     sponsoring the plan, make the investment decisions.


 section 401--modifications of joint and survivor annuity requirements

       Problem--Under current federal law, traditional defined 
     benefit pension plans can offer unequal survivor benefit 
     options. That option can pay the surviving spouse (most often 
     the wife) only half the survivor's benefit paid to the spouse 
     who participated in the plan. Plans may, but are not 
     required, to offer more equitable options. Current law also 
     requires that pension plans disclose retirement benefit 
     options to one spouse, the spouse who participated in the 
     plan. This leaves the other spouse (usually the wife) 
     uninformed about an irrevocable decision that affects her 
     income for the rest of her life.
       Solution--Require that pension plans offer an additional 
     option that provides either surviving spouse with two-thirds 
     of the benefit received while both were alive. Require that 
     both spouses be given a illustration of benefits before any 
     benefit can be chosen.


 section 501--spousal consent required for distributions from section 
                              401(k) plans

       Problem--Under current federal law, in order for a plan 
     participant to take a lump sum distribution from a defined 
     benefit plan, the participant must have the consent of his 
     or her spouse. This is not true of a 401(k) plan.This 
     means that a participant can, at any time, drain his or 
     her pension plan and leave the spouse with no access to 
     retirement savings.
       Solution--Require that 401(k) plans be covered by the same 
     spousal consent protections as defined plans when it comes to 
     lump-sum distributions.


          section 601--Women's Pension Toll-free Phone Number

       Problem--One of the key obstacles to women's pension 
     security is lack of information. Too many women do not know 
     whether or not they are eligible for retirement income, the 
     implications of the decisions they are asked to make 
     regarding divorce and survivor benefits, the steps they 
     should take to provide for a secure retirement, or even how 
     to gather the necessary information.
       Solution--Create a women's pension hotline that can provide 
     basic information to women regarding pension law and their 
     options under that law.


           Section 701--Periodic Pension Benefits Statements

       Problem--Under federal law, pension plans are required to 
     provide a benefits statement annually, upon request by the 
     employee. Many employees, especially young employees, do not 
     consider pension income or do not feel secure requesting 
     information from their employer. Thus, many employees do not 
     know the amount of their accrued benefits, or payout upon 
     retirement. In addition, there are numerous instances of 
     defined contribution plans misappropriating money by failing 
     to place funds in the employee's account. Unless an employee 
     asks for a statement, he or she does not have a clear idea of 
     the state of his or her retirement security, or if the funds 
     are being properly placed.
       Solution--Require that 401(k) plans provide benefits 
     statements automatically at least once year. For defined 
     benefit plans, due to the more complicated calculation 
     required to produce an accurate future benefits statement, 
     require that a statement be automatically provided every 
     three years.

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