[Congressional Record Volume 143, Number 43 (Monday, April 14, 1997)]
[Extensions of Remarks]
[Page E641]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  LEGISLATION TO EXEMPT MULTIEMPLOYER PENSION PLANS FROM COMPENSATION-
                        BASED LIMITS ON BENEFITS

                                 ______
                                 

                        HON. PETER J. VISCLOSKY

                               of indiana

                    in the house of representatives

                         Monday, April 14, 1997

  Mr. VISCLOSKY. Mr. Speaker, today I am introducing legislation that 
will help correct a gross oversight within our Nation's pension system.
  Under section 415 of the Internal Revenue Code, pension benefits from 
multiemployer pension plans are limited to the average of the retired 
employee's three highest consecutive years of income. This 
compensation-based limit makes perfect sense for many types of 
corporate pension plans, where pensions are based on compensation and 
income levels are relatively steady and tend to increase over time. But 
for many participants in multiemployer pension plans, limiting pension 
benefits in this way is both unfair and inequitable.
  Unlike their corporate counterparts, benefits earned under 
multiemployer pension plans have very little relationship to actual 
compensation. Rather, benefits are generally based on a worker's years 
of covered service and the collectively bargained dollar amount of 
contributions made into the multiemployer plan. But the compensation-
based limits contained in section 415 override the benefit rates set in 
the multiemployer plan, often decreasing a retiree's pension benefit 
well below what was negotiated.
  Workers in the building and construction industries are particularly 
disadvantaged by section 415. Compensation for these workers can 
fluctuate dramatically from year-to-year, with the availability of work 
in these mobile, cyclical industries. For workers in these industries, 
section 415 often has the effect of driving the compensation-based 
limit much lower than the worker's average income. What's more, finding 
the 3 highest years of consecutive compensation often means basing the 
benefit limit on a period well before the date of retirement, which can 
mean a dramatic drop in income and lower standard of living once the 
worker retires.
  Legislation passed by the 104th Congress, Public Law 104-188, which 
provided a long-overdue increase in the minimum wage, also exempted 
public employees from the pension benefit limits contained in section 
415. But for reasons that have gone unexplained, Public Law 104-188 did 
not extend this exemption to multiemployer pension plans.
  Mr. Speaker, no one should misinterpret either the intention or the 
effect of this legislation. These plans are not tax shelters and 
exempting multiemployer plans from section 415 will not result in an 
unfair windfall of pension benefits. Instead, my legislation would take 
a necessary step to ensure that benefits from multiemployer plans are 
not artificially reduced, and that every retired worker covered by 
these plans receives the pension benefits that he or she rightly 
deserves. I urge you and my other colleagues to cosponsor and support 
this important measure.

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