[Congressional Record Volume 143, Number 124 (Wednesday, September 17, 1997)]
[Senate]
[Pages S9516-S9517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself and Mr. Breaux):
  S. 1185. A bill to provide employees with more access to information 
concerning their pension plans and with additional mechanisms to 
enforce their rights under such plans; to the Committee on Labor and 
Human Resources.


                         THE PENSION TOOLS ACT

  Mr. GRASSLEY. Mr. GRASSLEY. Mr. President, today I rise to introduce 
the Pension Tools Act of 1997. Why pension tools? Because this 
legislation contains the components, or tools that will assist pension 
participants and retirees to understand the fundamentals of their 
pension plans, get them to think about their retirement for the long 
term, and when problems arise--help put in place a cost-effective 
conflicts resolution process.
  This legislation is very important to today's retirees and workers. 
In June, the Senate Aging Committee, which I chair, convened a hearing 
which highlighted the growing problem of pension mistakes. That's 
right, Mr. President. A pension mistake. The problem addressed at the 
hearing did not target intentional wrongdoing--but honest mistakes by 
employers which can lead to a cut in a monthly pension payment or a 
lump-sum payment a worker takes when leaving a job.
  It's impossible to determine how big the problem is, but it is a 
growing concern. To try to document how big the problem could be, I 
asked the Pension Benefit Guaranty Corporation [PBGC] to provide me 
with data about a program they administer called the standard 
termination audit program. The program audits a sample of plans which 
have terminated--these are not plans which have gone bankrupt. The PBGC 
released a letter to my committee which showed that certain pension 
payouts have errors in the range of 8 percent. That number has 
increased since the program started back in 1986 when it was 2 percent. 
Many of these errors involve substantial sums of money. In fact, one in 
three people who were shortchanged, were shortchanged by at least 
$1,000.
  Other pension experts and advocates would put the number of mistakes 
at a higher rate--in the range of 15 to 20 percent. But we just can't 
say what the number is because none of the agencies who regulate 
pensions audit whether or not the pensions and lump-sum payments that 
are made to the majority of workers and retirees are usually accurate. 
Most employers are doing their best to pay the right amount but 
mistakes do happen. The problem is that people are not aware that they 
really need to verify that their pension payouts are the right amount.
  The hearing called attention to that very problem. Too many workers 
lack a full understanding of how their pension works and how much their 
benefit will be until just before retirement.
  It is my hope that this legislation will be a vital part of our 
effort to educate people about the need to prepare for retirement. One 
of the components of good retirement preparation is tracking your 
employer-provided pension and knowing your pension rights.
  Specifically, this legislation will give employees the opportunity to 
have benefit statements sent to them on a regular basis. In addition, 
the legislation clarifies that pension plan participants and 
beneficiaries should have access to plan documents which show how their 
pension benefit was calculated. That way, they can check the math and 
verify that their benefit is correct.
  My bill will also address two other problems raised at the hearing. 
First, one problem faced by pension participants and beneficiaries is 
that employers are slow to respond to their requests for information. 
To address that problem, we will authorize the Secretary of Labor to 
assess a fine if an employer fails or refuses to provide information in 
a timely manner. The other problem that this bill will address is to 
clarify that a person who has been cashed out of a plan can still get 
information from the plan administrator if a problem arises after the 
person separates from employment.
  Senator Breaux and I are also including a directive to the Secretary 
of Labor to draft model procedures for alternative dispute resolution. 
The enforcement option open to pension participants now--a lawsuit--is 
simply too costly for many people who are living on a fixed income.
  Part of the problem we see is that pensions are very complex. It is 
hard for employers to administer pensions even with the expert advice 
of paid pension consultants. I am continuing to seek ways to alleviate 
some of the pressure on employers. We have already taken the first step 
of asking the General Accounting Office to review the changes in the 
law since the passage of GATT--this had an impact on interest rates--
one of the areas where we see the most problems in pension errors. We 
are also looking into the usefulness of mandating that employers 
provide a summary annual report of the pension plan to participants 
every year. These summary reports are not user-friendly and do not 
provide the participants with information in an accessible way. Benefit 
statements and the use of education and outreach may provide a 
substitute for the annual mailing of summary annual reports to pension 
participants.
  I am also submitting for the Record two letters of support for the 
legislation. The first letter is from the Pension Rights Center here in 
Washington, DC. The center has a long history as an effective advocate 
for participant rights. The second letter was submitted by the American 
Society of Pension Actuaries. This group strongly supports the idea of 
automatic benefit statements and we will certainly work with them to 
clarify language in the legislation.
  While great strides have been made since the act went into effect, 
participants and beneficiaries still lack access to basic but vital 
information and tools to enforce their rights. Having a pension can 
make all the difference to people once they retire. The Pension Tools 
Act strikes the right balance to get people useful information about 
their pensions and help them enforce basic rights to that information. 
I urge my colleagues to support the efforts of Senator Breaux and 
myself to ensure that retirees and workers get every penny they have 
earned when the time comes to retire.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                               American Society of


                                            Pension Actuaries,

                                Arlington, VA, September 16, 1997.
     Hon. Charles E. Grassley,
     Special Committee on Aging, U.S. Senate, Dirksen Senate 
         Office Building, Washington, DC.
       Dear Chairman Grassley: The American Society of Pension 
     Actuaries appreciates your efforts to ensure that plan 
     participants and beneficiaries have sufficient information 
     about their plan benefits. ASPA believes that better informed 
     participants will become more active participants. 
     Particularly, ASPA strongly supports your proposals to 
     provide for participant benefit statements and benefit 
     calculations. This invaluable information will allow plan 
     participants to more accurately plan for retirement.
       We agree conceptually with the other proposals outlined in 
     the ``Summary of Pension Tools Act of 1997,'' which was 
     provided to us by your staff. However, we are unable to more 
     fully endorse the entire bill until we have had an 
     opportunity to review the detailed legislative language. 
     Further, we would like to alert you about two general 
     concerns we have pertaining to two of the proposals outlined.
       First, one of the proposals would treat participants who 
     have been ``cashed out'' of the plan as ``active'' 
     participants for purposes of obtaining information about the 
     plan as allowed under the Employee Retirement Income Security 
     Act. Although we appreciate the general objective underlying 
     this proposal, we are concerned if the proposal would allow, 
     for instance, a former participant to request a benefit 
     calculation after ten years. Such a request would be a 
     tremendous hardship on the plan sponsor or plan administrator 
     since in most cases such records are not retained for a long 
     period of time. We would suggest giving participants a fixed 
     period of time--such as 18 months after they have received 
     their benefits--to request this information.

[[Page S9517]]

       Second, another proposal would require the Secretary of 
     Labor to develop model alternative dispute resolution 
     procedures. We agree that such procedures can often be a more 
     efficient means for resolving disputes, and we also agree 
     with your conclusion to give plans the option of choosing to 
     adopt such procedures. The summary further indicates that the 
     Secretary of Labor would formulate a list of neutral experts 
     to serve as mediators. We are concerned that such a list 
     would become politicized. Consequently, we would suggest as 
     an alternative that the Secretary of Labor be tasked with 
     simply maintaining the list and that any pension professional 
     meeting objective qualification requirements be permitted to 
     be listed.
       We hope these comments are helpful and we look forward to 
     working with you and your staff toward passage of this 
     legislation.
           Respectfully,
                                             Brian H. Graff, Esq.,
     Executive Director.
                                                                    ____



                                        Pension Rights Center,

                               Washington, DC, September 11, 1997.
     Hon. Charles Grassley,
     Chairman, Special Committee on Aging, Senate Dirksen Office 
         Building, Washington, DC.
       Dear Senator Grassley: I am writing to express the Pension 
     Rights Center's strong support for the Pension Tools Act of 
     1997. Your proposed legislation will help assure that 
     employees will receive accurate and timely information about 
     their future pension benefits. It will also give retirees the 
     opportunity to check the accuracy of plan calculations, and 
     develop an inexpensive forum where they can challenge 
     improper benefit denials.
           Sincerely your,
                                                Karen W. Ferguson,
                                                         Director.
                                 ______