[Congressional Record Volume 143, Number 157 (Sunday, November 9, 1997)]
[Senate]
[Pages S12305-S12306]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS:
  S. 1501. A bill to amend the Employee Retirement Income Security Act 
of 1974 to improve protection for workers in multiemployer pension 
plans; to the Committee on Labor and Human Resources.


              THE WORKERS' PENSION PROTECTION ACT OF 1997

  Mr. JEFFORDS. Mr. President, I am today introducing the Workers' 
Pension Protection Act. This legislation will level the playing field 
for millions of American workers who currently participate in defined 
benefit multiemployer pension plans.
  As I am certain many of my colleagues are aware, there is a 
difference between multiemployer and single-employer pension plans. 
Multiemployer plans are maintained by a specific union, and supported 
by the various employers that union has organized, whereas single-
employer plans are established by one company for its own employees. 
Thus, the Central States Teamsters pension fund covers individuals who 
work for employers the Teamsters have organized in the Midwestern 
United States. By contrast, General Electric has its a single-employer 
plan, or plans, that it established for its own employees.
  This bill is only concerned with multiemployer pension plans. It 
protects workers' benefits by making sure that multiemployer plans are 
funded so that benefits promised today will be available when workers 
retire in the future. Many of this country's multiemployer pension 
plans are underfunded by billions of dollars. It is true that a plan 
can be underfunded by billions of dollars but the relationship of 
assets to liabilities can still be relatively high. However, we are 
looking at plans that are not only underfunded by large amounts, but 
also where liabilities seriously outstrip assets.
  This legislation both increases funding and reporting requirements on 
multiemployer plans, so that we know when plans are becoming riskier, 
and improves protections and benefits. American workers rely upon their 
pensions to support them through their twilight years. Unfortunately 
pension plans are not infallible and too often, the American workers 
discover that their plan is bankrupt and that all pension payments are 
now in the hands of the Pension Benefit Guaranty Corporation [PBGC], 
the Federal agency charged with insuring defined benefit pension plans. 
What these workers may not realize is that under a single-employer 
plan, up to $33,132 per year is protected by the PBGC's pension 
insurance, but under the multiemployer pension insurance system, they 
can only receive $5,850. My legislation will not completely eliminate 
this unfairness, but it will slightly more than double the amount 
payable by the PBGC, by increasing benefits from $5,850 to $12,780. 
This change in the guaranty benefit amount would be the first increase 
to those benefits since the multiemployer program was enacted in 1980.

[[Page S12306]]

  Next, this bill will require plans to fund their current pension 
promises before making new ones. Pension plan trustees would be unable 
to grant benefit increases if a plan is less than 95 percent funded. 
This provision is needed to keep underfunded plans from going deeper in 
the red if collective bargaining ignores the underfunding problem.

  Third, this legislation will require multiemployer pension plans to 
use single, identified interest rate and mortality table assumptions in 
all calculations. As in the single-employer pension plan reform 
legislation of 1994, the interest rates and mortality tables must be 
standardized and must conform to the most recent data available. With 
this change, plans may not use one set of numbers when reporting the 
level of funding in their plan to the PBGC, and another set of numbers 
when determining liability associated with a withdrawal from the plan. 
That amounts to manipulating interest rates to game the system. We 
require single-employer pension plans to use a specific interest rate 
and a mortality table. I believe it should apply to multiemployer 
plans, as well.
  Fourth, the bill will require that plan trustees notify participants, 
annually and in plain English, of how well or poorly funded their plans 
are. Once and for all, multiemployer pension plan participants and 
beneficiaries will have a chance to learn how secure--or insecure--
their retirement benefits are. It is one thing to tell a plan 
participant what his or her expected benefit will be upon retirement. 
It is quite another to let a participant know that their pension plan 
could have 45 percent more in liabilities than it has in assets, or 
that it may have accumulated $5 billion in underfunding.
  The PBGC has told us that notification to participants of plan 
funding has worked well for single-employer plans. Since it has been a 
success for the single-employer insurance system, we should extend the 
same protections to participants in multiemployer plans. With a better 
understanding of the worth of their benefits, workers can make informed 
decisions about their retirement needs. I think such notification is a 
vitally important participant protection for multiemployer pension plan 
participants.
  Finally, the bill will increase premiums imposed by the PBGC upon 
sponsors of multiemployer pension plans. Currently, premiums are $2.60 
per participant but they have not been increased since the 
multiemployer guaranty program was enacted in 1980. By contrast, the 
single employer premium has been increased by Congress eight times 
since ERISA was passed in 1974. The minimum premium for fully funded 
single-employer plans is now $19 per participant, but some underfunded 
plans are charged hundreds of dollars per participant for PBGC 
premiums. If we are going to raise multiemployer benefits, it is also 
time to raise multiemployer premiums. Over a 3-year period, my bill 
will double premiums, increasing them to $5.20 per participant.
  Mr. President, I realize that it is the end of the session. I am 
introducing this measure now in order to permit review and comment by 
interested parties in advance of hearings I will be holding on this 
issue next year. This bill takes modest, but overdue steps to protect 
participants of multiemployer pension plans. I hope that those 
concerned with the safety and security of, and equity in, multiemployer 
pension plans will not hesitate to step forward to be heard. There are 
slightly more than 1,800 multiemployer pension plans in this Nation 
providing benefits to approximately 8.7 million individuals. This bill 
protects those workers and retirees--and they need and deserve our 
oversight. I encourage my colleagues in the Senate to join me in 
sponsoring this important piece of legislation.
                                 ______