[Congressional Record Volume 144, Number 29 (Tuesday, March 17, 1998)]
[Extensions of Remarks]
[Pages E386-E387]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  THE FACULTY RETIREMENT INCENTIVE ACT

                                 ______
                                 

                         HON. HARRIS W. FAWELL

                              of illinois

                    in the house of representatives

                        Tuesday, March 17, 1998

  Mr. FAWELL. Mr. Speaker, I am pleased to today join with my 
colleagues Messrs. Goodling, McKeon, Andrews, Roemer, and Petri in 
introducing the Faculty Retirement Incentive Act. This bill would amend 
the Age Discrimination in Employment Act of 1967 (ADEA) to clarify that 
it is permissible for colleges and universities to offer voluntary 
early retirement incentives to tenured faculty that are in part age-
based.
  I support the principles of the ADEA and note that the Act has 
already recognized the unique nature of faculty tenure. In 1986, when 
Congress amended the ADEA to abolish the mandatory retirement age, it 
included a seven year exemption for tenured faculty. On December 31, 
1993, that exemption was allowed to expire as recommended by a 
congressionally mandated study, by the National Academy of Sciences, on 
the impact of an uncapped retirement age on higher education. The 
Academy's report, however, concluded that diminished faculty turnover--
particularly at research universities--could increase costs and limit 
institutional flexibility in responding to changing academic needs, 
particularly with regard to necessary hires in new and expanding fields 
and discipline. It thus predicated its recommendation for ending 
mandatory retirement on the enactment of several proposals to mitigate 
these negative effects. The legislation I am introducing today is one 
of those proposals.
  Moreover, this past January, the bipartisan National Commission on 
the Cost of Higher Education included this legislative initiative in 
its recommendations to check the skyrocketing cost of a college 
education. The Commission recommended that ``Congress enact a 
clarification to the Age Discrimination in Employment Act to ensure 
that institutions offering defined contribution retirement programs are 
able to offer early retirement incentives to tenured faculty members. 
The Commission endorses pending Senate Bill 153, which would accomplish 
this purpose.'' This legislation which I am introducing today is 
similar to S. 153, introduced by Senators Moynihan and Ashcroft.
  However, unlike the Senate version, this bill does not permit an 
early retirement incentive open exclusively to faculty in a given age 
range. Under this legislation, a college or university must allow all 
faculty who qualify for a retirement incentive at the time a plan is 
established, but for their having attained too advanced an age, at 
least 6 months to elect to retire and receive that incentive. Thus, no 
professor is denied eligibility for any retirement incentive on the 
basis of age.
  This legislation has been endorsed by the union that represents 
university faculty, the American Association of University Professors 
(AAUP). According to the AAUP, voluntary early retirement incentives 
are beneficial for both the faculty members who choose to retire and 
the institutions that need to encourage turnover to make necessary 
hires. Further, the voluntary nature of the proposed incentives and the 
double protections available to tenured faculty--the age discrimination 
laws and the tenure system--insure that this ``safe harbor'' cannot be 
used to penalize faculty members who choose not to retire. The AAUP 
wrote in a January 30, 1998 letter that it supports the legislation 
because ``the retirement incentives under discussion are offered on a 
voluntary basis . . . [and] the legislation would permit an offer of 
additional benefits. It would not permit institutions to reduce or 
eliminate

[[Page E387]]

retirement benefits that would otherwise have been available to faculty 
after a certain age.''

  The purposes of voluntary early retirement incentives permitted by 
this bill are precisely in line with the intent of section 
4(f)(2)(B)(ii) of the Older Worker's Benefit Protection Act (OWBPA). 
That amendment to the ADEA states that it is not unlawful for an 
employer ``to observe the terms of a bona fide employee benefit plan . 
. . that is a voluntary retirement incentive plan consistent with the 
relevant purpose or purposes of this Act.'' These incentives are 
consistent with the purposes of the ADEA because they merely subsidize 
or enhance the faculty member's regular retirement income, so that the 
income does not fall so far short of the retirement income that would 
be available upon retirement at a later age.
  OWBPA explicitly allows for certain age-based early retirement 
subsidies in the case of defined benefit plans, but makes no reference 
to defined contribution plans. Of the over 3,400 colleges and 
universities in this country, over 70 percent offer defined 
contribution plans, which are very popular with the faculty. Both the 
professors and the institutions want the flexibility that this 
legislation insures.
  This legislation has been endorsed by the American Association of 
University Professors, the American Council on Education, the American 
Association of Community Colleges, the American Association of Colleges 
for Teacher Education, the American Association of State Colleges and 
Universities, the Association of American Universities, the Association 
of Catholic Colleges and Universities, the Association of Community 
College Trustees, the Association of Jesuit Colleges and Universities, 
the College and University Personnel Association, the Council of 
Independent Colleges, the National Association of Independent Colleges 
and Universities, the National Association of State Universities and 
Land-Grant Colleges, and the National Association of Student Personnel 
Administrators.
  I expect that this provision, along with several other 
recommendations of the Cost Commission, will be incorporated into H.R. 
6, the ``Higher Education Amendments of 1998,'' which will be marked up 
shortly by the Education and Workforce Committee. Thus, this 
legislation will contribute to containing the costs of higher 
education, as well as, in the words of the AAUP, ``provide greater 
flexibility in faculty retirement planning, offer a substantial 
retirement benefit to those professors who choose to retire under the 
terms of an incentive plan, and leave other professors whole in their 
choice to continue their careers.''

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