[Congressional Record Volume 144, Number 86 (Friday, June 26, 1998)]
[Extensions of Remarks]
[Pages E1252-E1253]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




INTRODUCTION OF THE RETIREMENT ACCOUNTABILITY SECURITY PORTABILITY ACT 
                                OF 1998

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                        Thursday, June 25, 1998

  Mr. NEAL of Massachusetts. Mr. Speaker, today Congressman Gejdenson 
and I are introducing comprehensive pension legislation which focuses 
on the four major themes of accessibility, security, portability, and 
equity for women. Almost 51 million American workers have no pension 
coverage. In my state of Massachusetts, only 29 percent of employers 
with fewer than 100 employees sponsor pension plans. Small businesses 
with fewer than 100 employees make up approximately 36 percent of the 
workforce in Massachusetts.
  The Retirement Accountability Security Portability Act of 1998 will 
make it easier for employers to offer pensions and for employees to 
keep their pensions when they change jobs. Now is the time for us to 
focus on pensions. We are beginning to face what has been commonly 
referred to as the ``graying of America.'' Within thirty years, one out 
of every five Americans will be over age sixty-five. In thirteen years, 
the baby boomers will begin turning sixty-five. The baby boomer 
generation consists of 76 million members and will result in the Social 
Security beneficiaries doubling by the year 2040.
  Pensions are an integral part of retirement. Retirement can be 
compared to a three-legged stool and the legs of the stool are savings, 
pensions and Social Security. Forty percent of retirement income comes 
from Social Security, nineteen percent comes from pensions, and the 
remaining comes from private savings. Last year, we enacted the 
Taxpayer

[[Page E1253]]

Relief Act which created the Roth IRA which has made IRAs available to 
millions of Americans. The response has been overwhelming. The Taxpayer 
Relief Act has jump-started personal savings and now we need to do the 
same for pensions.
  Our society changed greatly over the last few decades and these 
changes have affected the workplace. It is now more common to change 
jobs than stay with one firm for an entire career. This makes it 
extremely important for us to address pension portability. Portability 
allows the employee to transfer the benefits of their pension when they 
change jobs. Changing jobs should not drastically affect one's pension.
  Five million people with pensions change jobs every year. One-third 
of employees leave their job before reaching five years of employment. 
Under current law, an employee does not receive the employer's 
contribution until he or she has been employed for five years. This 
legislation will reduce the vesting period from five years to three 
years for employer contributions to defined contribution plans or 
allows benefits to become vested in increments of 20 percent for each 
year beginning after two years of service, with full vesting after the 
employee has completed six years of service.
  This legislation allows employees of non-profit entities and public 
schools to take their retirement savings when they change jobs and put 
these savings into the retirement plan of their new for-profit or state 
or local government employer when they switch jobs. Participants of 457 
defined contribution plans would be permitted to rollover their account 
balance into an IRA. The current 60-day rollover period is extended in 
cases of natural disaster and military service. Individuals faced with 
disaster will be able to avoid substantial tax penalties.
  This legislation creates a new simplified tax-favored pension plan 
entitled Secure Money Annuity or Retirement Trust Plan, commonly 
referred to as the SMART Plan. These plans would provide participants 
with a minimum guaranteed benefit at retirement with Pension Benefit 
Guaranty Corporation insurance. Employees would immediately vest in the 
benefit contributions made and earnings that accrue under the plan. 
Funding would be provided either through an annuity or a trust. This 
type of funding allows SMART plans to be portable upon a job change. 
The SMART plan is a simplified defined benefit plan which contains the 
best attribute of a defined contribution plan which is portability.
  I urge my colleagues to join us in protecting pensions for American 
workers.

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