[Congressional Record Volume 145, Number 126 (Friday, September 24, 1999)]
[Senate]
[Pages S11439-S11440]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WELLSTONE:
  S. 1640. A bill to amend the Internal Revenue Code of 1986 and the 
Employee Retirement Income Security Act of 1974 to protect pension 
benefits of employees in defined benefit plans and to direct the 
Secretary of the Treasury to enforce the age discrimination 
requirements of the Internal Revenue Code of 1986 with respect to 
amendments resulting in defined benefit plans becoming cash balance 
plans; to the Committee on Finance.


        pension benefits protection and preservation act of 1999

 Mr. WELLSTONE. Mr. President, I rise to introduce the Pension 
Benefits Protection and Preservation Act of 1999, a bill that will 
protect the hard earned pensions of millions of American workers.
  Mr. President, this legislation is long past due because big 
companies across America have been deserting their traditional defined 
benefit pension plan which promised a fair retirement to their long-
time workers in favor of new ``cash-balance plans'' which promise less 
to loyal employees and more to CEO's who are already receiving record 
salaries, stock options and benefits. It is simply unfair for companies 
to discriminate against the very workers who have made those companies 
so successful.
  Older employees who have been forced into these cash-balance plans 
are finding their eventual pensions cut by 20-50 percent, and sometimes 
even more. This conversion technique is saving corporate America 
billions of dollars, but it is older workers who are paying the price. 
The technical and actuarial issues of cash-balance conversions may be 
complex, but what is simple is that Congress must act now to put 
transition safeguards in place to protect the retirement security of 
the American worker.
  Earlier this week, the Health, Education, Labor, and Pensions 
Committee heard testimony from long-time IBM employees who were shocked 
on July 1, 1999, to find that the accrued balance in their pension 
plans had been slashed up to 50 percent overnight. Why? Because IBM 
decided to join the corporate conversion parade and convert its defined 
benefit pension plan that had promised a secure retirement to IBM 
employees into a plan that left trusted employees both insecure and 
embittered. IBM employees, including those in my state of Minnesota, 
used their knowledge of the Internet to organize, to communicate and to 
ultimately win major, but not fully adequate, concessions from IBM. But 
most employees of most companies don't have that kind of on-line 
sophistication. And no employees should have to rely on protests in 
order to preserve what they have already earned.
  That is why I am introducing this legislation. The Pension Benefits 
Protection and Preservation Act of 1999 offers a comprehensive approach 
to the difficulties of employees faced with cash-balance conversions. 
This measure will ensure fair treatment of American workers by 
requiring disclosure, pension plan choice, elimination of the ``wear-
away'' of pension benefits, and enforcement of the Age Discrimination 
and Employment Act.
  Workers have a right to know how much of a pension they will receive 
when an employer unilaterally changes its pension play. My bill 
required a detailed disclosure at least 45 days before a plan 
conversion becomes effective, if that conversion significantly reduces 
the pension benefits of employees. This gives employees adequate time 
to compare the benefits they would receive under the old plan with 
those of the new.
  That time to compare plans is critical because my bill penalizes 
employers who significantly reduce employee pension benefit unless 
employees are able to knowledgeably choose between old and new plans. 
Employers who do significantly reduce benefits and fail to allow choice 
will be liable for an excise tax equal in amount to 50 percent of the 
surplus in the pension fund of the company. What the threat of this 
penalty does is to direct pension monies where they belong--into the 
retirement benefits that employees receive, not into shareholder 
pockets or stock options of highly paid CEO's.
  The Pension Benefits Protection and Preservation Act of 1999 also 
eliminates the ``wearing-away'' of employee's accrued pension benefits 
by preventing company pension plans from giving participating employees 
an opening account balance in their ``new'' plan that is lower than 
their already accrued pension benefits to date under the old plan. 
Under my bill, companies will no longer be able to engage in that 
tactic; instead, they will be required to continue to pay into workers' 
pension accounts without regard to the amount of pension benefits 
workers have accrued under their old plan.
  Finally, the bill directs the Secretary of the Treasury to enforce 
the existing pension age discrimination law enacted in 1986.
  Mr. President, 25 years ago this month ERISA, the Employee Retirement 
Security Act, was enacted. Congress passed ERISA to put an end to 
broken pension promises and to protect working men and women. Twenty-
five years later what we see instead is ERISA neither adequate--nor 
adequately enforced--enough to protect workers' pensions.
  Pension funds belong to the workers, not the employer, and we must 
put in place a strong safety net to prevent those funds from being 
raided in the guise of being improved. That is why I am introducing the 
Pension Benefits Protection and Preservation Act of 1999 today, and 
that is why I am asking my

[[Page S11440]]

colleagues to join me in supporting this legislation.
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