[Congressional Record Volume 146, Number 135 (Wednesday, October 25, 2000)]
[Extensions of Remarks]
[Pages E1935-E1937]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         INTRODUCTION OF THE RETIREMENT ENHANCEMENT ACT OF 2000

                                 ______
                                 

                         HON. ROBERT E. ANDREWS

                             of new jersey

                    in the house of representatives

                      Wednesday, October 25, 2000

  Mr. ANDREWS. Mr. Speaker, today I introduce the Retirement 
Enhancement Act of 2000. The Retirement Enhancement Act of 2000 consist 
of two bills one amending the Employee Retirement Income Security Act 
(ERISA) and the other amending the Internal Revenue Code (IRC). These 
bills are the product of my work as the Ranking Member of the 
Subcommittee on Employer-Employee Relations, which earlier this year 
held a number of bipartisan hearings to consider updating ERISA. 
Throughout the hearings, the Subcommittee Chairman, Representative John 
Boehner, and I, maintained a common agenda of seeking to strengthen a 
private pension system that is already very strong as a result of 
ERISA. We both recognized ERISA's achievement in moving from a system 
where insecure pensions were somewhat common, to a situation where 
insecure pensions are exceedingly rare. Witnesses were selected to 
testify at the hearing that could assist us in looking for ways the 
Congress could make the pension holdings of Americans expand and grow 
even more secure.
  The subcommittee heard from representatives of pension participants, 
employers, and financial advisors. They presented us with a variety of 
proposals to improve the retirement security of American workers. 
Taking the best of these contributions, and coupling them with other 
pension provisions that I have either advocated or supported in the 
past, I drafted this comprehensive pension reform legislation.
  Joining with me as cosponsors of the Retirement Enhancement Act of 
2000 are numerous members of the Committee on Education and the 
Workforce, including Representatives Clay, Kildee, Owens, Payne, Mink, 
Woolsey, Romero-Barcelo, Fattah, Tierney, Kind, Sanchez, Ford, Kucinich 
and Holt. They share my belief that enactment of these bills will 
ensure that all workers and retirees receive their promised benefits.
  Since the enactment of ERISA, the number of Americans who participate 
in a pension plan has grown from 38.4 million in 1975 to almost double 
that today. While this growth is considerable, it still leaves about 
half the workforce without access to a pension plan through their 
employer. Both the General Accounting Office and Congressional Research 
Service have recently completed studies analyzing pension coverage in 
the United States. The studies found that about
  These bills seek to eliminate the remaining weaknesses in ERISA and 
lay the groundwork to help those not covered by an employer pension. 
These bills seek to improve pension coverage and adequacy. Pension 
coverage for all workers is very important and we should all support 
the effort to achieve this goal. Under these bills, employers that 
sponsor plans would be required to offer pension coverage to all 
employees who meet current minimum eligibility requirements such as 
completion of one year of employment. These bills also improve coverage 
for part-time workers who represent one of the largest groups without 
pension coverage. As the workforce changes to include many temporary 
and contract workers, Congress must also help to improve pension 
coverage for this part of America's workforce. With the ever-changing 
workforce it is also important that we decrease the vesting period for 
workers in defined contribution plans. For workers who will have many 
employers during their working lives, we need to ensure that they will 
earn pension benefits that will benefit them in retirement.
  The Retirement Enhancement Act seeks to expand pension availability 
to those workers without it. One of the innovative ways in which it 
would do so is to create a model small employer group pension plan into 
which small employers could buy in with minimal administrative 
responsibilities. The Departments of Labor and Treasury would work with 
associations or financial institutions to advertise these model plans 
so that employers would know that easy and accessible pension options 
exist.
  The Retirement Enhancement Act of 2000 includes important pension 
protections for women. These bills establish a 75 percent joint and 
survivor annuity option that would provide surviving spouses greater 
benefits in retirement. It protects divorced spouses' pension rights 
and improves spousal information rights. These bills would also allow 
for time taken off from work under the Family and Medical Leave Act to 
count toward pension participation and vesting requirements.
  The act improves ERISA's safeguards for the investment of pension 
plan monies. It creates an expedited prohibited transaction exemption 
approval process under which plans would be able to more easily and 
quickly provide participants with new investment products. It does so, 
however, without weakening participant protections. These bills also 
make clear that employers may offer access to investment advice to 
participants with limited liability provided such advice is by 
qualified advisors and they are subject to the fiduciary responsibility 
requirements. This will be extremely helpful to those workers in 
defined contribution pension plans who bear the primary responsibility 
for their pension plan investment decisions.
  The Retirement Enhancement Act of 2000 improves access to pension 
information and strengthens enforcement mechanisms. It would require 
that plan participants regularly receive statements apprising them of 
the status of their earned pension benefits. Pension plans would also 
have to provide more detailed financial information about their 
earnings and investments.
  The bills create an alternate dispute resolution system to resolve 
benefit disputes. The Department of Labor, along with dispute 
resolution organizations, would develop an early neutral evaluation 
program. This would allow for participants to receive benefits in a 
timely manner instead of after years of litigation. The bills also 
strengthen ERISA's remedies to ensure that participants have meaningful 
access to court, and that the courts can remedy violations of the law.
  Finally, the Retirement Enhancement Act of 2000 requires the timely 
distribution of defined contribution cash-out amounts, which would have 
to be made within 60 days of an employee's termination. It permits 
employees to work longer without being required to start pension 
receipt by delaying the minimum distribution of benefits from age 70\1/
2\ to 75. Furthermore, for workers who are involuntarily terminated, it 
permits them to borrow against their pension earnings in order pay for 
health or job training expenses.
  Mr. Speaker, it is now time for the Congress to build on what was 
started with the enactment of ERISA in 1974, and take additional steps 
to ensure retirement security for our workforce. Advances in medical 
technology, environmental protection, nutrition, and improved living 
standards give us reason to believe that Americans are going to live 
longer lives. Whether the quality of these lives, after retirement, is 
good or not, will depend upon the existence, nature, and security of 
each person's pension plan. Because employers are rapidly shifting to 
the use of employee-directed pension accounts, more and more workers 
will be making decisions that are critical to their future financial 
health. I believe that the Retirement Enhancement Act of 2000 will help 
make those decisions easier, and make the benefits of those decisions 
more secure. I look forward to working with my colleagues and the 
pension community to continue to improve these bills and advance their 
consideration during the next Congress.
  Mr. Speaker, I submit the following summary and letters of support 
from AARP, AFL-CIO, the Pension Rights Center, and the Women's 
Institute for A Secure Retirement to be included in the Record.

    SUMMARY OF THE RETIREMENT ENHANCEMENT ACT OF 2000 SPONSORED BY 
                     CONGRESSMAN ROBERT E. ANDREWS

       EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) AMENDMENTS


          TITLE I. IMPROVED PENSION VESTING AND PARTICIPATION:

       (1) PENSION COVERAGE FOR ALL EMPLOYEES--Employers that 
     sponsor plans would be required to offer pension coverage to 
     all employees who meet minimum eligibility requirements in a 
     single line of business (age 21 or older, one year of 
     service).
       (2) IMPROVE COVERAGE FOR PART-TIME WORKERS--Reduce from 
     1000 to 750 or more hours a year the minimum service 
     requirement and provide pro-rata credit for part-time 
     workers.

[[Page E1936]]

       (3) 3 YEAR VESTING FOR DEFINED CONTRIBUTION PLANS--The 
     maximum pension vesting period for defined contribution plans 
     would be reduced to 100% after 3 years or 20% a year phased 
     in over 5 years.
       (4) ENCOURAGE CREATION OF SMALL EMPLOYER GROUP PENSION 
     PLANS--Model small employer group pension plans would be 
     created in which small employers could buy in with minimal 
     administrative responsibilities. The Departments of Labor and 
     Treasury would contract with associations or financial 
     institutions to advertise the model plans.


            TITLE II. IMPROVED PENSION PROTECTIONS FOR WOMEN

       (1) ELIMINATE INTEGRATION WITH SOCIAL SECURITY AND OTHER 
     BENEFITS--Prospectively prohibit the reduction of pension 
     benefits by integrating them with Social Security or workers' 
     compensation benefits and adjust pre-1989 benefits for 
     current employees.
       (2) EXTEND SPOUSAL CONSENT TO DEFINED CONTRIBUTION PLANS--
     Provide spouses in defined contribution plans with the right 
     to consent to plan distributions.
       (3) PROVIDE A 75% JOINT AND SURVIVOR ANNUITY OPTION--
     Provide a 75% joint and survivor annuity option to 
     participants in plans which currently offer a 50% annuity and 
     other annuity forms (survivor would receive 75% of joint 
     spousal benefit).
       (4) PROTECT DIVORCED SPOUSES' PENSION RIGHTS--Divorce 
     decrees would be required to specify how pension benefits are 
     to be allocated or if allocation waived.
       (5) COUNT FAMILY AND MEDICAL LEAVE FOR VESTING--Family and 
     medical leave would count towards pension participation and 
     vesting.
       (6) IMPROVE SPOUSAL INFORMATION RIGHTS--Provides spouses 
     with information about survivor annuities and elective 
     contributions.
       (7) EXTEND PRIVATE SECTOR PROTECTIONS TO CIVIL SERVICE AND 
     MILITARY RETIREMENT--Extend private sector spouse and divorce 
     protections to civil service and military retirement systems 
     (i.e. civil service--presume spouse is beneficiary, and 
     military--permit surviving spouses to receive higher benefits 
     if they delay retiring until Social Security eligibility 
     age.)


                TITLE III. IMPROVED INVESTMENT STANDARDS

       (1) CREATE AN EXPEDITED PROHIBITED TRANSACTION APPROVAL 
     PROCESS--Create an expedited interim DOL approval process 
     under which plans would be able to engage in financial 
     transactions that require prohibited transaction exemption if 
     the financial entity provides the plan with a letter of 
     credit and meets other fairness requirements.
       (2) CLARIFY INVESTMENT ADVICE RULES--Codify Department of 
     Labor interpretive bulletin provisions in order to make clear 
     that employer liability is limited to selection and oversight 
     of advisor and provide standards for qualified investment 
     advisors.
       (3) PERMIT EMPLOYEE INVOLVEMENT IN PENSION INVESTMENTS--
     Permit participants in defined contribution plans in which 
     employees make contributions to participate in investment and 
     other plan decisions.
       (4) ENCOURAGE DIVERSIFICATION OF PENSION ASSETS--Permit 
     employees to request diversification of employer 
     contributions. Plans may phase in over a reasonable period of 
     time not to exceed 3 years. ESOPs and stock bonus plans 
     exempted.
       (5) IMPROVE PARTICIPANT ACCESS TO INVESTMENT INFORMATION--
     Participants may, upon written request, receive information 
     on specific plan investment transactions and proxy votes.
       (6) PROVIDE INVESTMENT RETURN INFORMATION--Plans would be 
     required to include reporting of net return and 
     administrative fees in benefit reports to participants.


         TITLE IV. IMPROVE PENSION INFORMATION AND ENFORCEMENT

       (1) PROVIDE PARTICIPANTS WITH PERIODIC BENEFIT STATEMENTS--
     Participants in single employer defined benefit plans every 3 
     years and participants in defined contribution plans annually 
     would receive a statement of their expected benefits. Multi-
     employer plan participants would receive statements on 
     request.
       (2) PROVIDE ACCURATE FINANCIAL STATUS INFORMATION--Pension 
     plan sponsors would be required to accurately report their 
     financial status to participants in order to correct 
     misinformation generated by Financial Accounting Standards 
     Board (FASB) requirements.
       (3) IMPROVE PENSION PLAN AUDITING--Accountants would be 
     required to conduct full scope audits and report financial 
     irregularities to the Department of Labor.
       (4) IMPROVE PENSION PLAN DATA COLLECTION--The Department of 
     Labor would be directed to collect sufficient statistical and 
     survey information and biennially report to Congress and the 
     public on pension coverage and adequacy.
       (5) PROVIDE ACCESS TO ALTERNATIVE DISPUTE RESOLUTION--The 
     Department of Labor, in consultation with dispute resolution 
     organizations, would develop an early neutral evaluation 
     program to aid resolution of pension grievances.
       (6) IMPROVE COURT ENFORCEMENT OR WRONGFUL BENEFIT DENIALS--
     Permit courts to review benefit denials de novo and award 
     prevailing plaintiff's attorneys' fee and costs (including 
     expert witness costs) and appropriate relief.
       (7) PERMIT PBGC TO TRACK LOST PENSIONS--Authorizes the PBGC 
     to assist defined contribution plans in locating missing 
     participants.


   TITLE V. IMPROVING PENSION PROTECTIONS FOR THE CHANGING WORKFORCE

       (1) PERMIT LOANS TO PAY HEALTH OR JOB TRAINING EXPENSES--
     Involuntarily terminated employees would be able to borrow 
     against some of the pension benefits and IRA fund to pay 
     health care expenses, including COBRA premiums, and job 
     training expenses.
       (2) AUTOMATIC ROLL-OVER OF PENSION MONIES--Provides that 
     lump sum pension cash-out prior to retirement will be 
     automatically rolled over to another qualified pension plan 
     unless the participant elects to receive a lump sum cash-out.
       (3) TIMELY DISTRIBUTION OF BENEFITS--Defined contributions 
     plans which are immediately valuable would be required to pay 
     lump sum distributions within 60 days of employee 
     termination.
       (4) PHASE-IN BENEFIT REPAYMENTS--permit participants who 
     have received benefit overpayments to request repayment over 
     a phased in period, up to 5 years, and permit fiduciaries to 
     waive repayment in hardship cases.

                    INTERNAL REVENUE CODE AMENDMENTS

       (1) EXPAND PARTICIPANT PROTECTIONS IN STATE AND LOCAL 
     PLANS.--Create reporting and disclosure and enforcement 
     requirements for public plans, including review boards to 
     oversee plan changes.
       (2) NARROW 401(K) PLAN EXEMPTIONS--The 401(k) non-
     discrimination safe harbor exemption would be narrowed so 
     that the exemption only applies if an employer enrolls all 
     eligible employees in the plan.
       (3) SIMPLIFY SIMPLE EMPLOYEE PENSIONS (SEPs)--Make SEPs 
     simpler by permitting 3 year vesting, increasing contribution 
     limits, and eliminating other administrative requirements.
       (4) INCREASE MINIMUM DISTRIBUTION AGE--Permit retirees to 
     delay pension receipt from 70\1/2\ to 75.
       (5) IMPROVE MULTI--EMPLOYER PLAN PROTECTIONS--Eliminate 
     unfair restrictions on multi-employer plan pension benefits 
     and increase PBGC guaranteed benefit levels for multi-
     employer plans.
       (6) HARMONIZE STATE AND LOCAL PENSION PLAN TREATMENT--
     Provide comparable benefit rollover treatment for 457 state 
     and local plans as is provided to private section plans.
       (7) PROHIBIT ANTI--UNION EXCLUSIONS-Prohibit employers from 
     excluding unionized employees from 401(k) plan participation 
     if the employees have no other plan.


                                                          AARP

                                 Washington, DC, October 24, 2000.
     Hon. Robert Andrews,
     U.S. House of Representatives, Washington, DC.
       Dear Representative Andrews: AARP applauds your leadership 
     in introducing the Retirement Enhancement Act of 2000. Your 
     bill would build upon efforts to improve coverage and benefit 
     adequacy in our pension system.
       While Social Security and Medicare remain the foundation of 
     retirement security, other components of the retirement 
     framework must be improved. In particular, we must begin to 
     address the continued holes in pension coverage, adequacy and 
     portability. Pension coverage rates have been stagnant for 
     the last twenty-five years, with just under half the 
     workforce covered by a pension. In addition, the shift to 
     defined contribution plans, such as 401(k) plans, has created 
     new challenges for achieving equity and adequacy.
       Under current law, employers are permitted to exclude a 
     large percentage of workers for coverage under any plan the 
     employer offers. Your bill would help address the need for 
     greater pension coverage by improving the minimum coverage 
     rules. In addition, your bill would encourage the creation of 
     plans in the small business sector, which is especially 
     important given the lack of coverage in this part of the 
     workforce.
       Your bill would also attempt to improve benefit adequacy by 
     eliminating integration of pensions and Social Security, a 
     practice which disproportionately reduces benefits for lower 
     wage workers. Your bill would also seek to improve equity for 
     women by improving spousal rights and benefits. Given that 
     the average benefit for women is only about half the amount 
     of the average benefit for men, as well as women's longer 
     life expectancy, improvements are essential if we are to 
     improve the economic security of women as they age.
       AARP supports your effort to improve the information 
     available to plan participants by requiring that plans 
     provide periodic benefit statements. While many employers 
     routinely provide such statements, participants should be 
     automatically entitled to information about the amount and 
     security of their benefits. Your bill would also attempt to 
     address some of the problems associated with plan 
     distributions by providing for automatic rollovers of benefit 
     amounts from a plan to another retirement vehicle. This 
     change is crucial to helping ensure that retirement money is 
     actually preserved for retirement.
       AARP commends you for your efforts to address some of the 
     shortcomings in the current pension system. If pensions are 
     to become a more universal and more adequate source of 
     retirement income security, then

[[Page E1937]]

     changes are needed. AARP looks forward to working with you 
     and others in Congress to further improve the pension system. 
     If you have any further questions, please feel free to call 
     me, or have your staff call David Certner of our Federal 
     Affairs staff at 202-434-3760.
           Sincerely,
                                                  Martin A. Corry,
                                        Director, Federal Affairs.

                                  ____
                                  

         American Federation of Labor and Congress of Industrial 
           Organizations,
                                  Washington, DC, October 2, 2000.
     Hon. Robert E. Andrews,
     U.S. House of Representatives,
     Washington, DC.
       Dear Representative Andrews: The AFL-CIO commends your 
     efforts to improve the retirement security of America's 
     working families by introducing the Retirement Enhancement 
     Act of 2000. This important legislation will expand coverage, 
     strengthen workers' rights, and improve benefit security at a 
     time when too many workers lack adequate pension benefits on 
     their jobs and those who are fortunate enough to have 
     pensions, increasingly find them at risk.
       Among the bill's many provisions that will mean a better 
     retirement future for working families are important worker 
     protections that would:
       Limit an employer's ability to unfairly divide its 
     workforce and deny workers pension coverage;
       Ensure that workers will have a real voice in the 
     management of their 401(k) and other defined contribution 
     pensions;
       Extend important disclosure and enforcement protections to 
     workers who participate in pension plans sponsored by state 
     and local government employers;
       Make critical improvements to the insurance protections for 
     workers participating in multiemployer plans, bringing them 
     more in line with corporate single employer plans.
       The AFL-CIO supports the Retirement Enhancement Act of 2000 
     and thanks you for raising this vitally important issue.
           Sincerely,
                                                     Peggy Taylor,
                              Director, Department of Legislation.

                                  ____
                                  

                                        Pension Rights Center,

                                 Washington, DC, October 12, 2000.
     Hon. Robert E. Andrews,
     Rayburn House Office Building, Washington, DC.
       Dear Congressman Andrews: The Pension Rights Center is 
     pleased to express our strong support for the Retirement 
     Enhancement Act of 2000.
       Your legislation would encourage the creation of new 
     private retirement plans that would provide pensions fairly 
     for workers, and would end many of the inequities that affect 
     so many employees who are now participating in plans. The 
     Retirement Enhancement Act would also address too-long-
     overlooked problems affecting homemakers in both the private 
     and federal retirement systems, and would help even the 
     playing field for private sector participants and 
     beneficiaries seeking to enforce their pension rights.
       The Pension Rights Center is a nonprofit consumer 
     organization dedicated to promoting retirement income 
     security. For the past 24 years, the Center has worked with 
     retiree, women's and employee organizations to secure a wide 
     range of reforms to improve the nation's pension programs. We 
     commend you for introducing this critically important 
     legislation, which holds the promise of assuring millions of 
     working Americans that they will have enough money to pay 
     their bills when they are too old to work.
           Sincerely yours,
                                                Karen W. Ferguson,
                                                         Director.

                                  ____
                                  

                    Women's Institute for a Secure Retirement,

                                  Washington, DC, October 6, 2000.
     Hon. Robert Andrews,
     U.S. House of Representatives,
     House Education and Workforce Committee, Rayburn House Office 
         Building, Washington, DC.
       Dear Representative Andrews: We applaud the introduction of 
     the Retirement Enhancement Act of 2000 (REA 2000) because it 
     addresses the current alarming situation--a situation where 
     millions of women are retiring into eventual poverty, despite 
     a lifetime of work. This bill will improve the long-term 
     economic security of women, by removing many of the barriers 
     that have made it impossible for many women (and men) to 
     achieve a secure retirement without the benefit of an 
     employer-sponsored pension plan. In addition, this 
     legislation increases protection for women during the times 
     when they are most economically vulnerable--during divorce 
     and widowhood.
       The Women's Institute for a Secure Retirement (WISER) is a 
     nonprofit organization that seeks to ensure that poverty 
     among older women will be reduced by improving the 
     opportunities for women to secure retirement benefits. WISER 
     works with community based organizations, advocates and 
     policymakers to provide a key link between federal policy and 
     individual women.
       Although women are entering the workforce in record 
     numbers, their access to retirement benefits has not followed 
     at the same level. A recent report indicates that women 
     comprise 69% of retired persons living below the poverty 
     threshold without pension income. In addition, because women 
     earn less than men--75% of working women earn $30,000 a year 
     or less--which impacts the amount they can save for their own 
     retirement.
       Again, we support REA 2000, which reflects many of the 
     provisions contained in WISER's Pension Action Agenda to 
     improve pension and healthcare benefits for women.
           Sincerely,
                                                M. Cindy Hounsell,
                                               Executive Director.

     

                          ____________________