[Congressional Record Volume 147, Number 25 (Wednesday, February 28, 2001)]
[Extensions of Remarks]
[Pages E237-E238]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          IN SUPPORT OF THE BLUNT-BENTSEN RETIREMENT PLAN ACT

                                 ______
                                 

                            HON. KEN BENTSEN

                                of texas

                    in the house of representatives

                      Wednesday, February 28, 2001

  Mr. BENTSEN. Mr. Speaker, it is with great pleasure that I wish 
today, to join with my distinguished colleague, Mr. Blunt, in 
introducing legislation to give small employers the chance to show how 
much they care for their employees. The Blunt-Bentsen Retirement Plan 
Act would establish the ``qualified small employer plan,'' a new kind 
of design-based plan available exclusively to employers with fewer than 
100 employees.
  Today, we, as a nation, are experiencing the lowest unemployment rate 
in a generation. This recent boom in job creation has been driven in 
large part by growth in the number of small businesses created. 
However, even as incomes rise, we have an abysmally low savings rate of 
3.8 percent of disposable personal income. There is broad consensus 
that a substantial number of American workers will be unable to afford 
a retirement that maintains their current lifestyle, at least not 
without working more years than currently planned. According to the 
nonpartisan Employee Benefit Research Institute (EBRI), 36 percent of 
American workers are not saving for retirement.
  Americans think of retirement income in terms of a ``three-legged 
stool,'' consisting of Social Security, personal savings, and employer-
sponsored benefits. Unfortunately, employer-sponsored retirement plans 
are not available to all American workers. In fact, only 21 percent of 
all individuals employed by small businesses with less than 100 
employees participate in an employer-sponsored plan, compared to 64 
percent of those who work for businesses with more than 100 employees. 
Moreover, only 11.1 percent of working family heads who work at 
business with 10 or fewer employees actually participate in employer-
sponsored plans. According to EBRI's 2000 survey of small employers, 
thirty-nine percent who currently do not offer plans, contemplate 
starting a plan in the next two years.
  Under current law, small business employers who want to offer a 
retirement plan to their employees are forced to choose between 
unappealing options. They can either establish a traditional qualified 
plan, and manage the prohibitively high compliance and administration 
costs or set up a highly restrictive design-based plan (such as the 
SIMPLE or SEP). The Blunt-Bentsen Retirement Plan offers a third 
option. The Blunt-Bentsen bill would establish the ``qualified small 
employer plan,'' a new kind of design-based plan available exclusively 
to small employers (those with fewer than 100 employees). The Blunt-
Bentsen bill seeks to offer small businesses and their employees with 
opportunities for pension savings commonly available to large 
corporations and public sector employees. Characteristics of the 
qualified small employer plan include 100 percent coverage, accelerated 
vesting, and minimum non-integrated benefits.
  The most important aspect of this legislation is that the employer 
must make an annual, mandatory contribution of at least three percent 
of an employee's compensation if that employee is at least 21-years-old 
and has

[[Page E238]]

worked more than 1,000 hours in the preceding calendar year. It does 
not matter whether the employee contributes. Employers have the option 
of contributing as much as 10 percent. This will undoubtedly give small 
business employees not only a stake in equity, but a larger stake in 
the success of that business. In a world largely absent of retirement 
plans where employers alone make annual contributions, I believe this 
measure provides a third practical alternative to government mandated 
pensions and no pension coverage at all. In turn, small business 
employers are allowed to contribute a higher percentage of their salary 
to a retirement plan than they would otherwise be allowed under current 
law.
  Second, for a variety of reasons, the number of companies offering 
defined benefit plans has fallen dramatically. Between 1970 and 1990, 
the percentage of private sector workers covered by a pension plan 
decreased by 2 percent from 45 percent in 1970 to 43 percent in 1990. 
This is not progress.
  Finally, an aging population where most men and women who reach age 
65 can expect to live at least another decade will surely place some 
stress on Social Security's ability to pay out benefits. Today, Social 
Security is the main source of income for 80 percent of retirees. While 
Social Security is currently strong, it faces challenges to its 
solvency as the Baby Boom generation nears retirement.
  In short, the three-legged stool of retirement security is in 
jeopardy without a correction. Plans where employers make automatic, 
mandatory contributions have been replaced by plans where employees 
make voluntary contributions. No longer do companies automatically bear 
the risks and costs of professionally made investment decisions, Today, 
workers have to bear the risks and costs of their investment decisions. 
Investment decisions can be quite scary for inexperienced, first time, 
lower- and middle-income investors, who have a lot more to lose than 
wealthy investors. Employees in these pension plans not only have to 
take a crash course in ``Investing 101'' but are less likely to 
accomplish personal savings with stagnant or slowly rising wages.
  It is imperative that Congress put in place new, innovative and cost-
effective ways to expand pension coverage. The Blunt-Bentsen bill put a 
new critical tool in the hands of small businesses to create greater 
security against the risks and burdens of old age, inflation, and 
economic downturns for their employees.

                          ____________________