[Congressional Record Volume 147, Number 174 (Friday, December 14, 2001)]
[Extensions of Remarks]
[Page E2304]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       THE INTRODUCTION OF THE RETIREMENT ENHANCEMENT ACT OF 2001

                                 ______
                                 

                         HON. ROBERT E. ANDREWS

                             of new jersey

                    in the house of representatives

                      Thursday, December 13, 2001

  Mr. ANDREWS. Mr. Speaker, I rise today to introduce the Retirement 
Enhancement Act of 2001. The Retirement, Enhancement Act of 2001 
consists 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 result of my work as the Ranking Member of the 
Subcommittee on Employer-Employee Relations, which last Congress and 
earlier this year held a number of bipartisan hearings to consider 
improvements to ERISA. The Subcommittee heard from a wide variety of 
witnesses representing pension participants, employers, and financial 
advisors. They presented us with a variety of proposals to improve the 
retirement security of American workers. The Retirement Enhancement Act 
seeks to take the best of these contributions, and couple them with 
other pension provisions that I have either advocated or supported in 
the past,
  Joining with me as cosponsors of the Retirement Enhancement Act of 
2001 are numerous members of the Committee on Education and the 
Workforce, including Representatives Miller, Kildee, Owens, Payne, 
Mink, Scott, Woolsey, Rivers, Hinojosa, Tierney, Kind, Sanchez, Ford, 
Kucinich, Holt, Solis and McCollum. They share my belief that enactment 
of these bills will improve workers' access to and adequacy of needed 
retirement benefits.
  Since the enactment of ERISA, the number of Americans who participate 
in a pension plan has nearly doubled from 38.4 million in 1975. While 
this growth is considerable, it still leaves about half of the 
workforce without access to a pension plan through their employer. Both 
the General Accounting Office and Congressional Research Service have 
completed studies analyzing pension coverage in the United States. The 
studies found that approximately 53 per cent of workers, roughly 68 
million people, lacked a pension plan in 1998. About 39 per cent of 
those without coverage worked for an employer that did not sponsor a 
plan, while 14 per cent lacked coverage because their company's plan 
did not include them.
  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, 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. Women represent 70 percent of 
the part-time 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 bill reduces pension vesting from 5 to 
3 years for defined contribution plans.
  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 establish and advertise these 
model plans so that employers and employees would know that easy and 
accessible pension options exist.
  The Retirement Enhancement Act includes important pension protections 
for women. These bills establish a 75 per cent joint and survivor 
annuity option that would provide surviving spouses greater benefits in 
retirement. It provides enhanced protection to 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. It permits 
employers to provide qualified investment advice, including self-
interested advice provided advisors meet minimum qualifications, 
adequate notice is provided, employees have an independent option and 
also effective remedies are available to employees for breach of the 
advisors fiduciary duties. This will be extremely helpful to those 
workers in defined contribution pension plans who bear the primary 
responsibility for their pension plan investment decisions.
  In recent months tens of thousands of participants in defined 
contribution plans have suffered great loss when their company stock 
price dramatically declined, most notably in the case of Enron. Too 
many participants have had their retirement savings effectively wiped 
out. The Retirement Enhancement Act would give pension participants 
enhanced rights to diversify their employer pension contributions. The 
bill would require all employers to notify employees of their right to 
diversify employer contributions and would require employers to 
diversify employer contributions.
  The Retirement Enhancement Act of 2001 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. These bills would improve the current pension 
auditing system by requiring accountants to conduct full scope audits 
and report irregularities to the Department of Labor.
  The bill includes important incentives to increase meaningful access 
to pension plans for low and moderate wage earners. It makes refundable 
the new tax credit for individuals who make pension contributions 
either to an IRA or 401 (k) plan and it also includes a tax credit to 
small businesses that would subsidize 50 per cent of their pension 
contributions for the first 3 years of a plan.
  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 adequately remedy violations 
of the law.
  Finally, the Retirement Enhancement Act of 2001 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 to 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 2001 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.

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