[Congressional Record Volume 148, Number 108 (Thursday, August 1, 2002)]
[Senate]
[Pages S7940-S7941]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WELLSTONE (for himself, Mr. Dayton, and Ms. Mikulski):
  S. 2875. A bill to amend the Employee Retirement Income Security Act 
of 1974 to increase the maximum levels of guaranteed single-employer 
plan benefits, and for other purposes; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. WELLSTONE. Mr. President, I introduced an extremely important 
bill, the Pension Guarantee Improvement Act of 2002. I urge my 
colleagues to join me in pressing for its swift consideration and 
passage.
  For over a quarter of a century, the federal government has run an 
insurance system for private ``defined benefit'' pension plans. The 
agency that administers this system, the Pension Benefit Guarantee 
Corporation, PBGC, has worked hard to live up to its statutory 
obligations to protect benefits in the event that the plan sponsor goes 
bankrupt and is forced to terminate the plan.
  In my home state of Minnesota, I have worked closely with former LTV 
workers whose plans have been taken over to facilitate a dialogue with 
the PBGC. I am very grateful to Joe Grant, Steven Kandarian, Michael 
Rae and all the other PBGC staff who have provided invaluable 
assistance to my office and my constituents over the past few moths. I 
have been greatly impressed with their responsiveness, dedication and 
hard work.
  Yet the experiences of the LTV workers in Minnesota--and other 
manufacturing workers around the country I suspect--have exposed some 
serious though limited gaps in the guarantees that PBGC is permitted to 
provide.
  These guarantees are predicated on a certain set of assumptions 
regarding retirement that unfortunately do not hold true for all 
workers. For example, the vast majority of all workers that retire at 
age 65 having earned a defined benefit pension are guaranteed their 
full earned pension, regardless of whether or not the sponsoring 
company is still in business. In most white-collar jobs this 
arrangement works well; the nature of the employment permits most 
employees to continue in their jobs through age 65 and the terms of 
their private pension plans are generally set up for retirement at that 
age.
  In labor-intensive industries such as steel and other manufacturing 
sectors, however,workers have never been expected to endure as many 
years of active employment as their white-collar counterparts. Again, 
the expectations of workers as they enter these industries are well-
known. Employees are generally promised a secure retirement in exchange 
for their 25-30 years of service and they work for decades under the 
assumption that that promise will be kept.
  What has happened to many of the former LTV employees in Minnesota is 
their hard-earned benefits have been unexpectedly--and in a few cases, 
dramatically--reduced as a result of their company being forced into 
bankruptcy. This is because their plan was taken over by the PBGC which 
is not allowed to provide as comprehensive a guarantee to these workers 
as they can offer to their white-collar counterparts.
  The shorter working lives of steelworkers and others who labor in our 
rapidly-shrinking manufacturing sector effectively means that they will 
often not receive the full measure of their earned benefit if their 
company happens to go bankrupt before they reach age 65. The reductions 
in benefits that many of these workers suffer occur regardless of how 
hard they worked, how productive an employee they were--anything that 
they have any control over.
  These losses are inflicted on these workers because they labored in 
the manufacturing sector and because they happened to be employed by a 
company that was forced into bankruptcy. There is no other reason. 
Given that we insure defined benefit plans, I see no reason why we 
should have one standard of coverage for white-collar workers and 
another, lesser guarantee for manufacturing workers. If a worker has 
fully earned the pension that they were originally promised I see no 
reason why we should pull the rug out from under them just because 
their company happens to go under.
  Mr. President, we must strengthen the guarantees that the PBGC is 
required to provide in order to protect this small subset of all 
workers from unfair and unreasonable cuts in their earned benefits--
cuts that all too often come at a tremendously difficult time in their 
lives when health or geographic location may prevent them from finding 
alternative employment. In my state of Minnesota, I saw first-hand how 
LTV workers in their 50s, who had qualified for a full retirement 
benefit under the terms of their original plan, had to struggle to 
survive the loss of their health insurance, and

[[Page S7941]]

some substantial reduction in their earned benefits as a result of PBGC 
takeover of their plan.
  This legislation is designed to provide some relief to those workers 
who often suffer unexpected benefit reductions as a result of a PBGC 
takeover. Let me be quite clear that the affected workers represent 
only a very small fraction of all those covered by PBGC. The CBO has 
issued a preliminary score for this proposal that puts its cost at $110 
million over the next ten years. Colleagues, this very modest proposal 
would allow PBGC to provide guarantees to these workers that more 
closely reflect what they earned under the terms of the plan that they 
had signed onto. It would help bring the level of guarantees provided 
to manufacturing-sector workers closer to that provided to their white-
collar counterparts.
  This bill involves three changes to the rules that determine how much 
of an earned benefit is guaranteed by the PBGC.
  First, it would increase the maximum benefit guarantee level for 
single employer plans by adjusting an indexed formula that would boost 
the monthly maximum payable for retired workers of all ages by some 13 
percent. This would translate into an increase of approximately $150-
200/month for retirees over the age of 50 whose benefits are often 
reduced by the current maximum payable limitation.
  Second, this bill directs the PBGC to cover supplemental benefits 
such as social security ``bridge'' payments as basic pension benefits. 
Again, this benefit is often earned by workers in steel and other 
labor-intensive industries and is specially provided to tide them over 
until they become eligible for Social Security.
  Finally, this proposal would index the $20/year option on the 5-yr 
phase-in rule for recent benefit increases--which would put it at $95 
using the same 4.773 social security index multiplier as is used to 
calculate the maximum payable. The current $20/year figure was part of 
the original 1975 ERISA statute and was intended to represent normal 
benefit increase. It has become essentially meaningless because it has 
never been increased. This would allow workers who received a 
``normal'' benefit increase within the last 5 years to receive the 
entire raise instead of a percentage of it.
  Mr. President, defined benefits plans and the manufacturing sector 
have both suffered serious declines in recent years. At the very least 
we owe it to these hard-working men and women to improve their access 
to meaningful pensions guarantees should their company be forced out of 
business. This bill would make a huge difference to people who need it 
the most--and do so without in any way threatening the solvency of the 
PBGC. I urge my colleagues to join me in supporting this modest yet 
meaningful relief for these workers.
                                 ______