Congressional Record, Volume 149 Issue 141 (Wednesday, October 8, 2003)

[Congressional Record Volume 149, Number 141 (Wednesday, October 8, 2003)]
[House]
[Pages H9293-H9302]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PENSION FUNDING EQUITY ACT OF 2003

Mr. BOEHNER. Mr. Speaker, pursuant to the prior order of the House of
October 7, 2003, I call up the bill (H.R. 3108) to amend the Employee
Retirement Income Security Act of 1974 and the Internal Revenue Code of
1986 to temporarily replace the 30-year Treasury rate with a rate based
on long-term corporate bonds for certain pension plan funding
requirements and other provisions, and for other purposes, and ask for
its immediate consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Simmons). Pursuant to the order of the
House of Tuesday, October 7, 2003, the bill is considered read for
amendment.
The text of H.R. 3108 is as follows:

H.R. 3108

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Pension Funding Equity Act
of 2003''.

SEC. 2. FINDINGS; SENSE OF CONGRESS.

(a) Findings.--The Congress finds the following:
(1) The defined benefit pension system has recently
experienced severe difficulties due to an unprecedented
economic climate of low interest rates, market losses, and an
increased number of retirees.
(2) The discontinuation of the issuance of 30-year Treasury
securities has made the interest rate on such securities an
inappropriate and inaccurate benchmark for measuring pension
liabilities.
(3) Using the current 30-year Treasury bond interest rate
has artificially inflated pension liabilities and therefore
adversely affected both employers offering defined benefit
pension plans and working families who rely on the safe and
secure benefits that these plans provide.
(4) There is consensus among pension experts that an
interest rate based on long-term, conservative corporate
bonds would provide a more accurate benchmark for measuring
pension plan liabilities.
(5) A temporary replacement for the 30-year Treasury bond
interest rate should be enacted while the Congress evaluates
permanent and comprehensive funding reforms.
(b) Sense of Congress.--It is the sense of the Congress
that the Congress must ensure the financial health of the
defined benefit pension system by working to promptly
implement--
(1) a permanent replacement for the pension discount rate
used for defined benefit pension plan calculations, and
(2) comprehensive funding reforms aimed at achieving
accurate and sound pension funding to enhance retirement
security for workers who rely on defined pension plan
benefits, to reduce the volatility of contributions, to
provide plan sponsors with predictability for plan
contributions, and to ensure adequate disclosures for plan
participants in the case of underfunded pension plans.

SEC. 3. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.

(a) Employee Retirement Income Security Act of 1974.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 is amended by
redesignating subclause (II) as subclause (III) and by
inserting after subclause (I) the following new subclause:
``(II) Special rule for years 2004 and 2005.--In the case
of plan years beginning after December 31, 2003, and before
January 1, 2006, the term `permissible range' means a rate of
interest which is not above, and not more than 10 percent
below, the weighted average of the rates of interest on
amounts conservatively invested in long-term corporate bonds
during the 4-year period ending on the last day before the
beginning of the plan year. Such rates shall be determined by
the Secretary on the basis of one or more indices selected
periodically by the Secretary, and the Secretary shall make
the permissible range publicly available.''.
(B) Secretarial authority.--Subclause (III) of section
302(b)(5)(B)(ii) of such Act, as redesignated by subparagraph
(A), is amended--
(i) by inserting ``or (II)'' after ``subclause (I)'' the
first place it appears, and
(ii) by striking ``subclause (I)'' the second place it
appears and inserting ``such subclause''.
(C) Conforming amendment.--Subclause (I) of section
302(b)(5)(B)(ii) of such Act is

[[Page H9294]]

amended by inserting ``or (III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of
section 302(d)(7)(C) of such Act is amended by adding at the
end the following new subclause:

``(IV) Special rule for 2004 and 2005.--For plan years
beginning in 2004 or 2005, notwithstanding subclause (I), the
rate of interest used to determine current liability under
this subsection shall be the rate of interest under
subsection (b)(5).''.

(3) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such
Act is amended by adding at the end the following new
subclause:
``(V) In the case of plan years beginning after December
31, 2003, and before January 1, 2006, the annual yield taken
into account under subclause (II) shall be the annual
yield determined by the Secretary of the Treasury on
amounts conservatively invested in long-term corporate
bonds for the month preceding the month in which the plan
year begins. For purposes of the preceding sentence, the
Secretary of the Treasury shall determine such yield on
the basis of one or more indices selected periodically by
the Secretary, and the Secretary shall make such yield
publicly available.''.
(b) Internal Revenue Code of 1986.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 412(b)(5)(B) of the
Internal Revenue Code of 1986 is amended by redesignating
subclause (II) as subclause (III) and by inserting after
subclause (I) the following new subclause:

``(II) Special rule for years 2004 and 2005.--In the case
of plan years beginning after December 31, 2003, and before
January 1, 2006, the term `permissible range' means a rate of
interest which is not above, and not more than 10 percent
below, the weighted average of the rates of interest on
amounts conservatively invested in long-term corporate bonds
during the 4-year period ending on the last day before the
beginning of the plan year. Such rates shall be determined by
the Secretary on the basis of one or more indices selected
periodically by the Secretary, and the Secretary shall make
the permissible range publicly available.''.

(B) Secretarial authority.--Subclause (III) of section
412(b)(5)(B)(ii) of such Code, as redesignated by
subparagraph (A), is amended--
(i) by inserting ``or (II)'' after ``subclause (I)'' the
first place it appears, and
(ii) by striking ``subclause (I)'' the second place it
appears and inserting ``such subclause''.
(C) Conforming amendment.--Subclause (I) of section
412(b)(5)(B)(ii) of such Code is amended by inserting ``or
(III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of
section 412(l)(7)(C) of such Code is amended by adding at the
end the following new subclause:

(3) Conforming amendment.--Section 415(b)(2)(E)(ii) of such
Code is amended by inserting before the period at the end ``,
except that in the case of years beginning in 2004 or 2005,
`5.5 percent' shall be substituted for `5 percent' in clause
(i)''.
(c) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any plan or
annuity contract amendment--
(A) such plan or contract shall be treated as being
operated in accordance with the terms of the plan or contract
during the period described in paragraph (2)(B)(i), and
(B) except as provided by the Secretary of the Treasury,
such plan shall not fail to meet the requirements of section
411(d)(6) of the Internal Revenue Code of 1986 and section
204(g) of the Employee Retirement Income Security Act of 1974
by reason of such amendment.
(2) Amendments to which section applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or annuity contract which is made--
(i) pursuant to any amendment made by this section, and
(ii) on or before the last day of the first plan year
beginning on or after January 1, 2006.

In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2008'' for ``2006''.
(B) Conditions.--This subsection shall not apply to any
plan or annuity contract amendment unless--
(i) during the period beginning on the date the amendment
described in subparagraph (A)(i) takes effect and ending on
the date described in subparagraph (A)(ii) (or, if earlier,
the date the plan or contract amendment is adopted), the plan
or contract is operated as if such plan or contract amendment
were in effect; and
(ii) such plan or contract amendment applies retroactively
for such period.
(d) Effective Date.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall apply to years
beginning after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(l)(9)(B)(ii) and (m)(1) of section 412 of the Internal
Revenue Code of 1986 and subsections (d)(9)(B)(ii) and (e)(1)
of section 302 of the Employee Retirement Income Security Act
of 1974 to plan years beginning after December 31, 2003, the
amendments made by this section may be applied as if such
amendments had been in effect for all years beginning before
such date.
(3) No reduction required.--In the case of any participant
or beneficiary, the amount payable under any form of benefit
subject to section 417(e)(3) of the Internal Revenue Code of
1986 shall not be required to be reduced below the amount
determined as of the last day of the last plan year beginning
before January 1, 2004, merely because of the amendments made
by subsection (b)(3).

The SPEAKER pro tempore. The amendment designated in the previous
order of the House is adopted.
The text of the amendment in the nature of a substitute is as
follows:

Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Pension Funding Equity Act
of 2003''.

SEC. 2. FINDINGS; SENSE OF CONGRESS.

SEC. 3. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.

[[Page H9295]]

on amounts conservatively invested in long-term corporate
bonds for the month preceding the month in which the plan
year begins. For purposes of the preceding sentence, the
Secretary of the Treasury shall determine such yield on the
basis of one or more indices selected periodically by the
Secretary, and the Secretary shall make such yield publicly
available.''.
(b) Internal Revenue Code of 1986.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 412(b)(5)(B) of the
Internal Revenue Code of 1986 is amended by redesignating
subclause (II) as subclause (III) and by inserting after
subclause (I) the following new subclause:

(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to years
beginning after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(l)(9)(B)(ii) and (m)(1) of section 412 of the Internal
Revenue Code of 1986 and subsections (d)(9)(B)(ii) and (e)(1)
of section 302 of the Employee Retirement Income Security Act
of 1974 to plan years beginning after December 31, 2003, the
amendments made by this section may be applied as if such
amendments had been in effect for all years beginning before
such date.

The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner), the
gentleman from California (Mr. George Miller), the gentleman from
California (Mr. Thomas), and the gentleman from Michigan (Mr. Levin),
each will control 15 minutes.
The Chair recognizes the gentleman from Ohio (Mr. Boehner).

General Leave

Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on H.R. 3108.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. BOEHNER. Mr. Speaker, it was my understanding that the Committee
on Ways and Means would control the first 30 minutes of debate on H.R.
3108, but considering that the chairman is not here as yet, let me,
under my 15 minutes, yield myself such time as I may consume.
Mr. Speaker, we have a pension underfunding crisis in this country;
and it has significant implications on the retirement security of the
American workers. This chronic underfunding crisis we face among
traditional defined benefit pension plans, the type that guarantees
workers a set monthly benefit when they retire, is jeopardizing the
pension benefits of millions of American workers who have worked all
their lives for a safe and secure retirement.
The committee hearings we have conducted on this issue, which have
included a joint hearing with the Committee on Ways and Means,
demonstrated the critical nature of this problem and the need for a
solution that will give workers a renewed sense of confidence that
their pension savings are on a sound financial footing. This is
precisely why I was joined by the gentleman from California (Mr.
Thomas), the gentleman from California (Mr. George Miller), the
gentleman from New York (Mr. Rangel), the gentleman from Texas (Mr.
Johnson), who chairs our subcommittee, and the gentleman from Ohio (Mr.
Portman), my good friend and colleague, in producing legislation to
address this underfunding problem.
The Pension Funding Equity Act, the bipartisan bill to be considered
today, would protect the retirement benefits of millions of American
workers in the short term while committing Congress to immediately
proceed with efforts to identify permanent long-term solutions to this
underfunding crisis.
This underfunding crisis has manifested itself in several ways. The
termination of large underfunded pension plans in the steel and
airlines industries, for example, has led to growing anxieties about
the financial condition of the Federal Pension Benefit Guarantee
Corporation and its ability to ensure the pension benefits of American
workers across the country. Those concerns were sufficient to lead the
General Accounting Office in July to include the PBGC on its list of
high-risk programs that require increased Federal scrutiny because the
PBGC's mounting deficit had grown to $5.7 billion, the largest in
history.
To make matters worse, the PBGC recently announced that there are
some $80 billion in unfunded pension benefits looming on the horizon
among financially weak companies, pension benefits that may ultimately
have to be paid by the PBGC; and this poses a serious question of
whether a taxpayer bailout of the PBGC would be necessary if the
alarming trend of underfunded pension plans and company plan failures
continue.
One of the several reasons that defined benefit plans are in
financial jeopardy is because the interest rate used by employers to
calculate the amount of money they must set aside in their employee
pension plans, the interest rate on the now discontinued 30-year
Treasury bonds, has been at artificially low levels, therefore,
inflating plan funding liabilities.
Congress enacted a temporary fix in March of 2002 by allowing
employers to use a higher interest rate. But because this fix expires
at the end of 2003, there is an urgency on the part of employers,
unions, and workers to address this issue because of a growing
consensus that this problem is putting the pension benefits of American
workers at risk.
The bipartisan Pension Funding Equity Act represents a responsible
short-term approach that would replace the 30-year Treasury interest
rate with a blend of corporate bond index rates for 2 years through
2005. If Congress fails to provide a pension funding solution by the
end of 2003, the benefits of millions of workers could be jeopardized.
Strengthening the funding of defined benefit pension plans in the
short term will reduce the likelihood that the PBGC will have to step
in and pay benefits to underfunded plans. Moreover, employers who are
making major short-term financial decisions need greater certainty to
make key decisions about how to allocate scarce resources. Doing
nothing could jeopardize employers' willingness to continue the defined
benefit programs that provide stable and secure pension benefits to
workers during retirement.
The act before us today would help ensure the financial integrity of
America's defined benefit plans in the short term while Congress takes
a broader look at the defined benefit system and considers permanent
solutions to the pension underfunding problems that are jeopardizing
the retirement security of America's working families.
I again want to thank my colleagues, the gentleman from California
(Mr. Thomas), the gentleman from California (Mr. George Miller), the
gentleman from New York (Mr. Rangel), the gentleman from Texas (Mr.
Johnson) and the gentleman from Ohio (Mr. Portman) for working together
in a bipartisan manner on this bill. I look forward to continuing to
work with them and the administration as we move ahead, and I urge my
colleagues to support the bill we have before us.
Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such
time as I may consume.
(Mr. GEORGE MILLER of California asked and was given permission to
revise and extend his remarks.)
Mr. GEORGE MILLER of California. Mr. Speaker, I rise in support of
H.R.

[[Page H9296]]

3108, the Pension Funding Equity Act. This bill provides short-term
relief to avert what otherwise might be an imminent pension crisis for
American businesses and workers.
I want to thank the cooperation of the gentleman from Ohio (Mr.
Boehner) for his work on this committee, the gentleman from California
(Mr. Thomas) and the gentleman from Michigan (Mr. Levin) and others for
their support of this effort.
Pension plan funding requirements are tied to projected rates of
investment return based upon 30-year Treasury note bills. In 2000, when
the U.S. was running a budget surplus, the Clinton administration
decided to retire the 30-year note. For that reason, we are now
inserting that rate.
We expect the new Treasury rate to be slightly higher than the
current rate, a rate which also will give employers a significant
amount of pension funding relief in the midst of what remains a weak
economy. Even though the additional pension fund flexibility will
result in reduced pension funding for 2 years, it is our expectation
that American businesses will use this time to shore up the resources
and not terminate or default on their long-term pension promises.
During this time the Bush administration and the Congress must
seriously consider a broader array of pension funding retirement
security reforms that will more permanently protect and secure the
retirement promises made to millions of American workers and retirees.
The threats to our long-term retirement security are real and they
are severe. Workers are justifiably scared about their retirement
security. The Bush administration and the Congress have done very
little to protect workers' pensions and, in fact, they sometimes have
acted to undermine retirement security. As soon as Congress passes this
bill we need to start the hard work of meaningfully safeguarding
workers' pensions.
The crisis we address today is not new. In fact, for over a year the
Bush administration repeatedly ignored our urgent request to wake up to
the serious problems of pension underfunding. I wrote the
administration in July of 2002 to take action when pension deficits
skyrocketed from $26 billion to over $100 billion. It failed to act.
Now, over a year later, the problem is substantially worse. The
Pension Benefit Guarantee Corporation now says that pension plans are
$400 billion in the red nationally and the largest liability in history
and that PBGC itself is reporting a $5.7 billion deficit as of July 31.
The General Accounting Office is so concerned that it has placed PBGC
on its list of Federal programs that are at high risk of failure. The
administration and Congress' failure to take decisive action on
pensions, their failed economic policies and neglect of our
manufacturing industries and the failure of some companies to honestly
estimate their pension liabilities have together precipitated one of
the largest underfunding of private pensions in history.
Today, hard-working Americans are taking it on the chin. Over 3
million private sector job workers have lost their jobs since 2001, and
many of those jobs will not return. Workers in manufacturing sectors
see their jobs vanish overseas and their industries ignored by this
administration's economic policies.
Working families have already lost billions of dollars in
irreplaceable life savings in their 401(k) plans as the stock market
crumbled and corporate abuse ran rampant.
The pensions of millions of Americans are threatened by the
administration's ``cash balance'' plan proposal and may cost older
workers up to half of their expected pension benefits.
Today we see shenanigans in the mutual fund industry where so many
millions of Americans have parked their pension fund share savings
plans to secure their future retirement. We now see inside trading,
trading by the big boys and sending the cost to those families that
have put their money in many of these mutual funds. Some of the biggest
companies that PBGC has taken over and put on the pension watch list
have been able to exploit pension rules riddled with loopholes and
escape hatches. Over the past few years companies have been permitted
to publish their annual reports, rosy financial pictures about their
pensions, while at the same time running plans into the ground through
reductions and freezes on pension contribution.
Conflicts between company management's push for the bottom line and
the plan's obligation to protect participants and workers clearly
compromise safe and sound pension practices at many companies.
Worse still, current law allows the plan's real financial condition
to be kept secret from the workers and investors. This failure of
accountability and transparency has eerie similarities to the Enron
Corporation and the debacle of that corporation when its CEOs and its
executives kept secret the status of the public health plan from the
employees while they jumped ship and rank and file were left to do the
best they could.
The gentleman from Texas (Mr. Doggett) and I have introduced
legislation to open up those reports, referred to as the 4010 forms, to
public scrutiny. There must be transparency and accountability for
billions of dollars promised to hard-working employees. The
administration now says it supports this publication of these secret
reports, but the Congress so far has yet to join in the effort and ask
for their publication.
The administration must get serious about pension reform. The
retirement security of millions of Americans depends upon timely
actions. What we do here today is important to provide this relief.
Hopefully, the companies will use this as the opportunity to shore up
their pension obligations. But we must understand that the American
people's anxiety about the future of the retirement security is highly
justified in light of this administration's and Congress's failure to
seriously address the problems in our pension system.
We look forward to using this opportunity to make sure that we can
address those pension concerns of the American workers in the 2 years
time that this legislation buys us.
I am heightened in my expectations by the discussion that we had in
our Committee on Education and the Workforce where the chairman said
that he wanted to use this time to do an in-depth look at the current
pension system and come up with remedies that are necessary to secure
that system both for the employers and for the employees. I hope that
we use that time wisely, and I would ask that my colleagues support
this legislation.
Mr. Speaker, I yield my remaining time to the gentleman from Michigan
(Mr. Levin).

{time} 1115

Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today in support of H.R. 3108, the Pension
Funding Equity Act before us. And I do so because of the very concerns
that were just raised by my colleague from California (Mr. George
Miller) and that is this will strengthen and define benefit plans in
this country.
I will remind the gentleman that this Congress did pass, the House
passed legislation after the Enron scandal to be sure that workers
indeed had more options for diversification and to further protect
those who are in 401(k)s and in plans like the Enron plan. That
legislation is currently in the other body, but we do hope we can act
on that yet this year.
I also would agree with the gentleman that we need to go even further
with regard to looking at the defined benefit area. That includes
looking at the funding rules. It obviously includes looking at the
issue of what the discount rate ought to be. Today, we have before us a
short-term fix for that problem, but it is only for 2 years. It also
means we need to look, I believe, at other issues connected with
pension accounting and with PBGC, the Pension Benefit Guarantee
Corporation.
But having said all that, the bill before us today is necessary, and
it is very important. We need to put this in a little perspective, I
think. First, there is no mandate for American businesses to offer
pension plans, whether it is a 401(k) or other defined contribution
plan or whether it is a defined benefit plan, such as those we are
talking about today. Those guaranteed defined benefit plans, of course,
are traditionally viewed as the most secure pension plans, and there
are millions of Americans who depend on them, not as many as they used
to be.

[[Page H9297]]

Mr. Speaker, in fact, over the past 18 years, we have gone from
114,000 plans insured by the PBGC, the Pension Benefit Guarantee
Corporation, ultimately by the taxpayer, to today where we have roughly
32,000 plans.
In the last four years alone, we have lost over 20 percent of the
contribution plans in this country that are defined benefit plans
insured by PBGC. So there are not as many Americans today as there used
to be depending on these plans, but I believe they are still an
incredibly important part of our overall retirement security system,
and we ought to do all we can here in Congress to stop the erosion of
these plans.
What does that mean? Without a system that is mandated, it means we
need to offer better legislative incentives and encouragements for
those plan sponsors and for those employees to be in these kinds of
plans.
I will also say, Mr. Speaker, that this legislation addresses one of
the reasons that we have seen a reduction in plans. It also addresses
one of the reasons that we are seeing, even this year, not termination
of plans but freezing of plans, where there are no new participants
admitted or where existing participants are not able to accrue
additional benefits. There is a group out there, one of the consulting
firms that does work in this area that has told me they believe up to
20 percent of the plans are currently freezing or looking to freeze or
scale back benefits in the near-term; 27 percent of the plans that they
work with intend to offer less generous benefits for new hires. So we
have got a serious situation here, and we do need to deal with it.
Again, one of the reasons we have seen this deterioration of the
defined benefit plan is because of the discount rate. I believe this
was talked about earlier, but right now by using this now defunct 30-
year rate, we are telling corporations they have to overfund their
plans. The 30-year Treasury measurement has been discontinued,
therefore, the rate is too low; and, therefore, it is not an accurate
measure of what the return will be on these plans over time; therefore,
companies are being asked to come up with millions of dollars, in some
cases over time billions of dollars, in funds that they do not believe
are necessary in order to provide adequate benefits for workers. And at
a time when the economy is not doing as well as it should be,
particularly in the manufacturing sector, this is a real problem.
It is very important to come up with what we view as an accurate
measure for this discount rate. In other words, what rate companies
have to use with regard to their contributions to their plans and with
regard to the premiums they pay to PBGC. That is what this debate is
about today.
I am delighted by the fact that it is a bipartisan discussion. I am
delighted by the fact that we have bipartisan cosponsorship of this
short-term fix for this problem. What we are saying is that instead of
using this defunct 30-year Treasury measurement, which again is
outdated, that instead we ought to use a more accurate measure which
would be a long-term, conservatively invested corporate bond rate to be
chosen by the Department of Treasury. They would choose which corporate
bond conservative indexes to use. The corporate bond indices which
would be chosen would not be up to us, but we would be establishing
here, legislatively, that that ought to be the rate going forward.

This is a huge victory because at least now we are telling those plan
sponsors out there, gee, if you want to stay in this defined benefit
area or for somebody maybe who is looking to get into the defined
benefit area, there will be a more accurate measure, rather than,
again, forcing companies and plan sponsors to overinflate their
contributions and their premium payments. Rather, it will be an
accurate measure, based on something you can predict which is what is
the long-term corporate bond rate, again, determined by the Treasury
Department based on indices.
That is where we are today. It is extremely important that we move
forward with this legislation to give companies a little bit of
predictability and certainty, at least over the next two year, as to
what will be their liability.
Personally, I would have strongly preferred that we would go beyond 2
years. I think 3 years was a minimum that we should have gone. But this
is something we worked at, again, on a bipartisan basis, given the
balancing of interests here between the PBGC, the Pension Benefit
Guarantee Corporation, their liabilities and concerns, which is
ultimately the taxpayer, given the concerns of the employees and having
job security and having pension security because this relates to jobs,
as well as pensions, given that these contributions affect the bottom
line of these companies, and given the need for us to be sure that you
have enough incentive to keep plan sponsors in these plans. So this is
a two-year period within which we go to a better discount rate.
During that time period, it is explicit in what we are doing here
today, that this Congress will be getting busy in looking at these
bigger issues. And they have to do, again, with the pension funding
rules, with accounting rules, working with the PBGC, working with
Treasury and working with outside groups. After all, those who are
making decisions as to whether to offer pensions day to day, whether to
freeze or not, whether to go to some sort of a convention, perhaps to a
cash balance plan, those are people we need to hear from.
Congress can come up with what we think are great ideas, but if they
do not work in the real world, who gets hurt in the end? It is the
employees who do not have that guaranteed benefit that is so important,
such an important part of our overall retirement security plan in this
country.
Mr. Speaker, I reserve the balance of my time.
Mr. LEVIN. Mr. Speaker, I yield myself such time as I may consume.
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, I rise in support of this temporary solution
to a very serious pension financing problem. I hope it can become law
quickly.
Although this is not the permanent solution, protecting both workers
and their employers that I had hoped for, it is far better than other
options being considered today. If Congress does not act, starting in
the next plan year, companies will have to contribute more money to
their defined pension benefit plans than will likely be needed to pay
their pension obligations. That will harm business and labor alike.
Businesses would be forced to lock away resources that could be used
to upgrade plants, hire workers and build for the future. Workers would
have to accept reduced wages or reduced future benefit pension
benefits. Although this rate adjustment may seem technical to some, in
reality, it is a critical part of the solution to the manufacturing and
job crisis which will require more action by this Congress and by the
White House than new titles for bureaucrats or encouraging speeches.
I want to remind my colleagues of just how serious the crisis is for
workers and their families. Over $2 trillion in tax cuts have helped
move this Nation from substantial Federal budget surpluses to huge
deficits without creating jobs or overall increasing income for
families. For the past 2 years, median income has dropped and poverty
has risen. An average of 250,000 jobs per month were created during the
Clinton administration, and in the Bush administration an average of
80,000 jobs a month are being lost. It would take us nearly a year to
create enough jobs to replace the 3 million jobs lost and also account
for population growth, even if we created over 500,000 jobs a month,
the high under the Clinton administration.
Unfortunately, the Republican leadership in Congress and the Bush
administration decided to wait and see about the economy and did not
view the crisis like it was, including this pension issue. Rather than
begin work on a consensus solution immediately after Congress passed a
temporary fix 2 years ago, the Bush administration waited a year and a
half, until the temporary rate was about to expire to unveil a
controversial yield curve formula. It would disproportionately increase
pension costs for already struggling manufacturing companies.
At the same time, leaders in this House initially delayed action on
this matter by holding the rate correction hostage to action on an
expensive and controversial package.
I hope this bipartisan action on pensions will be quickly followed by
action

[[Page H9298]]

on another bipartisan effort, the Rangel-Crane-Manzullo-Levin bill. It
would provide a needed tax cut for manufacturers who produce in the
United States of America. Also needed is an extension of unemployment
benefits for those still out of work through no fault of their own,
millions of people, and other real actions specifically targeted to
help turn this economy around.
Mr. Speaker, I reserve the balance of my time.
Mr. PORTMAN. Mr. Speaker, I yield such time as he may consume to the
gentleman from Texas (Mr. Sam Johnson), a distinguished member of the
Committee on Ways and Means, also chair of the subcommittee of the
Committee on Education and the Workforce on Employee-Employer
Relations.
(Mr. SAM JOHNSON of Texas asked and was given permission to revise
and extend his remarks.)
Mr. SAM JOHNSON of Texas. Mr. Speaker, I appreciate the remarks of
the gentleman from Ohio (Mr. Portman), as well as those on the other
side.
Mr. Speaker, I rise today in support of Pension Funding Equity Act.
It is long past time that we act on this important issue. I have even
had people today come and tell me they want to work longer, so the
Pension Benefit Guaranteed Corporation, which is a taxpayer funded
entity, can fund them with more money. That is wrong.
Traditional pension plans provide financial security for millions of
retirees and for today's workers. However, in order for employers to
provide this type of financial security, the companies that sponsor
these plans need some certainty with respect to the laws that govern
them.
Two years ago the Treasury Department stopped issuing the 30-year
Treasury bonds. That provided the interest rate benchmark for pension
plans to measure their earnings. Since then, we have provided a stop-
gap interest rate, and that stop-gap law is set to expire, and we are
now coming forward with another temporary solution. The issues we are
dealing with are complex and with roughly $350 billion of unfunded
pension promises looming over the Pension Benefit Guarantee
Corporation, taxpayer funded, this is a high wire act without a safety
net for American taxpayers.
I support moving forward with using the index of high-quality
corporate bonds as the new benchmark to measure pension funding levels.
This interest rate will better approximate what a conservatively
invested pension plan is likely to earn in its portfolio. I am
disappointed, however, along with the gentleman from Ohio (Mr.
Portman), that the bill we are debating only replaces the 30-year bond
rate for purposes of determining how well-funded a pension plan is. We
are continuing the fantasy of using a 30-year Treasury bond rate for
purposes of determining lump-sum calculations.
The problem with ignoring the lump-sum calculations and using the
defunct interest rate is that it provides a huge windfall to near-term
retirees in transitional pension plans, while unjustifiably robbing
everyone else in the pension plan. It also leaves gaping holes in
pension funding that either must come from corporate earnings or these
deficits must be turned over to the PBGC, at taxpayer expense, for
payment.

{time} 1130

For Congress to ignore the lump sum side of this occasion means that
we are collaborating and strategically undermining pension plan
funding. Again, at a time when the pension insurance program is facing
$350 billion in plan underfunding, I cannot be silent. We must protect
the taxpayer.
I will support this bill today in order to get it to conference with
the Senate, but we must replace the 30-year Treasury bond rate, and we
must do it now.
Mr. LEVIN. Mr. Speaker, I yield 7 minutes to the gentleman from
Maryland (Mr. Cardin), and I ask unanimous consent that the gentleman
from Maryland (Mr. Cardin) be able to control the remainder of the time
on this side.
The SPEAKER pro tempore (Mr. Latham). Is there objection to the
request of the gentleman from Michigan?
There was no objection.
Mr. CARDIN. Mr. Speaker, let me thank the gentleman from Michigan
(Mr. Levin) for yielding me this time, and let me point out from the
outset that each Member who has spoken on this particular issue I have
worked with on pension reform legislation, and we have worked together
to try to increase the security for retirees. We share a common
objective, and that is to provide more pension security for America's
workers and for all individuals.
I have many concerns about the legislation we are considering today.
I feel compelled at least to mention some of these concerns.
First, I am pleased that the legislation incorporates a replacement
for the 30-year Treasury, which is a corporate bond mix which was
included in the Portman-Cardin legislation. The Portman-Cardin
legislation, that I have worked on with my good friend from Ohio (Mr.
Portman), who is managing the time on the other side of the aisle, the
two of us have worked together and developed a process that is not just
bipartisan. It is a process that uses the procedures here about
hearings and listening to all parties. It works with all stakeholders,
tries to work consensus. As a result, we have been successful in
enacting some very important legislation.
I regret that that process was not used in the legislation before us.
It certainly does not represent a consensus among the stakeholders. So
let me tell my colleagues the problems as I see in this legislation.
First, I have heard my good friend, the gentleman from Ohio (Mr.
Boehner), and the gentleman from California (Mr. George Miller) talk
about underfunded plans; and, yes, there are underfunded defined
benefit plans. There is no question about that, but using an accurate
interest assumption will not make the underfunding situation worse. In
fact, it will help the PBGC because it will encourage companies that
are properly funded to remain in the defined benefit world. It actually
helps the plans using an accurate interest assumption. So why are we
afraid to enact a permanent replacement for the 30-year Treasury?
Defined benefit plans are the best security for American workers.
They have guaranteed benefits that they know they will receive when
they retire. They do not have to worry about the market going up or
down. It is guaranteed. The company puts money on the table. It
provides in almost all cases annuitant retirement so that an individual
has income and is not tempted to take out their retirement in a lump
sum, spend it and not have it for their own retirement needs. It is the
one form of retirement that we all should be here today to try to
encourage more, and as the gentleman from Ohio (Mr. Portman) pointed
out, we are seeing a hemorrhaging of these plans. They are terminating,
they are converting, they are freezing their contributions.
So what does this bill do in order to help the situation? It provides
a 2-year, and a 2-year fix only, on a 30-year Treasury that does not
exist. My concern is that because it does not provide the necessary
predictability to companies that have to make a decision, whether they
are going to continue these plans or not, that many plans will, in
fact, convert or freeze and many companies will not even look at
starting defined benefit plans.
The gentleman from Michigan (Mr. Levin) said that we should not
require companies to put more into their plans than is required. Yet,
that is exactly what we are doing in many cases. So why would a company
or its workers want to put too much money in a pension plan when it is
only one part of a compensation package? There are so many issues
dealing with adequate funding that have been left out of this bill that
were included in the Portman-Cardin bill. Let me just go through some
of the issues that are not included in this bill, in addition to the
fact that we had a permanent replacement and this is only 2 years.
It has nothing on mortality schedules. The mortality schedules are
out of date. Treasury will acknowledge the mortality schedules are out
of date. There are companies that are contributing too much; there are
companies that are contributing too little. And yet we are going to do
nothing on the mortality schedules in this legislation. We have multi-
employer plans that have been left out completely from this

[[Page H9299]]

legislation. We have the 415 plans that are left out. These are small
employers, small companies, and they are not going to get any relief
under this legislation. That should have been corrected. It was in the
original bill. The multi-employers are not affected by the 30-year
Treasury replacement. They still have a problem. We do not deal with
that.
Assets moving to take us through good times and bad times are not
included in the legislation. We know that the current interest
assumptions encourage individuals to take their money out in lump sum.
It discriminates against annuitant retirement. Accountants will tell my
colleagues that. It discriminates against annuitant retirement, and it
means more money is coming out of plans than perhaps would need to and
add to.
What it does is it makes the plans even more underfunded because we
do not deal with the lump sum. Nothing in this legislation deals with
the lump sum issues. And I think most tragically, I have heard my
colleagues say, well, we are going to study these issues for the next 2
years and then come back with something. Nothing in this bill provides
any study. I am just afraid 2 years from now we will be back exactly
where we are today, and we will not have made the progress and we will
not have taken advantage of the opportunity this year to deal with this
matter in a more comprehensive way.
There is something good I can say about the bill. It does not
incorporate the administration's proposal for a yield curve. I think
that would have been disastrous. I am glad that is not legislation. I
do agree with each of the prior speakers that this Congress has to act.
So I am going to vote in favor of the bill today. I hope that as it
moves through the process the other body will show more wisdom and we
will be able to have a more comprehensive bill, a longer term than just
2 years, covering more, at least a study, so that we are committed to
dealing with all of these funding issues, and that we can get back on
track to try to encourage companies to stick with it through defined
benefit plans, because I think that is in the interest of American
workers. We just do not want to see remaining this underfunded plan. We
want these well-funded plans to continue to provide the benefits
necessary for American workers, and I look forward to working with all
my colleagues so that hopefully we can get back on track on important
pension reform legislation.
Mr. PORTMAN. Mr. Speaker, will the gentleman yield?
Mr. CARDIN. I yield to the gentleman from Ohio.
Mr. PORTMAN. Mr. Speaker, I thank my good colleague from Maryland for
yielding.
I want to echo the concerns he raised about this not being the more
comprehensive approach that is needed. I also want to thank him for
working with me and other Members on both sides of the aisle over the
last 3 years in putting together more comprehensive legislation from
which this corporate bond rate is taken, and that is the Portman-Cardin
legislation my colleague talked about. It did go to the Committee on
Ways and Means; it has not come to the floor yet. I do think we will
have the opportunity to take up that legislation in the future because
it does address not only some of the other issues connected with the
defined benefit plans but also defined contribution plans.
Mr. CARDIN. Mr. Speaker, I reserve the balance of my time.
Mr. PORTMAN. Mr. Speaker, I yield such time as he may consume to the
gentleman from Massachusetts (Mr. Neal) for purposes of a colloquy, a
member of the Committee on Ways and Means.
Mr. NEAL of Massachusetts. Mr. Speaker, I have a question and perhaps
an answer might clear it up for those who are still trying to sort
through this legislation.
H.R. 3108, as introduced, included a provision that would have
replaced the 30-year Treasury rate with a flat rate of 5.5 percent for
purposes of the so-called section 415 limit. This provision was dropped
in the amendment being considered today. Will this provision be
considered as H.R. 3108 moves forward?
Mr. PORTMAN. Mr. Speaker, will the gentleman yield?
Mr. NEAL of Massachusetts. I yield to the gentleman from Ohio.
Mr. PORTMAN. Mr. Speaker, I would say first it is an excellent
question, and he raises a concern that I also have with this
legislation.
As my colleague indicated, section 415 of the Tax Code limits the
maximum pension benefit that can be paid from a defined benefit plan.
For 2003, that dollar limit is $160,000 annually paid in the form of a
lifetime annuity. If that worker decides to take a lump sum benefit
instead, this annuity, the 415 limit, would also be converted into the
lump sum.
Under current law, pension plans must use the 30-year Treasury rate
to convert the 415 limit into a lump sum; and of course, because the
30-year Treasury is not a good rate, as we have talked about today, and
because it fluctuates a great deal, it is very difficult for businesses
to determine with any amount of certainty how much money it has to set
aside to pay lump sum benefits. Although volatility is never good, it
is particularly problematic for small plans; and it is these 415 plans
that are typically in smaller businesses.
The legislation before us, H.R. 3108, would have allowed businesses
to use a flat rate of 5.5 percent to convert the 415 limit. We think
that was good policy. This provision would allow businesses,
particularly small ones that I know the gentleman from Massachusetts
(Mr. Neal) is concerned about, to fund their pension plans with more
certainty.
That provision was dropped in this amendment being considered today
because it would have had an effect on lump sum distributions, and we
did make an agreement with all parties that lump sums would not be
affected one way or another by this short-term 2-year change in the
discount rate. So that provision would have increased the 415 limit in
some circumstances and reduced it in others. So it would have affected
lump sums.
Nonetheless, the provision is extremely important to small business.
I appreciate the gentleman from Massachusetts (Mr. Neal) raising it and
appreciate his support. I hope we can get it back in the bill, and I
believe that we can as this bill moves forward when more permanent
legislation is considered.
Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman for
yielding time to me.
Mr. PORTMAN. Mr. Speaker, I yield such time as he may consume to the
gentleman from Wisconsin (Mr. Ryan), my colleague on the Committee on
Ways and Means, a distinguished Member.
Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentleman from Ohio
for yielding me the time. I also thank him for all of his years of
leadership on this issue. It is very, very important.
I simply want to lend my support and echo the sentiments of the
gentleman from Maryland and the gentleman from Ohio on the fact that
more does need to be done than what we are just doing here today. Few
times have I had the opportunity to see an issue that is bipartisan,
where labor and management can agree on things and come together to
work for a common purpose for our country and for the workers of
America. That is something that is important, and that is something
that we need to advance, and that is why more needs to be done.
Multi-employer plans, mortality table rate reform, those things are
important; and we need to pass legislation to do that, but this bill
right here does need to pass. This bill needs to pass because this is
about jobs, and I know this is pretty complicated. It is a difficult
issue to get our arms around; but what it basically means is if this
bill does not pass, millions of dollars, billions of dollars that are
coming through corporations because of the economic recovery that is
beginning, that is under way, instead of creating jobs and hiring
people will go into artificial pension payments, and that is not good.
We have a recovery that we are trying to get under way. In many areas
the recovery is under way. In manufacturing we still have work to do.
The last thing we need to do is put a huge tax on the economic recovery
of this Nation, and that is why it is important that the cash that is
coming through these firms go to bringing these people back to work,
expanding, buying new pieces of plant and equipment. We have

[[Page H9300]]

all of these tax benefits that are now under way through the tax bills
that we have passed to give incentives to manufacturers, to give
incentives to employers to reinvest in their businesses, to expand, to
rehire employees.
It would be a horrible thing if all of the sudden we allow this
reform to expire, and these plans, rather than expanding, buying new
plant equipment, rehiring employees, have to dump it into these
artificial payments. This needs to pass so the economic recovery can
continue. Then we need to get together to work on these broader reforms
sooner rather than later.
I thank my colleagues for what they are doing.
Mr. CARDIN. Mr. Speaker, I yield such time as he may consume to the
gentleman from North Dakota (Mr. Pomeroy), my colleague on the
Committee on Ways and Means.
Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me the
time, and in particular, applaud him for the effort and research and
expertise he has developed in this area, as well as our colleague, the
gentleman from Ohio (Mr. Portman). Certainly, the Portman-Cardin
legislation that appears unlikely to pass this session of Congress was
a bill that advanced these considerations and did so in a more thorough
way than the bill before us.
I think it is important to have in perspective, really, what this is
all about. Defined benefit pension plans are those retirement savings
vehicles made available to employees at the workplace that give them a
monthly annuity benefit every month in retirement. It is the retirement
cash flow that they cannot outlive. That is what makes pensions so
important. That is why, for many of us, we view pensions in the defined
benefit context as a superior retirement benefit than the defined
contribution 401(k) account where one saves up a little nest egg and
hopes it lasts as long as they need it. The defined benefit pension
plan guarantees cash flow for life.
Agreeing then on the importance of defined benefit pension plans, it
is also important to really look at how we are presently regulating
them to determine whether we are doing it in an appropriate way. These
are voluntary plans by the employer; and if we do not regulate them
correctly, the employers will drop them.
There is reason to believe something is terribly wrong with the
existing regulatory system on pension plans because it is estimated by
Watson Wyatt, the consulting firm, that 20 percent of defined benefit
pension plans, one in five, have been frozen or canceled within the
last three years alone.

{time} 1145

Now, that is a staggering problem, and I really regret that the
administration has not seized on this as an outright emergency in terms
of employee benefits. One out of five pension plans frozen in the last
3 years alone. So the economic record is not just jobs lost, it is also
those who still have jobs but do not have pensions, and there are
hundreds of thousands of them.
One of the reasons causing this problem is the fact that in good
times, we do not allow funding, and in bad times, we make them
substantially increase the funding of these pension plans. Now, if you
are an employer, what sense does that make? Times are good, you have a
little cash, and you would like to plus up the pension plan to make
sure you have enough in there, but you cannot under the law. On the
other hand, in a recession, when you are trying to desperately turn
things around, trying to grow your businesses, my colleague, the
gentleman from Wisconsin (Mr. Ryan), just explained we make more money
to come out of operations and be put into pension reserving. Not
because the plan is about to go under, but that is just what the
formula says. Well, that is a dramatically screwed-up format, and it
places a government disincentive on employers to continue pension
plans. We have to fix that.
Unfortunately, what we have seen out of this administration, in my
view, is only a focus on whether or not the reserving is enough
relative to immediately liquid liabilities. Out of the Treasury
Department come new formulas for increasing funding, making even more
volatile the funding situation facing employers. Out of the Pension
Benefit Guaranty Corporation, we have just seen a single focus. We need
more funding because the plans are under water. Well, we have to keep
this in perspective.
The Watson Wyatt Research Group has estimated that comparing assets
to liabilities, the plans are on average 4 percent under water. Four
percent. That is all. And that is measured based upon today's stock
market evaluations. Now, if the administration has any confidence at
all in its economic plans forecasting growth, forecasting rising stock
values, that 4 percent is going to disappear in an instant. That is not
a problem. So it is wrong to put this inordinate pressure on employers
to increase funding for their liabilities now. It really forces them to
do what so many have done, and that is freeze or cancel the plans.
Plans need certainty, and we only provide a little bit of certainty
in the legislation before us; 2 years of continuing this interim fix. I
wish it had been 5 years. I believe maybe even 7 years might have been
appropriate. Two years, in my opinion, falls short of what will be
required to give employers some relief. I am not at all sure, even if
we pass this, that we are going to stop this trend of canceling the
defined benefit plans. But certainly it is better than nothing, and I
will be voting for it. It is far short of what we should have done.
More work lies ahead, and I would point to two areas, in particular,
that are going to need some attention. The airline industry, in
particular, has been battered by terrorism and battered by a recession
in the economy. They have also been battered, unfortunately, by the
statutory reserving requirements on the pension plans. We should be
able to address their unique circumstance. This bill does not do that.
I believe they need relief, and was proud to work with my colleague,
the gentleman from Michigan (Mr. Camp) on bipartisan legislation to get
that done.
Other plans, in particular those protecting the retirement interests
of older workers, those places of employment that have, on balance, an
older-age mix in their place of employment are going to potentially be
very heavily hit on pension reform. And without giving them some
assurance, I believe we are going to see the freezing of plans
accelerate in these industries. Those who most need the protection,
those plans with older workers, will be most likely to have the
benefits cut or frozen or discontinued all together. We really have not
addressed that in this legislation. I believe this is absolutely the
fault of the United States Treasury Department under this
administration. We deserve more from them than we have received.
I also believe that the Pension Benefit Guaranty Corporation has only
looked with a green eyeshade at whether or not plans are solvent. The
preceding director of the Pension Benefit Guaranty Corporation, an
individual from my hometown, understood that the PBGC has two missions;
one was making certain that the plans were adequately funded, but the
other was continuing defined benefit pension plans in the workforce.
And that is why some balance is needed. That is why the existing
administration needs to incorporate more balance in looking at these
issues, so that we look at them over a long time frame and in a way
that is compatible with continuing defined benefit pension plans, or
even increasing the number in the workforce, because it is that
important.
I thank, again, my colleagues for their responsible bipartisan work
on this issue. Obviously, we have a lot more heavy lifting to do.
Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume,
and I want to thank my colleague. He ended up by saying that he
appreciates the responsible bipartisan work that has been done in this
area. I want to thank him and the gentleman from Maryland (Mr. Cardin),
who spoke earlier, and I also want to thank the gentleman from Texas
(Mr. Sam Johnson), who we heard from a moment ago, and I want to thank
the gentleman from Ohio (Mr. Boehner), who we will hear from in just a
minute.
This has been a bipartisan effort from the start, and it is something
we need to continue to focus on. We need to do two things: One, today
we need to do this short-term fix. Second, we need to look more
comprehensively at these issues. First, at all the funding issues

[[Page H9301]]

and other PBGC issues, some of which were raised by the gentleman from
North Dakota (Mr. Pomeroy) and the gentleman from Maryland (Mr.
Cardin), the lump-sum issues, and that will be done in the next 2 years
if we are to meet our commitment under the legislation we are passing
today.
The second thing we need to do, though, is we need to look more
comprehensively at retirement security generally, and that is what the
Portman-Cardin legislation builds on, and, hopefully, we can continue
to do that.
Mr. Speaker, I yield back the balance of my time.
Mr. CARDIN. Mr. Speaker, I reserve the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield such time as he may consume to the
gentleman from Oklahoma (Mr. Cole).
Mr. COLE. Mr. Speaker, I rise today to support H.R. 3108, the Pension
Funding Equity Act. This bipartisan, shorted-term fix is important so
we can develop a long-term solution to the challenges faced by both
employers and employees who participate in defined pension plans.
This interim solution is necessitated by an unusual combination of
events: Record-low interest rates, although they are beginning to tick
up; a stock market decline, although, frankly, that has now reversed
itself and become a stock market rally; growth in the number of
retirees; and discontinuation of the 30-year Treasury benchmark that
previously provided the means used for determining funding liability.
Unless we make this temporary adjustment in H.R. 3108, employers will
face demands on their capital that will lessen their ability to create
jobs and invest in our future. Workers will have less certainty in
terms of their own pensions, and that, in turn, may well affect
consumer spending and affect this economic recovery.
H.R. 3108 provides the time necessary for the recovery generated by
the Bush tax cuts, which is clearly underway, the continued generation
of new jobs, and new increases in stock market values, which over time
will ease some of the pension challenges that we face, and, frankly,
ultimately provide a better environment in which to find a long-term
bipartisan solution to this problem.
I urge my colleagues to support H.R. 3108. It is simply the right
thing to do.
Mr. BOEHNER. Mr. Speaker, I am pleased to yield such time as she may
consume to the gentlewoman from Tennessee (Mrs. Blackburn).
Mrs. BLACKBURN. Mr. Speaker, I would like to thank our chairman for
his excellent work on this issue, and I do rise today to support H.R.
3108, the Pension Funding Equity Act.
We have talked about all the reasons that have caused this, the stock
market fluctuations, the growing retiree population, interest rates,
and that the plan is underfunded. Over the past year, we have heard
from so many of our constituents about the concern of the condition of
the Pension Benefit Guaranty Corporation and concern with its weakening
and with the deficit of $5.7 billion. What we have got, basically is
$80 billion in unfunded pension benefits among financially weak
companies that are looming on the horizon, those pension benefits that
may eventually come to the PBGC and be their responsibility.
This Pension Funding Equity Act creates a short-term replacement for
the 30-year Treasury bond interest rate and allows us to work out a
long-term bipartisan solution. I join my colleagues in urging all of
our Members to support H.R. 3108 and support our constituents who are
indeed very concerned about this issue.
Mr. BOEHNER. Mr. Speaker, I am prepared to close on our side.
Mr. CARDIN. Mr. Speaker, I yield back the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
Let me thank all my colleagues on both sides of the aisle for their
work in moving this very important piece of legislation to help
strengthen the Pension Benefit Guaranty Corporation and, more
specifically, to help strengthen defined benefit plans. Making this
change in the 30-year bond rate to a corporate bond index rate will, in
fact, strengthen a lot of defined benefit plans, single-employer plans.
Multiemployer plans use a different index.
There has been some discussion on the floor today about this fact
that this is temporary, that it is only 2 years. Frankly, that is by
design. Putting this in place we all know needs to happen because the
current temporary fix is about to expire. It has been my intention, as
the chairman of the Committee on Education and the Workforce, who
shares jurisdiction with our friends on the Committee on Ways and
Means, to continue our work on defined benefit pension plans, both
single employer and multiemployer plans. There are long-term issues
that have to be dealt with.
Congress, over the last number of years, has kind of shoved this off
and shoved it off. Allowing for a 3-year fix or a 4-year fix, in my
opinion, provides far too much time. It gets people unengaged in the
process, when, in fact, we need to stay with this difficult process in
order to come up with a longer term solution.
We have to walk a very fine line, as all of my colleagues know, in
terms of getting the appropriate funding levels in many plans, securing
the retirement security for millions of American workers, without
unduly or unnecessarily pushing employers out of the defined benefit
system. These are voluntary plans offered by employers to their
employees. It is very critical, I believe, and others believe, that we
find the right balance in terms of restructuring the regulatory system
for how these plans operate and the contribution levels that need to be
made.
While others want to make changes, and we have heard some of the
suggestions made on the floor today, to fix the lump-sum problem, to
fix the mortality-rate issue, all of these issues in defined benefit
plans are interrelated. And as you begin to pull on that string, what
we do not want to have happen, and what usually happens around here, is
that the law of unintended consequences jumps up and bites us.
I know that our committee is going to take a very serious look at
what needs to be done to improve the health of these plans, to ensure
that the money is there to pay the benefits to American working
families and to try to maintain some stability so that employers will
continue to offer these plans. I suspect my colleagues on the Committee
on Ways and Means will do the same. It is my plan, Mr. Speaker, to have
a bill through the House next year. And I do believe that this 2-year
temporary fix will, in fact, keep pressure on us to do the heavy
lifting that needs to be done.
There have been calls for a commission to look at this. In all
honesty, I do not know that we need a commission. What we need to do is
the heavy lifting of legislating. And to legislate, we need to talk to
people in the administration and in the real world about the kind of
changes that need to be made in order to make sure that these systems,
these defined benefit plans, are there for American working families
and that they work properly and are funded properly.

{time} 1200

Mr. Speaker, I intend in our committee to do the work that is
necessary, and I believe our colleagues on the Committee on Ways and
Means will do likewise. I urge Members to support the bill.
Mr. McKEON. Mr. Speaker, I rise today to urge my colleagues to
support H.R. 3108, the Pension Funding Equity Act. Two years ago, the
benchmark interest rate used to determine various pension
calculations--the 30 year Treasury Bond rate--was discontinued, but
some employers have continued to use it to fund their defined benefit
pension plans.
The problem is that after the rate was discontinued, it reached
historic lows and now no longer correlates with the rates on other
long-term bonds, thereby artificially inflating its funding liability.
This has justifiably left many employees concerned about the certainty
and security of their defined benefit programs, which many Americans
depend on for their retirement.
Last year, my colleagues and I passed a temporary fix by allowing
employers to use a higher rate to calculate their pension liabilities,
but because this fix expires at the end of 2003, employers, unions, and
workers are once again concerned that defined benefit pension plans are
going to be jeopardized.
Mr. Speaker, this is unacceptable. The lack of a long-term solution
to the 30-year interest rate is putting worker and retiree benefits at
risk. Taking no action now could jeopardize employers' willingness to
continue their defined benefit programs that provide a stable

[[Page H9302]]

and secure pension benefit to workers during retirement.
Mr. Speaker, H.R. 3108 is by no means a permanent solution but it
will provide a short-term replacement to ensure certainty and security
for workers and employers while committing Congress to immediately
proceed with efforts to identify a permanent long-term solution. I
encourage my colleagues to join me in supporting this common sense
legislation and voting in favor of the Pension Funding Equity Act.
Mr. CASTLE. Mr. Speaker, during House consideration of H.R. 3108 I
was in Iraq visiting U.S. troops and touring U.S. reconstruction
efforts. Had I been here, I would have supported passage of H.R. 3108,
the Pension Funding Equity Act of 2003.
I support H.R. 3108 as a temporary response to a pressing issue that
ultimately affects the retirement benefits of millions of American
workers, their families, and beneficiaries. Today the House will
protect the benefits of those workers who have a pension benefit under
our defined benefit system.
The Pension Funding Equity Act would replace the current standards
that employers must use to determine their pension liabilities--the 30-
year Treasury bond interest rate--with a corporate bond index rate for
2 years through December 31, 2005. The 30-year Treasury bond interest
rate is set to expire this year, jeopardizing pension funds across the
country. The bill gives the Treasury Department the flexibility to
establish the discount interest rate based on a blend of corporate bond
index rates. This change will provide employers with greater certainty
and short-term funding relief and strengthen defined benefit pension
plans workers in the short term while Congress takes a broader look at
the defined benefit system as a whole and the issues that affect the
retirement security of American workers. As we progress down the road
of defining the long-term answer, the bottom line must be to enable
businesses to fill their pension funds, and, more importantly, that
they are fully funding them.
As a Member of the House Committee on Education and the Workforce, as
well as the House Committee on Financial Services, I have participated
in hearings that highlight the plight of American workers, beyond
defined benefit plans, who have suffered from a lack of retirement
security. It has also become all too clear that addressing this issue
is an extremely delicate and difficult task.
It is imperative that this Congress work overtime to ensure today's
workforce retire with the benefits they have spent their adult life
building. I am committed to asking the difficult questions and pressing
for the sometimes controversial answers. We are all aware of Enron and
World Com, but we must look beyond these most recent crises. We must
look at past documented instances of corporations using innovative ways
to rob pension assets. For example, some have projected unrealistically
high rates of returns to claim that the plan is overfunded, declare
bankruptcy but set up a special bankruptcy-proof pension plan for top
executives, and define employees as independent contractors. In asking
these tough questions we will be able to give business the tools they
need to create fair funds, absent any deceit. For the sake of the
millions of workers who rely on the security of their retirement we
must be tough on fiscal trickery and strong on pension protection.
Mr. BOEHNER. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Latham). All time for debate has
expired.
Pursuant to the order of the House of Tuesday, October 7, 2003, the
previous question is ordered on the bill, as amended.
The question is on engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. BOEHNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.

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