[Congressional Record Volume 151, Number 29 (Friday, March 11, 2005)]
[Senate]
[Pages S2522-S2523]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN:
  S. 608. A bill to create an independent office in the Department of 
Labor to advocate on behalf of pension participants, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
  Mr. HARKIN. Mr. President, I rise to reintroduce a bill originally 
introduced in the 106th Congress that seeks to create an Office of 
Pension Participant Advocacy at the Department of Labor.
  When I first introduced this bill, it was just a good idea. Now, it 
has become an absolute necessity. Since 2000, unimaginable pension loss 
horror stories have cropped up in the wake of major corporate 
bankruptcies like Enron and WorldCom. People have lost their guaranteed 
pensions to mergers and acquisitions and to misinformation and to just 
plain irresponsibility.
  On March 3, the New York Times reported that companies are still 
desperately seeking ways to scrape funds out of their pensions--despite 
market downfalls and despite the dire situation at the Pension Benefit 
Guarantee Corporation. And who ultimately ends up paying the price when 
the company ends up bailing on its obligation? Pension plan 
participants pay.
  Many of these people have absolutely nowhere to turn. People who have 
a genuine legal claim to their pension, but have been unfairly denied 
it, can end up spending countless hours calling phone number after 
phone number and getting the run around, and maybe receiving technical 
assistance years later.
  Individual pension plans are complex, as are the laws that govern 
them. Currently, multiple Federal agencies share jurisdiction over 
pension law. Time and time again, the needs of pension participants are 
ignored, and pensioners don't get help in navigating the government's 
pension bureaucracy.
  This office would accelerate good public policy. Several years ago, I 
heard from an employee of a large technology manufacturer that gave 
early retirees the choice between taking either an annuity of $1,470 
per month, or an annuity of $200 per month plus $107,300 as a lump sum, 
both payable at age 55. While the lump sum package may appear more 
lucrative at first glance, the annuity option for a given employee had 
a value of approximately $228,000--more than 80 percent greater than 
the lump sum option touted by the employer.
  I also heard from a 53 year old man with 26 years of service. He 
shared with me the complicated summary of his pension options he 
received from his employer. The first line offers a $423,000 lump sum, 
which looks like it is based on the value of the $3,140 per month 
annuity he would normally receive. However, the true actuarial value of 
the annuity option turns out to be closer to $511,000. Stated another 
way, the $423,000 lump sum offer is equivalent to a monthly benefit of 
$2,590, almost $500 a month less than the annuity option would provide. 
People lost half the value of their pensions to this kind of 
misinformation, many of whom never found out how they had been hurt.
  Hearing stories like that prompted me to write to the Treasury 
requesting that they close this loophole and require that employees get 
an apples-to-apples comparison of their benefits, and Treasury did. 
However, how many fewer people would have been given misleading 
information about their pensions if there were someone within the 
government specifically charged with seeking out problems like these?

[[Page S2523]]

  In the years that I have been working to fight age discriminatory 
practices sometimes used when converting from traditional defined 
benefit plans to cash balance pensions, I heard from a number of people 
who lost huge amounts of money in their pensions to ``wear away,'' 
again, often not realizing what had happened to them until their nest 
egg was gone.
  For example, take Larry Cutrone. He was one of thousands of people 
who figured out how much they lost in their cash balance conversion. He 
said that before AT&T converted his pension, it was valued at $350,000. 
After the conversion, in July 1997, the value dropped to $138,000. The 
calculation period for his pension was frozen at 1994-1996 salaries, so 
no value to his retirement account was added for any years he worked 
after the conversion.
  He said:

       In September 2001, I was ``downsized'' out of AT&T and 
     decided to take my pension. I discovered that it translated 
     into an annual income of just $23,444 instead of the $47,303 
     income under the old plan.
       When these plans were changed over, workers were not 
     informed that this could happen. They woke up one day and 
     found out: they have less than 50 percent of what they 
     thought they were going to get in their retirement.

  Good public policy on pensions should never, ever have allowed that. 
People need someone on their side, because large corporations have 
plenty of people on their side.
  This office would not only provide technical assistance to 
participants, but would serve as a voice to advocate for participants' 
rights in general within the Administration. Corporations who cheat 
employees out of their pensions should not be able to wait for a 
retiree to notice that they've been taken. There should be someone in 
the Federal government actively pursuing companies who use their 
employees' pension plans as their own private piggy bank.
  The Office of Pension Participant Advocacy created in this bill 
would: actively seek out information and suggestions on pension 
policies and on Federal agencies which affect pension participants.
  Evaluate the efforts of Federal agencies, businesses and industry to 
assist pension participants.
  Identify significant problems faced by employees and retirees.
  Make annual recommendations documenting significant pension problems 
and recommending legislative and regulatory solutions.
  And examine existing pension plans and determine the extent to which 
current law serves pensioners in those plans.
  We need one central place where pension participants can turn to when 
problems arise. We need one place in government whose sole obligation 
is to look out for the general pension interests of employees and 
retirees concerning their pensions. We need an office that will be an 
advocate for pension participants. For that reason, I urge my 
colleagues to join me in supporting this critical legislation.
                                 ______