[Congressional Record Volume 164, Number 202 (Friday, December 21, 2018)]
[Extensions of Remarks]
[Pages E1723-E1724]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]





  PROVIDING FOR CONSIDERATION OF SENATE AMENDMENT TO H.R. 88, SHILOH 
  NATIONAL MILITARY PARK BOUNDARY ADJUSTMENT AND PARKER'S CROSSROADS 
   BATTLEFIELD DESIGNATION ACT; PROVIDING FOR PROCEEDINGS DURING THE 
         PERIOD FROM DECEMBER 24, 2018, THROUGH JANUARY 3, 2019

                                 ______
                                 

    SHILOH NATIONAL MILITARY PARK BOUNDARY ADJUSTMENT AND PARKER'S 
                   CROSSROADS BATTLEFIELD DESIGNATION

                               speech of

                           HON. VIRGINIA FOXX

                           of north carolina

                    in the house of representatives

                      Thursday, December 20, 2018

  Ms. FOXX. Mr. Speaker, I commend Chairman Brady and Leader McCarthy 
for their work related to the retirement security title of this bill, 
which includes significant and long-overdue reforms that expand access 
to workplace retirement plans, improve participant savings, and 
increase transparency in those plans.
  The Ways and Means Committee and the Committee on Education and the 
Workforce have a long history of working together to improve and 
strengthen America's employer-sponsored retirement system.
  Given our shared jurisdiction over many of these matters, each 
Committee brings a unique perspective to the table, further 
strengthening the resulting legislation.
  The House Amendment to Senate Amendment to H.R. 88--Retirement, 
Savings, and Other Tax Relief Act of 2018 includes many reforms that 
have benefited from the work of both committees. Several provisions 
were the subject of a hearing in the Education and the'Workforce 
Committee earlier this Congress, such as the authorization of open 
multiple employer plans, and the clarification of an existing safe 
harbor for offering annuity products in a defined contribution plan.
  However, the Retirement, Savings, and Other Tax Relief Act of 2018 
overreaches by including a provision allowing for premium reductions 
for certain cooperative and small employer charity pension plans (CSEC 
plans), an issue which falls entirely under the jurisdiction of the 
Education and the Workforce Committee, and which stands in stark 
contrast to the spirit of this otherwise sensible legislation.
  As Chairwoman of the committee of jurisdiction, I welcome this 
opportunity to provide background on the cooperative and small employer 
charity premiums provision.
  In 2006, Congress passed the Pension Protection Act, which included 
provisions to improve the funding of defined benefit pension plans 
sponsored by a single employer, in order to ensure the solvency of 
these plans and the retirement security of plan participants. The law 
exempted certain entities from these improved plan funding 
requirements.
  The Pension Protection Act also increased insurance premiums paid to 
the Pension Benefit Guaranty Corporation by single-employer plan 
sponsors because the PBGC-administered single-employer insurance 
program was under extreme stress--it had gone from a $7 billion surplus 
in 2001 to a $22 billion deficit in 2005. Unlike the Pension Protection 
Act funding rules, the increased PBGC premiums applied equally to all 
single-employer plan sponsors.
  Mr. Speaker, PBGC premiums for single-employer plans take two forms--
a flat-rate, per participant premium; and an additional risk-based 
variable rate premium. While plan sponsors cannot control the level of 
the flat-rate premium, they have complete power over the amounts owed 
for the variable rate premium.
  The variable rate premium is higher for severely underfunded plans 
than for well-funded plans, reflecting the higher risk underfunded 
plans present to PBGC, which steps in to pay benefits if a plan 
terminates. If a plan sponsor improves the funding of its plan, then 
its PBGC premium levels will go down.
  The structure of this variable rate premium not only prevents 
sponsors of well-funded plans from subsidizing the benefits of other 
companies' employees, but also serves as an additional incentive for 
all plan sponsors to fund their plans properly.
  As such, this variable rate premium is an especially crucial 
incentive for proper plan funding in certain cooperative and small 
employer charity plans that are exempt from the Pension Protection 
Act's more stringent funding rules.
  For 2018, all single-employer plan sponsors pay a flat-rate premium 
of $74 per participant, and a variable rate premium is assessed at 3.8 
percent of a plan's unfunded vested benefits, capped at $523 per 
participant. In exchange, the PBGC insures benefits up to $67,295 
annually for a 65-year old retiree.
  Now, a number of organizations that already enjoy funding relief 
under current law have asked for an additional reprieve from premiums 
that protect their workers' pension plans.
  The bill before us grants certain groups this additional break--both 
the flat-rate premium and the variable-rate premium are reduced 
exclusively for these entities to pre-Pension Protection Act levels. 
While all other single-employer plans would continue to pay the current 
premium amounts, these plans would pay only a flat-rate of $19 per 
participant and a variable rate premium assessed at 0.9 percent of a 
plan's unfunded vested benefits. Further, the provision allows these 
plans alone to use higher interest rates to assume higher funding 
levels when determining premium amounts, while other single-employer 
plans must use long-standing specified assumptions that result in more 
sound funding estimates. As a result, many underfunded CSEC plans would 
not have to pay any variable rate premium under this provision.
  Funding levels in many plans that would qualify for premium relief 
under this provision have fallen in recent years, resulting in 
increased risk-based variable rate premiums. According to PBGC data, 
for purposes of determining the variable rate premium, the plan 
sponsored by Girl Scouts of USA was only 64 percent funded in 2017--but 
as noted above, this provision would allow the plan to assume a 76.6 
percent funding level; the Boy Scouts plan was only 75 percent funded 
in 2017, but under this provision the plan could assume 88 percent 
funding. Other plans are in a similar situation. For example, in 2017 
Hawkeye Insurance Association was only 56 percent funded and Lincoln 
Center for the Performing Arts' plan was only 58 percent funded.
  There has been a trend in recent years of certain companies and 
organizations looking to pension policies for financial relief when 
they are confronted with difficult situations. Congress should not set 
the precedent that when a company faces hard times, it can turn to its 
employees' pensions for a quick fix.
  Federal pension laws must reflect the purpose for which pension 
promises are made--they are not offered gratuitously, but as a form of 
compensation to employees. As such, any changes to federal pension laws 
should have a long-term, sustainable focus, taking into account all 
parties, and especially the interests of workers and retirees.
  Employees of charitable organizations often make great personal 
sacrifices to do important work that benefits local communities; as 
much as anyone, these employees deserve a sound pension system and a 
secure retirement.
  Once pension promises are made, workers must be able to rely on them 
being kept.
  The current variable-rate premium puts the responsibility for premium 
levels in the hands of plan sponsors, and rewards plan sponsors that 
care for their employees by maintaining well-funded plans; it 
additionally serves as a strong disincentive for sponsors to allow 
their employees' plans to fall to dangerous funding levels. In the 
aggregate, cooperative and small employer charity plans that would 
qualify for premium reductions under the bill are underfunded by about 
$5 billion according to PBGC.
  A premium reduction benefiting a select few, as provided for in this 
bill, hands a select group of employers the same insurance at a lower 
price, at the expense of other employers that also sponsor single-
employer plans. Under this provision, PBGC would lose over a billion 
dollars in premium revenue over the next ten years.
  It allows a select group of employers to minimally fund promises made 
to their employees without consequence. Because these groups are exempt 
from Pension Protection Act rules designed to result in higher plan 
funding levels, the variable rate premium plays an important role in 
policing funding levels. PBGC estimates that it is likely that no 
cooperative and small employer charity plan would owe variable rate 
premiums under this provision.
  Finally, this cooperative and small employer charity provision sends 
the wrong message to workers and retirees that when it comes to pension 
policy, Congress is willing to tip the

[[Page E1724]]

scales in favor of certain employers over the retirement security of 
their employees.
  Because the good in the bill before us today as a whole outweighs the 
harm of this one provision, I will be voting yes on the underlying 
bill. But my ``yes'' vote on this bill is not an endorsement of the 
CSEC provision which I strongly oppose for the reasons I've just 
discussed.

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