[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
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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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