[Congressional Record (Bound Edition), Volume 146 (2000), Part 10]
[Extensions of Remarks]
[Pages 14376-14377]
[From the U.S. Government Publishing Office, www.gpo.gov]



        INTRODUCTION OF THE PHASED RETIREMENT LIBERALIZATION ACT

                                 ______
                                 

                           HON. EARL POMEROY

                            of north dakota

                    in the house of representatives

                        Wednesday, July 12, 2000

  Mr. POMEROY. Mr. Speaker, today I join my colleague Senator Grassley 
in introducing the Phased Retirement Liberalization (PRL) Act. This 
legislation would allow in-service distributions from defined benefit 
plans once a

[[Page 14377]]

participant has reached the earliest of the plan's normal retirement 
age, age 59\1/2\, or 30 years of service. By providing for more 
flexible retirement options in defined benefit plans, this legislation 
will benefit employers and workers alike.
  Over the next 20 years, the aging of the baby boom generation and 
other demographic factors will transform the very nature of retirement. 
These factors, which include a shrinking labor supply, increased life 
expectancy, the desire of remain active, and a greater need for 
financial security, will combine to change the concept of retirement 
from an ``on-off'' switch to a wide spectrum of options, including 
phased retirement. As embodied in the PRL legislation, phased 
retirement would allow individuals to continue working for their 
current employer even after they begin drawing down their pension 
benefits.
  Many older Americans who want to continue working for their employer 
find that it makes more sense to switch jobs simply so that they can 
continue working and still receive their pension benefit. Other workers 
retire from their employer and start receiving pension benefits; only 
to be rehired later--either as a full-time or part-time employee or as 
an independent contractor. While these arrangements have allowed some 
workers to take advantage of phased retirement, permitting in-service 
distributions from defined benefit plans at age 59\1/2\ or 30 years of 
service will allow more employers to offer flexible retirement 
programs.
  Employers have expressed a keen interest in phased retirement as a 
method of retaining skilled older workers. In a survey of 586 larger 
employers conducted by Watson Wyatt in 1999, 60 percent of employers 
reported they were having difficulty attracting workers, and fully 70 
percent agreed that implementing a phased retirement program is a 
viable strategy for addressing labor shortages. Sixteen percent of 
employers surveyed reported that they offer phased retirement, while 
another 28 percent said they are interested in establishing such 
programs in the next two to three years. Employers currently offering 
phased retirement report that it enables them to retain skilled older 
workers.
  Mr. Speaker, our nation's pension laws have not kept pace with the 
need for flexible approaches to retirement. Under current law, defined 
benefit plans are permitted to make in-service distributions to active 
employees only if they have reached the plan's ``normal retirement 
age.'' Under our legislation, however, the vast majority of defined 
benefit plans would have the flexibility to adopt a phased retirement 
arrangement.
  Congress recently recognized the changing nature of the workforce and 
of retirement by passing legislation to eliminate the Social Security 
earnings test for beneficiaries age 65 and older. It is time that 
Congress took a similar step in the private sector by examining phased 
retirement proposals.

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