[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[House]
[Pages 4356-4357]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         PENSION PROTECTION ACT

  (Mr. GUTKNECHT asked and was given permission to address the House 
for 1 minute and to revise and extend his remarks and include 
extraneous material.)
  Mr. GUTKNECHT. Mr. Speaker, later today the House will take up a bill 
called the Pension Protection Act of 2002; and as far as it is 
concerned, it is a pretty good bill. There is nothing really wrong with 
it. The problem is it is not strong enough. Most Americans do not know 
that right now employers have the right to change their pension plan at 
any moment, even vested employees. And, Mr. Speaker, when we look up in 
the dictionary the term ``vested,'' it says ``settled, fixed or 
absolute, being without contingency, as in a vested right.''
  The problem is that employers now have the right to change their 
pension plan in mid-course. Mr. Speaker, right now there are over 48 
million American workers who are over the age of 45. Forty percent of 
all workers are engaged in what we call ``defined benefit plans.'' 
Those can be changed and have tremendous cost to those employees.
  Mr. Speaker, I have an amendment I would like to offer to that bill 
to make it clear that employers cannot raid the pension funds for their 
own benefit and deny people the benefits that they are vested in.
  Mr. Speaker, this may be a good bill; but it really is not pension 
protection. I hope the Committee on Rules will make in order the 
amendment that I am offering today, and I hope my colleagues will join 
in supporting it.
  Several years ago, thousands of IBM workers in my district came into 
work one morning to find that the defined pension plan they had been 
promised had been changed without warning. For years these employees 
had been able to calculate their future benefits with a pension 
calculator located on their computer, compliments of IBM. When the plan 
changed, the calculator disappeared. So did the employees' promised 
benefits.
  Right now, companies can, at any time and for any reason, change a 
vested employee's pension plan--this is wrong.
  Most often this change involves a company converting a traditional, 
defined benefit plan to a cash-balance plan, which usually results in 
anywhere from a 20-50% reduction in final benefits.
  These conversions disproportionately burden older, career-oriented 
employees.
  Bureau of Labor Statistics indicate there are more than 48 million 
workers over the age of 45.
  More than 40 million workers or their spouses participate or receive 
benefits from defined benefit plans.
  This amendment would:
  (1) Provide 90 days notice of any pension plan conversion to all 
workers.
  (2) Give fully vested employees the choice of staying in their 
current plan or switching to the new, amended plan.
  This amendment exempts companies in financial distress from penalties 
(distress is to be determined by the Secretary of the Treasury, 
following guidelines set out in ERISA).
  This amendment will have no adverse effect on profitable companies 
that simply keep their promises to their employees.

           What Do Your Constituents Think ``Vested'' Means?

       Dear Colleague: In my dictionary, ``vested'' is defined as 
     follows:
       vested, adj. 1. Settle, fixed, or absolute; being without 
     contingency: a vested right.
       Despite this definition, being ``vested'' in a pension plan 
     does not mean what most employees think it means. Did you 
     know that companies can, at any time and for any reason, 
     change a vested employee's pension plan? Most often, this 
     change in plans involves a company changing from a 
     traditional, defined benefit pension plan to a ``cash 
     balance'' pension plan. This usually results in anywhere from 
     a 20-50% reduction in final pension benefits, with long 
     ``wear-away'' periods during which employees do not accrue 
     any new benefits.
       Bureau of Labor statistics indicate there are more than 48 
     million American workers over the age of 45. The latest 
     Bureau of Labor statistics also show that more than 40 
     million workers or their spouses participate or receive 
     benefits from defined benefit plans! Many of these 40 million 
     workers fall into the over-45 category. Pension plan 
     conversions disproportionately burden these older, career-
     oriented employees--those employees who need the most 
     protection.
       This is wrong! When companies change their retirement plans 
     in a way that may reduce employee benefits, vested employees

[[Page 4357]]

     should be allowed to stay in the original pension plan that 
     they were promised. Next week, I will introduce the Vested 
     Worker Protection Act of 2002, and I'm looking for original 
     cosponsors. This bill will require healthy companies to:
       (1) provide 90 days notice of any pension plan change to 
     all workers; and
       (2) give fully vested employees the choice of staying in 
     their current plan or switching to the new, amended plan.
       This bill exempts companies in financial distress from 
     penalties, while otherwise healthy companies will be subject 
     to an excise tax should they violate the provisions of this 
     bill.
       This bill will have no adverse effect on profitable 
     companies that simply keep their promises to their employees. 
     Support employees in your district by signing on as an 
     original co-sponsor of the Vested Worker Protection Act of 
     2002. To co-sponsor, please call James Beabout at extension 
     5-2472.
           Sincerely,
                                                    Gil Gutknecht,
                                               Member of Congress.

     
                                  ____
                                                   April 10, 2002.
       Dear Colleague: When Congress considered major pension 
     reform in 2000, I proposed an amendment to prevent healthy 
     companies from changing the pension plans to the detriment of 
     their fully vested employees. Unfortunately, the Rules 
     Committee did not allow debate on my amendment.
       Congress will revisit pension reform as soon as this week. 
     I strongly feel that any pension reform legislation must 
     include a provision to protect fully vested employees from 
     having their pension plans changed overnight.
       Several years ago, thousands of IBM workers in my district 
     came into work one morning to find that the defined benefit 
     pension plan they had been promised had been changed without 
     warning. For years these employees had been able to calculate 
     their future benefits with a pension calculator located on 
     their computer, compliments of IBM. When the plan changed the 
     calculator disappeared. So did the employees' promised 
     benefits.
       Most Americans take protection of their pension plans for 
     granted. The Enron situation has demonstrated the need for 
     employees to carefully monitor how their employer handles 
     their retirement benefits. As more companies change their 
     pension plans and reduce future benefits for employees, we 
     must provide, at a minimum, protection for vested workers who 
     are planning for retirement based on promises made by their 
     employers. Strengthening the definition of ``vested'' and 
     providing employee choice will go a long way toward re-
     establishing balance and fairness for workers with respect to 
     pensions.
           Sincerely,
                                                    Gil Gutknecht,
     Member of Congress.

                          ____________________