[Congressional Record (Bound Edition), Volume 149 (2003), Part 18]
[House]
[Pages 24309-24318]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   PENSION FUNDING EQUITY ACT OF 2003

  Mr. BOEHNER. Mr. Speaker, pursuant to the prior order of the House of 
October 7, 2003, I call up the bill (H.R. 3108) to amend the Employee 
Retirement Income Security Act of 1974 and the Internal Revenue Code of 
1986 to temporarily replace the 30-year Treasury rate with a rate based 
on long-term corporate bonds for certain pension plan funding 
requirements and other provisions, and for other purposes, and ask for 
its immediate consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Simmons). Pursuant to the order of the 
House of Tuesday, October 7, 2003, the bill is considered read for 
amendment.
  The text of H.R. 3108 is as follows:

                               H.R. 3108

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Pension Funding Equity Act 
     of 2003''.

     SEC. 2. FINDINGS; SENSE OF CONGRESS.

       (a) Findings.--The Congress finds the following:
       (1) The defined benefit pension system has recently 
     experienced severe difficulties due to an unprecedented 
     economic climate of low interest rates, market losses, and an 
     increased number of retirees.
       (2) The discontinuation of the issuance of 30-year Treasury 
     securities has made the interest rate on such securities an 
     inappropriate and inaccurate benchmark for measuring pension 
     liabilities.
       (3) Using the current 30-year Treasury bond interest rate 
     has artificially inflated pension liabilities and therefore 
     adversely affected both employers offering defined benefit 
     pension plans and working families who rely on the safe and 
     secure benefits that these plans provide.
       (4) There is consensus among pension experts that an 
     interest rate based on long-term, conservative corporate 
     bonds would provide a more accurate benchmark for measuring 
     pension plan liabilities.
       (5) A temporary replacement for the 30-year Treasury bond 
     interest rate should be enacted while the Congress evaluates 
     permanent and comprehensive funding reforms.
       (b) Sense of Congress.--It is the sense of the Congress 
     that the Congress must ensure the financial health of the 
     defined benefit pension system by working to promptly 
     implement--
       (1) a permanent replacement for the pension discount rate 
     used for defined benefit pension plan calculations, and
       (2) comprehensive funding reforms aimed at achieving 
     accurate and sound pension funding to enhance retirement 
     security for workers who rely on defined pension plan 
     benefits, to reduce the volatility of contributions, to 
     provide plan sponsors with predictability for plan 
     contributions, and to ensure adequate disclosures for plan 
     participants in the case of underfunded pension plans.

     SEC. 3. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.

       (a) Employee Retirement Income Security Act of 1974.--
       (1) Determination of permissible range.--
       (A) In general.--Clause (ii) of section 302(b)(5)(B) of the 
     Employee Retirement Income Security Act of 1974 is amended by 
     redesignating subclause (II) as subclause (III) and by 
     inserting after subclause (I) the following new subclause:
       ``(II) Special rule for years 2004 and 2005.--In the case 
     of plan years beginning after December 31, 2003, and before 
     January 1, 2006, the term `permissible range' means a rate of 
     interest which is not above, and not more than 10 percent 
     below, the weighted average of the rates of interest on 
     amounts conservatively invested in long-term corporate bonds 
     during the 4-year period ending on the last day before the 
     beginning of the plan year. Such rates shall be determined by 
     the Secretary on the basis of one or more indices selected 
     periodically by the Secretary, and the Secretary shall make 
     the permissible range publicly available.''.
       (B) Secretarial authority.--Subclause (III) of section 
     302(b)(5)(B)(ii) of such Act, as redesignated by subparagraph 
     (A), is amended--
       (i) by inserting ``or (II)'' after ``subclause (I)'' the 
     first place it appears, and
       (ii) by striking ``subclause (I)'' the second place it 
     appears and inserting ``such subclause''.
       (C) Conforming amendment.--Subclause (I) of section 
     302(b)(5)(B)(ii) of such Act is amended by inserting ``or 
     (III)'' after ``subclause (II)''.
       (2) Determination of current liability.--Clause (i) of 
     section 302(d)(7)(C) of such Act

[[Page 24310]]

     is amended by adding at the end the following new subclause:

       ``(IV) Special rule for 2004 and 2005.--For plan years 
     beginning in 2004 or 2005, notwithstanding subclause (I), the 
     rate of interest used to determine current liability under 
     this subsection shall be the rate of interest under 
     subsection (b)(5).''.

       (3) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such 
     Act is amended by adding at the end the following new 
     subclause:
       ``(V) In the case of plan years beginning after December 
     31, 2003, and before January 1, 2006, the annual yield taken 
     into account under subclause (II) shall be the annual yield 
     determined by the Secretary of the Treasury on amounts 
     conservatively invested in long-term corporate bonds for the 
     month preceding the month in which the plan year begins. For 
     purposes of the preceding sentence, the Secretary of the 
     Treasury shall determine such yield on the basis of one or 
     more indices selected periodically by the Secretary, and the 
     Secretary shall make such yield publicly available.''.
       (b) Internal Revenue Code of 1986.--
       (1) Determination of permissible range.--
       (A) In general.--Clause (ii) of section 412(b)(5)(B) of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subclause (II) as subclause (III) and by inserting after 
     subclause (I) the following new subclause:

       ``(II) Special rule for years 2004 and 2005.--In the case 
     of plan years beginning after December 31, 2003, and before 
     January 1, 2006, the term `permissible range' means a rate of 
     interest which is not above, and not more than 10 percent 
     below, the weighted average of the rates of interest on 
     amounts conservatively invested in long-term corporate bonds 
     during the 4-year period ending on the last day before the 
     beginning of the plan year. Such rates shall be determined by 
     the Secretary on the basis of one or more indices selected 
     periodically by the Secretary, and the Secretary shall make 
     the permissible range publicly available.''.

       (B) Secretarial authority.--Subclause (III) of section 
     412(b)(5)(B)(ii) of such Code, as redesignated by 
     subparagraph (A), is amended--
       (i) by inserting ``or (II)'' after ``subclause (I)'' the 
     first place it appears, and
       (ii) by striking ``subclause (I)'' the second place it 
     appears and inserting ``such subclause''.
       (C) Conforming amendment.--Subclause (I) of section 
     412(b)(5)(B)(ii) of such Code is amended by inserting ``or 
     (III)'' after ``subclause (II)''.
       (2) Determination of current liability.--Clause (i) of 
     section 412(l)(7)(C) of such Code is amended by adding at the 
     end the following new subclause:

       ``(IV) Special rule for 2004 and 2005.--For plan years 
     beginning in 2004 or 2005, notwithstanding subclause (I), the 
     rate of interest used to determine current liability under 
     this subsection shall be the rate of interest under 
     subsection (b)(5).''.

       (3) Conforming amendment.--Section 415(b)(2)(E)(ii) of such 
     Code is amended by inserting before the period at the end ``, 
     except that in the case of years beginning in 2004 or 2005, 
     `5.5 percent' shall be substituted for `5 percent' in clause 
     (i)''.
       (c) Provisions Relating to Plan Amendments.--
       (1) In general.--If this subsection applies to any plan or 
     annuity contract amendment--
       (A) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan or contract 
     during the period described in paragraph (2)(B)(i), and
       (B) except as provided by the Secretary of the Treasury, 
     such plan shall not fail to meet the requirements of section 
     411(d)(6) of the Internal Revenue Code of 1986 and section 
     204(g) of the Employee Retirement Income Security Act of 1974 
     by reason of such amendment.
       (2) Amendments to which section applies.--
       (A) In general.--This subsection shall apply to any 
     amendment to any plan or annuity contract which is made--
       (i) pursuant to any amendment made by this section, and
       (ii) on or before the last day of the first plan year 
     beginning on or after January 1, 2006.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2008'' for ``2006''.
       (B) Conditions.--This subsection shall not apply to any 
     plan or annuity contract amendment unless--
       (i) during the period beginning on the date the amendment 
     described in subparagraph (A)(i) takes effect and ending on 
     the date described in subparagraph (A)(ii) (or, if earlier, 
     the date the plan or contract amendment is adopted), the plan 
     or contract is operated as if such plan or contract amendment 
     were in effect; and
       (ii) such plan or contract amendment applies retroactively 
     for such period.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to years 
     beginning after December 31, 2003.
       (2) Lookback rules.--For purposes of applying subsections 
     (l)(9)(B)(ii) and (m)(1) of section 412 of the Internal 
     Revenue Code of 1986 and subsections (d)(9)(B)(ii) and (e)(1) 
     of section 302 of the Employee Retirement Income Security Act 
     of 1974 to plan years beginning after December 31, 2003, the 
     amendments made by this section may be applied as if such 
     amendments had been in effect for all years beginning before 
     such date.
       (3) No reduction required.--In the case of any participant 
     or beneficiary, the amount payable under any form of benefit 
     subject to section 417(e)(3) of the Internal Revenue Code of 
     1986 shall not be required to be reduced below the amount 
     determined as of the last day of the last plan year beginning 
     before January 1, 2004, merely because of the amendments made 
     by subsection (b)(3).

  The SPEAKER pro tempore. The amendment designated in the previous 
order of the House is adopted.
  The text of the amendment in the nature of a substitute is as 
follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Pension Funding Equity Act 
     of 2003''.

     SEC. 2. FINDINGS; SENSE OF CONGRESS.

       (a) Findings.--The Congress finds the following:
       (1) The defined benefit pension system has recently 
     experienced severe difficulties due to an unprecedented 
     economic climate of low interest rates, market losses, and an 
     increased number of retirees.
       (2) The discontinuation of the issuance of 30-year Treasury 
     securities has made the interest rate on such securities an 
     inappropriate and inaccurate benchmark for measuring pension 
     liabilities.
       (3) Using the current 30-year Treasury bond interest rate 
     has artificially inflated pension liabilities and therefore 
     adversely affected both employers offering defined benefit 
     pension plans and working families who rely on the safe and 
     secure benefits that these plans provide.
       (4) There is consensus among pension experts that an 
     interest rate based on long-term, conservative corporate 
     bonds would provide a more accurate benchmark for measuring 
     pension plan liabilities.
       (5) A temporary replacement for the 30-year Treasury bond 
     interest rate should be enacted while the Congress evaluates 
     permanent and comprehensive funding reforms.
       (b) Sense of Congress.--It is the sense of the Congress 
     that the Congress must ensure the financial health of the 
     defined benefit pension system by working to promptly 
     implement--
       (1) a permanent replacement for the pension discount rate 
     used for defined benefit pension plan calculations, and
       (2) comprehensive funding reforms aimed at achieving 
     accurate and sound pension funding to enhance retirement 
     security for workers who rely on defined pension plan 
     benefits, to reduce the volatility of contributions, to 
     provide plan sponsors with predictability for plan 
     contributions, and to ensure adequate disclosures for plan 
     participants in the case of underfunded pension plans.

     SEC. 3. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.

       (a) Employee Retirement Income Security Act of 1974.--
       (1) Determination of permissible range.--
       (A) In general.--Clause (ii) of section 302(b)(5)(B) of the 
     Employee Retirement Income Security Act of 1974 is amended by 
     redesignating subclause (II) as subclause (III) and by 
     inserting after subclause (I) the following new subclause:
       ``(II) Special rule for years 2004 and 2005.--In the case 
     of plan years beginning after December 31, 2003, and before 
     January 1, 2006, the term `permissible range' means a rate of 
     interest which is not above, and not more than 10 percent 
     below, the weighted average of the rates of interest on 
     amounts conservatively invested in long-term corporate bonds 
     during the 4-year period ending on the last day before the 
     beginning of the plan year. Such rates shall be determined by 
     the Secretary on the basis of one or more indices selected 
     periodically by the Secretary, and the Secretary shall make 
     the permissible range publicly available.''.
       (B) Secretarial authority.--Subclause (III) of section 
     302(b)(5)(B)(ii) of such Act, as redesignated by subparagraph 
     (A), is amended--
       (i) by inserting ``or (II)'' after ``subclause (I)'' the 
     first place it appears, and
       (ii) by striking ``subclause (I)'' the second place it 
     appears and inserting ``such subclause''.
       (C) Conforming amendment.--Subclause (I) of section 
     302(b)(5)(B)(ii) of such Act is amended by inserting ``or 
     (III)'' after ``subclause (II)''.
       (2) Determination of current liability.--Clause (i) of 
     section 302(d)(7)(C) of such Act is amended by adding at the 
     end the following new subclause:

       ``(IV) Special rule for 2004 and 2005.--For plan years 
     beginning in 2004 or 2005, notwithstanding subclause (I), the 
     rate of interest used to determine current liability under 
     this subsection shall be the rate of interest under 
     subsection (b)(5).''.

[[Page 24311]]

       (3) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such 
     Act is amended by adding at the end the following new 
     subclause:
       ``(V) In the case of plan years beginning after December 
     31, 2003, and before January 1, 2006, the annual yield taken 
     into account under subclause (II) shall be the annual yield 
     determined by the Secretary of the Treasury on amounts 
     conservatively invested in long-term corporate bonds for the 
     month preceding the month in which the plan year begins. For 
     purposes of the preceding sentence, the Secretary of the 
     Treasury shall determine such yield on the basis of one or 
     more indices selected periodically by the Secretary, and the 
     Secretary shall make such yield publicly available.''.
       (b) Internal Revenue Code of 1986.--
       (1) Determination of permissible range.--
       (A) In general.--Clause (ii) of section 412(b)(5)(B) of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subclause (II) as subclause (III) and by inserting after 
     subclause (I) the following new subclause:

       ``(II) Special rule for years 2004 and 2005.--In the case 
     of plan years beginning after December 31, 2003, and before 
     January 1, 2006, the term `permissible range' means a rate of 
     interest which is not above, and not more than 10 percent 
     below, the weighted average of the rates of interest on 
     amounts conservatively invested in long-term corporate bonds 
     during the 4-year period ending on the last day before the 
     beginning of the plan year. Such rates shall be determined by 
     the Secretary on the basis of one or more indices selected 
     periodically by the Secretary, and the Secretary shall make 
     the permissible range publicly available.''.

       (B) Secretarial authority.--Subclause (III) of section 
     412(b)(5)(B)(ii) of such Code, as redesignated by 
     subparagraph (A), is amended--
       (i) by inserting ``or (II)'' after ``subclause (I)'' the 
     first place it appears, and
       (ii) by striking ``subclause (I)'' the second place it 
     appears and inserting ``such subclause''.
       (C) Conforming amendment.--Subclause (I) of section 
     412(b)(5)(B)(ii) of such Code is amended by inserting ``or 
     (III)'' after ``subclause (II)''.
       (2) Determination of current liability.--Clause (i) of 
     section 412(l)(7)(C) of such Code is amended by adding at the 
     end the following new subclause:

       ``(IV) Special rule for 2004 and 2005.--For plan years 
     beginning in 2004 or 2005, notwithstanding subclause (I), the 
     rate of interest used to determine current liability under 
     this subsection shall be the rate of interest under 
     subsection (b)(5).''.

       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to years 
     beginning after December 31, 2003.
       (2) Lookback rules.--For purposes of applying subsections 
     (l)(9)(B)(ii) and (m)(1) of section 412 of the Internal 
     Revenue Code of 1986 and subsections (d)(9)(B)(ii) and (e)(1) 
     of section 302 of the Employee Retirement Income Security Act 
     of 1974 to plan years beginning after December 31, 2003, the 
     amendments made by this section may be applied as if such 
     amendments had been in effect for all years beginning before 
     such date.

  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner), the 
gentleman from California (Mr. George Miller), the gentleman from 
California (Mr. Thomas), and the gentleman from Michigan (Mr. Levin), 
each will control 15 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Boehner).


                             General Leave

  Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on H.R. 3108.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. BOEHNER. Mr. Speaker, it was my understanding that the Committee 
on Ways and Means would control the first 30 minutes of debate on H.R. 
3108, but considering that the chairman is not here as yet, let me, 
under my 15 minutes, yield myself such time as I may consume.
  Mr. Speaker, we have a pension underfunding crisis in this country; 
and it has significant implications on the retirement security of the 
American workers. This chronic underfunding crisis we face among 
traditional defined benefit pension plans, the type that guarantees 
workers a set monthly benefit when they retire, is jeopardizing the 
pension benefits of millions of American workers who have worked all 
their lives for a safe and secure retirement.
  The committee hearings we have conducted on this issue, which have 
included a joint hearing with the Committee on Ways and Means, 
demonstrated the critical nature of this problem and the need for a 
solution that will give workers a renewed sense of confidence that 
their pension savings are on a sound financial footing. This is 
precisely why I was joined by the gentleman from California (Mr. 
Thomas), the gentleman from California (Mr. George Miller), the 
gentleman from New York (Mr. Rangel), the gentleman from Texas (Mr. 
Johnson), who chairs our subcommittee, and the gentleman from Ohio (Mr. 
Portman), my good friend and colleague, in producing legislation to 
address this underfunding problem.
  The Pension Funding Equity Act, the bipartisan bill to be considered 
today, would protect the retirement benefits of millions of American 
workers in the short term while committing Congress to immediately 
proceed with efforts to identify permanent long-term solutions to this 
underfunding crisis.
  This underfunding crisis has manifested itself in several ways. The 
termination of large underfunded pension plans in the steel and 
airlines industries, for example, has led to growing anxieties about 
the financial condition of the Federal Pension Benefit Guarantee 
Corporation and its ability to ensure the pension benefits of American 
workers across the country. Those concerns were sufficient to lead the 
General Accounting Office in July to include the PBGC on its list of 
high-risk programs that require increased Federal scrutiny because the 
PBGC's mounting deficit had grown to $5.7 billion, the largest in 
history.
  To make matters worse, the PBGC recently announced that there are 
some $80 billion in unfunded pension benefits looming on the horizon 
among financially weak companies, pension benefits that may ultimately 
have to be paid by the PBGC; and this poses a serious question of 
whether a taxpayer bailout of the PBGC would be necessary if the 
alarming trend of underfunded pension plans and company plan failures 
continue.
  One of the several reasons that defined benefit plans are in 
financial jeopardy is because the interest rate used by employers to 
calculate the amount of money they must set aside in their employee 
pension plans, the interest rate on the now discontinued 30-year 
Treasury bonds, has been at artificially low levels, therefore, 
inflating plan funding liabilities.
  Congress enacted a temporary fix in March of 2002 by allowing 
employers to use a higher interest rate. But because this fix expires 
at the end of 2003, there is an urgency on the part of employers, 
unions, and workers to address this issue because of a growing 
consensus that this problem is putting the pension benefits of American 
workers at risk.
  The bipartisan Pension Funding Equity Act represents a responsible 
short-term approach that would replace the 30-year Treasury interest 
rate with a blend of corporate bond index rates for 2 years through 
2005. If Congress fails to provide a pension funding solution by the 
end of 2003, the benefits of millions of workers could be jeopardized.
  Strengthening the funding of defined benefit pension plans in the 
short term will reduce the likelihood that the PBGC will have to step 
in and pay benefits to underfunded plans. Moreover, employers who are 
making major short-term financial decisions need greater certainty to 
make key decisions about how to allocate scarce resources. Doing 
nothing could jeopardize employers' willingness to continue the defined 
benefit programs that provide stable and secure pension benefits to 
workers during retirement.
  The act before us today would help ensure the financial integrity of 
America's defined benefit plans in the short term while Congress takes 
a broader look at the defined benefit system and considers permanent 
solutions to the pension underfunding problems that are jeopardizing 
the retirement security of America's working families.
  I again want to thank my colleagues, the gentleman from California 
(Mr. Thomas), the gentleman from California (Mr. George Miller), the 
gentleman from New York (Mr. Rangel), the gentleman from Texas (Mr. 
Johnson) and the gentleman from Ohio (Mr.

[[Page 24312]]

Portman) for working together in a bipartisan manner on this bill. I 
look forward to continuing to work with them and the administration as 
we move ahead, and I urge my colleagues to support the bill we have 
before us.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker, I rise in support of H.R. 3108, the Pension Funding 
Equity Act. This bill provides short-term relief to avert what 
otherwise might be an imminent pension crisis for American businesses 
and workers.
  I want to thank the cooperation of the gentleman from Ohio (Mr. 
Boehner) for his work on this committee, the gentleman from California 
(Mr. Thomas) and the gentleman from Michigan (Mr. Levin) and others for 
their support of this effort.
  Pension plan funding requirements are tied to projected rates of 
investment return based upon 30-year Treasury note bills. In 2000, when 
the U.S. was running a budget surplus, the Clinton administration 
decided to retire the 30-year note. For that reason, we are now 
inserting that rate.
  We expect the new Treasury rate to be slightly higher than the 
current rate, a rate which also will give employers a significant 
amount of pension funding relief in the midst of what remains a weak 
economy. Even though the additional pension fund flexibility will 
result in reduced pension funding for 2 years, it is our expectation 
that American businesses will use this time to shore up the resources 
and not terminate or default on their long-term pension promises.
  During this time the Bush administration and the Congress must 
seriously consider a broader array of pension funding retirement 
security reforms that will more permanently protect and secure the 
retirement promises made to millions of American workers and retirees.
  The threats to our long-term retirement security are real and they 
are severe. Workers are justifiably scared about their retirement 
security. The Bush administration and the Congress have done very 
little to protect workers' pensions and, in fact, they sometimes have 
acted to undermine retirement security. As soon as Congress passes this 
bill we need to start the hard work of meaningfully safeguarding 
workers' pensions.
  The crisis we address today is not new. In fact, for over a year the 
Bush administration repeatedly ignored our urgent request to wake up to 
the serious problems of pension underfunding. I wrote the 
administration in July of 2002 to take action when pension deficits 
skyrocketed from $26 billion to over $100 billion. It failed to act.
  Now, over a year later, the problem is substantially worse. The 
Pension Benefit Guarantee Corporation now says that pension plans are 
$400 billion in the red nationally and the largest liability in history 
and that PBGC itself is reporting a $5.7 billion deficit as of July 31.
  The General Accounting Office is so concerned that it has placed PBGC 
on its list of Federal programs that are at high risk of failure. The 
administration and Congress' failure to take decisive action on 
pensions, their failed economic policies and neglect of our 
manufacturing industries and the failure of some companies to honestly 
estimate their pension liabilities have together precipitated one of 
the largest underfunding of private pensions in history.
  Today, hard-working Americans are taking it on the chin. Over 3 
million private sector job workers have lost their jobs since 2001, and 
many of those jobs will not return. Workers in manufacturing sectors 
see their jobs vanish overseas and their industries ignored by this 
administration's economic policies.
  Working families have already lost billions of dollars in 
irreplaceable life savings in their 401(k) plans as the stock market 
crumbled and corporate abuse ran rampant.
  The pensions of millions of Americans are threatened by the 
administration's ``cash balance'' plan proposal and may cost older 
workers up to half of their expected pension benefits.
  Today we see shenanigans in the mutual fund industry where so many 
millions of Americans have parked their pension fund share savings 
plans to secure their future retirement. We now see inside trading, 
trading by the big boys and sending the cost to those families that 
have put their money in many of these mutual funds. Some of the biggest 
companies that PBGC has taken over and put on the pension watch list 
have been able to exploit pension rules riddled with loopholes and 
escape hatches. Over the past few years companies have been permitted 
to publish their annual reports, rosy financial pictures about their 
pensions, while at the same time running plans into the ground through 
reductions and freezes on pension contribution.
  Conflicts between company management's push for the bottom line and 
the plan's obligation to protect participants and workers clearly 
compromise safe and sound pension practices at many companies.
  Worse still, current law allows the plan's real financial condition 
to be kept secret from the workers and investors. This failure of 
accountability and transparency has eerie similarities to the Enron 
Corporation and the debacle of that corporation when its CEOs and its 
executives kept secret the status of the public health plan from the 
employees while they jumped ship and rank and file were left to do the 
best they could.
  The gentleman from Texas (Mr. Doggett) and I have introduced 
legislation to open up those reports, referred to as the 4010 forms, to 
public scrutiny. There must be transparency and accountability for 
billions of dollars promised to hard-working employees. The 
administration now says it supports this publication of these secret 
reports, but the Congress so far has yet to join in the effort and ask 
for their publication.
  The administration must get serious about pension reform. The 
retirement security of millions of Americans depends upon timely 
actions. What we do here today is important to provide this relief. 
Hopefully, the companies will use this as the opportunity to shore up 
their pension obligations. But we must understand that the American 
people's anxiety about the future of the retirement security is highly 
justified in light of this administration's and Congress's failure to 
seriously address the problems in our pension system.
  We look forward to using this opportunity to make sure that we can 
address those pension concerns of the American workers in the 2 years 
time that this legislation buys us.
  I am heightened in my expectations by the discussion that we had in 
our Committee on Education and the Workforce where the chairman said 
that he wanted to use this time to do an in-depth look at the current 
pension system and come up with remedies that are necessary to secure 
that system both for the employers and for the employees. I hope that 
we use that time wisely, and I would ask that my colleagues support 
this legislation.
  Mr. Speaker, I yield my remaining time to the gentleman from Michigan 
(Mr. Levin).

                              {time}  1115

  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of H.R. 3108, the Pension 
Funding Equity Act before us. And I do so because of the very concerns 
that were just raised by my colleague from California (Mr. George 
Miller) and that is this will strengthen and define benefit plans in 
this country.
  I will remind the gentleman that this Congress did pass, the House 
passed legislation after the Enron scandal to be sure that workers 
indeed had more options for diversification and to further protect 
those who are in 401(k)s and in plans like the Enron plan. That 
legislation is currently in the other body, but we do hope we can act 
on that yet this year.
  I also would agree with the gentleman that we need to go even further 
with regard to looking at the defined benefit area. That includes 
looking at the funding rules. It obviously includes looking at the 
issue of what the discount rate ought to be. Today, we have

[[Page 24313]]

before us a short-term fix for that problem, but it is only for 2 
years. It also means we need to look, I believe, at other issues 
connected with pension accounting and with PBGC, the Pension Benefit 
Guarantee Corporation.
  But having said all that, the bill before us today is necessary, and 
it is very important. We need to put this in a little perspective, I 
think. First, there is no mandate for American businesses to offer 
pension plans, whether it is a 401(k) or other defined contribution 
plan or whether it is a defined benefit plan, such as those we are 
talking about today. Those guaranteed defined benefit plans, of course, 
are traditionally viewed as the most secure pension plans, and there 
are millions of Americans who depend on them, not as many as they used 
to be.
  Mr. Speaker, in fact, over the past 18 years, we have gone from 
114,000 plans insured by the PBGC, the Pension Benefit Guarantee 
Corporation, ultimately by the taxpayer, to today where we have roughly 
32,000 plans.
  In the last four years alone, we have lost over 20 percent of the 
contribution plans in this country that are defined benefit plans 
insured by PBGC. So there are not as many Americans today as there used 
to be depending on these plans, but I believe they are still an 
incredibly important part of our overall retirement security system, 
and we ought to do all we can here in Congress to stop the erosion of 
these plans.
  What does that mean? Without a system that is mandated, it means we 
need to offer better legislative incentives and encouragements for 
those plan sponsors and for those employees to be in these kinds of 
plans.
  I will also say, Mr. Speaker, that this legislation addresses one of 
the reasons that we have seen a reduction in plans. It also addresses 
one of the reasons that we are seeing, even this year, not termination 
of plans but freezing of plans, where there are no new participants 
admitted or where existing participants are not able to accrue 
additional benefits. There is a group out there, one of the consulting 
firms that does work in this area that has told me they believe up to 
20 percent of the plans are currently freezing or looking to freeze or 
scale back benefits in the near-term; 27 percent of the plans that they 
work with intend to offer less generous benefits for new hires. So we 
have got a serious situation here, and we do need to deal with it.
  Again, one of the reasons we have seen this deterioration of the 
defined benefit plan is because of the discount rate. I believe this 
was talked about earlier, but right now by using this now defunct 30-
year rate, we are telling corporations they have to overfund their 
plans. The 30-year Treasury measurement has been discontinued, 
therefore, the rate is too low; and, therefore, it is not an accurate 
measure of what the return will be on these plans over time; therefore, 
companies are being asked to come up with millions of dollars, in some 
cases over time billions of dollars, in funds that they do not believe 
are necessary in order to provide adequate benefits for workers. And at 
a time when the economy is not doing as well as it should be, 
particularly in the manufacturing sector, this is a real problem.
  It is very important to come up with what we view as an accurate 
measure for this discount rate. In other words, what rate companies 
have to use with regard to their contributions to their plans and with 
regard to the premiums they pay to PBGC. That is what this debate is 
about today.
  I am delighted by the fact that it is a bipartisan discussion. I am 
delighted by the fact that we have bipartisan cosponsorship of this 
short-term fix for this problem. What we are saying is that instead of 
using this defunct 30-year Treasury measurement, which again is 
outdated, that instead we ought to use a more accurate measure which 
would be a long-term, conservatively invested corporate bond rate to be 
chosen by the Department of Treasury. They would choose which corporate 
bond conservative indexes to use. The corporate bond indices which 
would be chosen would not be up to us, but we would be establishing 
here, legislatively, that that ought to be the rate going forward.
  This is a huge victory because at least now we are telling those plan 
sponsors out there, gee, if you want to stay in this defined benefit 
area or for somebody maybe who is looking to get into the defined 
benefit area, there will be a more accurate measure, rather than, 
again, forcing companies and plan sponsors to overinflate their 
contributions and their premium payments. Rather, it will be an 
accurate measure, based on something you can predict which is what is 
the long-term corporate bond rate, again, determined by the Treasury 
Department based on indices.
  That is where we are today. It is extremely important that we move 
forward with this legislation to give companies a little bit of 
predictability and certainty, at least over the next two year, as to 
what will be their liability.
  Personally, I would have strongly preferred that we would go beyond 2 
years. I think 3 years was a minimum that we should have gone. But this 
is something we worked at, again, on a bipartisan basis, given the 
balancing of interests here between the PBGC, the Pension Benefit 
Guarantee Corporation, their liabilities and concerns, which is 
ultimately the taxpayer, given the concerns of the employees and having 
job security and having pension security because this relates to jobs, 
as well as pensions, given that these contributions affect the bottom 
line of these companies, and given the need for us to be sure that you 
have enough incentive to keep plan sponsors in these plans. So this is 
a two-year period within which we go to a better discount rate.
  During that time period, it is explicit in what we are doing here 
today, that this Congress will be getting busy in looking at these 
bigger issues. And they have to do, again, with the pension funding 
rules, with accounting rules, working with the PBGC, working with 
Treasury and working with outside groups. After all, those who are 
making decisions as to whether to offer pensions day to day, whether to 
freeze or not, whether to go to some sort of a convention, perhaps to a 
cash balance plan, those are people we need to hear from.
  Congress can come up with what we think are great ideas, but if they 
do not work in the real world, who gets hurt in the end? It is the 
employees who do not have that guaranteed benefit that is so important, 
such an important part of our overall retirement security plan in this 
country.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEVIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of this temporary solution to a very 
serious pension financing problem. I hope it can become law quickly.
  Although this is not the permanent solution, protecting both workers 
and their employers that I had hoped for, it is far better than other 
options being considered today. If Congress does not act, starting in 
the next plan year, companies will have to contribute more money to 
their defined pension benefit plans than will likely be needed to pay 
their pension obligations. That will harm business and labor alike.
  Businesses would be forced to lock away resources that could be used 
to upgrade plants, hire workers and build for the future. Workers would 
have to accept reduced wages or reduced future benefit pension 
benefits. Although this rate adjustment may seem technical to some, in 
reality, it is a critical part of the solution to the manufacturing and 
job crisis which will require more action by this Congress and by the 
White House than new titles for bureaucrats or encouraging speeches.
  I want to remind my colleagues of just how serious the crisis is for 
workers and their families. Over $2 trillion in tax cuts have helped 
move this Nation from substantial Federal budget surpluses to huge 
deficits without creating jobs or overall increasing income for 
families. For the past 2 years, median income has dropped and poverty 
has risen. An average of 250,000 jobs per month were created during the 
Clinton administration, and in the Bush administration an average of 
80,000 jobs a month are being lost. It would take us

[[Page 24314]]

nearly a year to create enough jobs to replace the 3 million jobs lost 
and also account for population growth, even if we created over 500,000 
jobs a month, the high under the Clinton administration.
  Unfortunately, the Republican leadership in Congress and the Bush 
administration decided to wait and see about the economy and did not 
view the crisis like it was, including this pension issue. Rather than 
begin work on a consensus solution immediately after Congress passed a 
temporary fix 2 years ago, the Bush administration waited a year and a 
half, until the temporary rate was about to expire to unveil a 
controversial yield curve formula. It would disproportionately increase 
pension costs for already struggling manufacturing companies.
  At the same time, leaders in this House initially delayed action on 
this matter by holding the rate correction hostage to action on an 
expensive and controversial package.
  I hope this bipartisan action on pensions will be quickly followed by 
action on another bipartisan effort, the Rangel-Crane-Manzullo-Levin 
bill. It would provide a needed tax cut for manufacturers who produce 
in the United States of America. Also needed is an extension of 
unemployment benefits for those still out of work through no fault of 
their own, millions of people, and other real actions specifically 
targeted to help turn this economy around.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Texas (Mr. Sam Johnson), a distinguished member of the 
Committee on Ways and Means, also chair of the subcommittee of the 
Committee on Education and the Workforce on Employee-Employer 
Relations.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I appreciate the remarks of 
the gentleman from Ohio (Mr. Portman), as well as those on the other 
side.
  Mr. Speaker, I rise today in support of Pension Funding Equity Act. 
It is long past time that we act on this important issue. I have even 
had people today come and tell me they want to work longer, so the 
Pension Benefit Guaranteed Corporation, which is a taxpayer funded 
entity, can fund them with more money. That is wrong.
  Traditional pension plans provide financial security for millions of 
retirees and for today's workers. However, in order for employers to 
provide this type of financial security, the companies that sponsor 
these plans need some certainty with respect to the laws that govern 
them.
  Two years ago the Treasury Department stopped issuing the 30-year 
Treasury bonds. That provided the interest rate benchmark for pension 
plans to measure their earnings. Since then, we have provided a stop-
gap interest rate, and that stop-gap law is set to expire, and we are 
now coming forward with another temporary solution. The issues we are 
dealing with are complex and with roughly $350 billion of unfunded 
pension promises looming over the Pension Benefit Guarantee 
Corporation, taxpayer funded, this is a high wire act without a safety 
net for American taxpayers.
  I support moving forward with using the index of high-quality 
corporate bonds as the new benchmark to measure pension funding levels. 
This interest rate will better approximate what a conservatively 
invested pension plan is likely to earn in its portfolio. I am 
disappointed, however, along with the gentleman from Ohio (Mr. 
Portman), that the bill we are debating only replaces the 30-year bond 
rate for purposes of determining how well-funded a pension plan is. We 
are continuing the fantasy of using a 30-year Treasury bond rate for 
purposes of determining lump-sum calculations.
  The problem with ignoring the lump-sum calculations and using the 
defunct interest rate is that it provides a huge windfall to near-term 
retirees in transitional pension plans, while unjustifiably robbing 
everyone else in the pension plan. It also leaves gaping holes in 
pension funding that either must come from corporate earnings or these 
deficits must be turned over to the PBGC, at taxpayer expense, for 
payment.

                              {time}  1130

  For Congress to ignore the lump sum side of this occasion means that 
we are collaborating and strategically undermining pension plan 
funding. Again, at a time when the pension insurance program is facing 
$350 billion in plan underfunding, I cannot be silent. We must protect 
the taxpayer.
  I will support this bill today in order to get it to conference with 
the Senate, but we must replace the 30-year Treasury bond rate, and we 
must do it now.
  Mr. LEVIN. Mr. Speaker, I yield 7 minutes to the gentleman from 
Maryland (Mr. Cardin), and I ask unanimous consent that the gentleman 
from Maryland (Mr. Cardin) be able to control the remainder of the time 
on this side.
  The SPEAKER pro tempore (Mr. Latham). Is there objection to the 
request of the gentleman from Michigan?
  There was no objection.
  Mr. CARDIN. Mr. Speaker, let me thank the gentleman from Michigan 
(Mr. Levin) for yielding me this time, and let me point out from the 
outset that each Member who has spoken on this particular issue I have 
worked with on pension reform legislation, and we have worked together 
to try to increase the security for retirees. We share a common 
objective, and that is to provide more pension security for America's 
workers and for all individuals.
  I have many concerns about the legislation we are considering today. 
I feel compelled at least to mention some of these concerns.
  First, I am pleased that the legislation incorporates a replacement 
for the 30-year Treasury, which is a corporate bond mix which was 
included in the Portman-Cardin legislation. The Portman-Cardin 
legislation, that I have worked on with my good friend from Ohio (Mr. 
Portman), who is managing the time on the other side of the aisle, the 
two of us have worked together and developed a process that is not just 
bipartisan. It is a process that uses the procedures here about 
hearings and listening to all parties. It works with all stakeholders, 
tries to work consensus. As a result, we have been successful in 
enacting some very important legislation.
  I regret that that process was not used in the legislation before us. 
It certainly does not represent a consensus among the stakeholders. So 
let me tell my colleagues the problems as I see in this legislation.
  First, I have heard my good friend, the gentleman from Ohio (Mr. 
Boehner), and the gentleman from California (Mr. George Miller) talk 
about underfunded plans; and, yes, there are underfunded defined 
benefit plans. There is no question about that, but using an accurate 
interest assumption will not make the underfunding situation worse. In 
fact, it will help the PBGC because it will encourage companies that 
are properly funded to remain in the defined benefit world. It actually 
helps the plans using an accurate interest assumption. So why are we 
afraid to enact a permanent replacement for the 30-year Treasury?
  Defined benefit plans are the best security for American workers. 
They have guaranteed benefits that they know they will receive when 
they retire. They do not have to worry about the market going up or 
down. It is guaranteed. The company puts money on the table. It 
provides in almost all cases annuitant retirement so that an individual 
has income and is not tempted to take out their retirement in a lump 
sum, spend it and not have it for their own retirement needs. It is the 
one form of retirement that we all should be here today to try to 
encourage more, and as the gentleman from Ohio (Mr. Portman) pointed 
out, we are seeing a hemorrhaging of these plans. They are terminating, 
they are converting, they are freezing their contributions.
  So what does this bill do in order to help the situation? It provides 
a 2-year, and a 2-year fix only, on a 30-year Treasury that does not 
exist. My concern is that because it does not provide the necessary 
predictability to companies that have to make a decision,

[[Page 24315]]

whether they are going to continue these plans or not, that many plans 
will, in fact, convert or freeze and many companies will not even look 
at starting defined benefit plans.
  The gentleman from Michigan (Mr. Levin) said that we should not 
require companies to put more into their plans than is required. Yet, 
that is exactly what we are doing in many cases. So why would a company 
or its workers want to put too much money in a pension plan when it is 
only one part of a compensation package? There are so many issues 
dealing with adequate funding that have been left out of this bill that 
were included in the Portman-Cardin bill. Let me just go through some 
of the issues that are not included in this bill, in addition to the 
fact that we had a permanent replacement and this is only 2 years.
  It has nothing on mortality schedules. The mortality schedules are 
out of date. Treasury will acknowledge the mortality schedules are out 
of date. There are companies that are contributing too much; there are 
companies that are contributing too little. And yet we are going to do 
nothing on the mortality schedules in this legislation. We have multi-
employer plans that have been left out completely from this 
legislation. We have the 415 plans that are left out. These are small 
employers, small companies, and they are not going to get any relief 
under this legislation. That should have been corrected. It was in the 
original bill. The multi-employers are not affected by the 30-year 
Treasury replacement. They still have a problem. We do not deal with 
that.
  Assets moving to take us through good times and bad times are not 
included in the legislation. We know that the current interest 
assumptions encourage individuals to take their money out in lump sum. 
It discriminates against annuitant retirement. Accountants will tell my 
colleagues that. It discriminates against annuitant retirement, and it 
means more money is coming out of plans than perhaps would need to and 
add to.
  What it does is it makes the plans even more underfunded because we 
do not deal with the lump sum. Nothing in this legislation deals with 
the lump sum issues. And I think most tragically, I have heard my 
colleagues say, well, we are going to study these issues for the next 2 
years and then come back with something. Nothing in this bill provides 
any study. I am just afraid 2 years from now we will be back exactly 
where we are today, and we will not have made the progress and we will 
not have taken advantage of the opportunity this year to deal with this 
matter in a more comprehensive way.
  There is something good I can say about the bill. It does not 
incorporate the administration's proposal for a yield curve. I think 
that would have been disastrous. I am glad that is not legislation. I 
do agree with each of the prior speakers that this Congress has to act.
  So I am going to vote in favor of the bill today. I hope that as it 
moves through the process the other body will show more wisdom and we 
will be able to have a more comprehensive bill, a longer term than just 
2 years, covering more, at least a study, so that we are committed to 
dealing with all of these funding issues, and that we can get back on 
track to try to encourage companies to stick with it through defined 
benefit plans, because I think that is in the interest of American 
workers. We just do not want to see remaining this underfunded plan. We 
want these well-funded plans to continue to provide the benefits 
necessary for American workers, and I look forward to working with all 
my colleagues so that hopefully we can get back on track on important 
pension reform legislation.
  Mr. PORTMAN. Mr. Speaker, will the gentleman yield?
  Mr. CARDIN. I yield to the gentleman from Ohio.
  Mr. PORTMAN. Mr. Speaker, I thank my good colleague from Maryland for 
yielding.
  I want to echo the concerns he raised about this not being the more 
comprehensive approach that is needed. I also want to thank him for 
working with me and other Members on both sides of the aisle over the 
last 3 years in putting together more comprehensive legislation from 
which this corporate bond rate is taken, and that is the Portman-Cardin 
legislation my colleague talked about. It did go to the Committee on 
Ways and Means; it has not come to the floor yet. I do think we will 
have the opportunity to take up that legislation in the future because 
it does address not only some of the other issues connected with the 
defined benefit plans but also defined contribution plans.
  Mr. CARDIN. Mr. Speaker, I reserve the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Massachusetts (Mr. Neal) for purposes of a colloquy, a 
member of the Committee on Ways and Means.
  Mr. NEAL of Massachusetts. Mr. Speaker, I have a question and perhaps 
an answer might clear it up for those who are still trying to sort 
through this legislation.
  H.R. 3108, as introduced, included a provision that would have 
replaced the 30-year Treasury rate with a flat rate of 5.5 percent for 
purposes of the so-called section 415 limit. This provision was dropped 
in the amendment being considered today. Will this provision be 
considered as H.R. 3108 moves forward?
  Mr. PORTMAN. Mr. Speaker, will the gentleman yield?
  Mr. NEAL of Massachusetts. I yield to the gentleman from Ohio.
  Mr. PORTMAN. Mr. Speaker, I would say first it is an excellent 
question, and he raises a concern that I also have with this 
legislation.
  As my colleague indicated, section 415 of the Tax Code limits the 
maximum pension benefit that can be paid from a defined benefit plan. 
For 2003, that dollar limit is $160,000 annually paid in the form of a 
lifetime annuity. If that worker decides to take a lump sum benefit 
instead, this annuity, the 415 limit, would also be converted into the 
lump sum.
  Under current law, pension plans must use the 30-year Treasury rate 
to convert the 415 limit into a lump sum; and of course, because the 
30-year Treasury is not a good rate, as we have talked about today, and 
because it fluctuates a great deal, it is very difficult for businesses 
to determine with any amount of certainty how much money it has to set 
aside to pay lump sum benefits. Although volatility is never good, it 
is particularly problematic for small plans; and it is these 415 plans 
that are typically in smaller businesses.
  The legislation before us, H.R. 3108, would have allowed businesses 
to use a flat rate of 5.5 percent to convert the 415 limit. We think 
that was good policy. This provision would allow businesses, 
particularly small ones that I know the gentleman from Massachusetts 
(Mr. Neal) is concerned about, to fund their pension plans with more 
certainty.
  That provision was dropped in this amendment being considered today 
because it would have had an effect on lump sum distributions, and we 
did make an agreement with all parties that lump sums would not be 
affected one way or another by this short-term 2-year change in the 
discount rate. So that provision would have increased the 415 limit in 
some circumstances and reduced it in others. So it would have affected 
lump sums.
  Nonetheless, the provision is extremely important to small business. 
I appreciate the gentleman from Massachusetts (Mr. Neal) raising it and 
appreciate his support. I hope we can get it back in the bill, and I 
believe that we can as this bill moves forward when more permanent 
legislation is considered.
  Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman for 
yielding time to me.
  Mr. PORTMAN. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Wisconsin (Mr. Ryan), my colleague on the Committee on 
Ways and Means, a distinguished Member.
  Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentleman from Ohio 
for yielding me the time. I also thank him for all of his years of 
leadership on this issue. It is very, very important.
  I simply want to lend my support and echo the sentiments of the 
gentleman

[[Page 24316]]

from Maryland and the gentleman from Ohio on the fact that more does 
need to be done than what we are just doing here today. Few times have 
I had the opportunity to see an issue that is bipartisan, where labor 
and management can agree on things and come together to work for a 
common purpose for our country and for the workers of America. That is 
something that is important, and that is something that we need to 
advance, and that is why more needs to be done.
  Multi-employer plans, mortality table rate reform, those things are 
important; and we need to pass legislation to do that, but this bill 
right here does need to pass. This bill needs to pass because this is 
about jobs, and I know this is pretty complicated. It is a difficult 
issue to get our arms around; but what it basically means is if this 
bill does not pass, millions of dollars, billions of dollars that are 
coming through corporations because of the economic recovery that is 
beginning, that is under way, instead of creating jobs and hiring 
people will go into artificial pension payments, and that is not good.
  We have a recovery that we are trying to get under way. In many areas 
the recovery is under way. In manufacturing we still have work to do. 
The last thing we need to do is put a huge tax on the economic recovery 
of this Nation, and that is why it is important that the cash that is 
coming through these firms go to bringing these people back to work, 
expanding, buying new pieces of plant and equipment. We have all of 
these tax benefits that are now under way through the tax bills that we 
have passed to give incentives to manufacturers, to give incentives to 
employers to reinvest in their businesses, to expand, to rehire 
employees.
  It would be a horrible thing if all of the sudden we allow this 
reform to expire, and these plans, rather than expanding, buying new 
plant equipment, rehiring employees, have to dump it into these 
artificial payments. This needs to pass so the economic recovery can 
continue. Then we need to get together to work on these broader reforms 
sooner rather than later.
  I thank my colleagues for what they are doing.
  Mr. CARDIN. Mr. Speaker, I yield such time as he may consume to the 
gentleman from North Dakota (Mr. Pomeroy), my colleague on the 
Committee on Ways and Means.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me the 
time, and in particular, applaud him for the effort and research and 
expertise he has developed in this area, as well as our colleague, the 
gentleman from Ohio (Mr. Portman). Certainly, the Portman-Cardin 
legislation that appears unlikely to pass this session of Congress was 
a bill that advanced these considerations and did so in a more thorough 
way than the bill before us.
  I think it is important to have in perspective, really, what this is 
all about. Defined benefit pension plans are those retirement savings 
vehicles made available to employees at the workplace that give them a 
monthly annuity benefit every month in retirement. It is the retirement 
cash flow that they cannot outlive. That is what makes pensions so 
important. That is why, for many of us, we view pensions in the defined 
benefit context as a superior retirement benefit than the defined 
contribution 401(k) account where one saves up a little nest egg and 
hopes it lasts as long as they need it. The defined benefit pension 
plan guarantees cash flow for life.
  Agreeing then on the importance of defined benefit pension plans, it 
is also important to really look at how we are presently regulating 
them to determine whether we are doing it in an appropriate way. These 
are voluntary plans by the employer; and if we do not regulate them 
correctly, the employers will drop them.
  There is reason to believe something is terribly wrong with the 
existing regulatory system on pension plans because it is estimated by 
Watson Wyatt, the consulting firm, that 20 percent of defined benefit 
pension plans, one in five, have been frozen or canceled within the 
last three years alone.

                              {time}  1145

  Now, that is a staggering problem, and I really regret that the 
administration has not seized on this as an outright emergency in terms 
of employee benefits. One out of five pension plans frozen in the last 
3 years alone. So the economic record is not just jobs lost, it is also 
those who still have jobs but do not have pensions, and there are 
hundreds of thousands of them.
  One of the reasons causing this problem is the fact that in good 
times, we do not allow funding, and in bad times, we make them 
substantially increase the funding of these pension plans. Now, if you 
are an employer, what sense does that make? Times are good, you have a 
little cash, and you would like to plus up the pension plan to make 
sure you have enough in there, but you cannot under the law. On the 
other hand, in a recession, when you are trying to desperately turn 
things around, trying to grow your businesses, my colleague, the 
gentleman from Wisconsin (Mr. Ryan), just explained we make more money 
to come out of operations and be put into pension reserving. Not 
because the plan is about to go under, but that is just what the 
formula says. Well, that is a dramatically screwed-up format, and it 
places a government disincentive on employers to continue pension 
plans. We have to fix that.
  Unfortunately, what we have seen out of this administration, in my 
view, is only a focus on whether or not the reserving is enough 
relative to immediately liquid liabilities. Out of the Treasury 
Department come new formulas for increasing funding, making even more 
volatile the funding situation facing employers. Out of the Pension 
Benefit Guaranty Corporation, we have just seen a single focus. We need 
more funding because the plans are under water. Well, we have to keep 
this in perspective.
  The Watson Wyatt Research Group has estimated that comparing assets 
to liabilities, the plans are on average 4 percent under water. Four 
percent. That is all. And that is measured based upon today's stock 
market evaluations. Now, if the administration has any confidence at 
all in its economic plans forecasting growth, forecasting rising stock 
values, that 4 percent is going to disappear in an instant. That is not 
a problem. So it is wrong to put this inordinate pressure on employers 
to increase funding for their liabilities now. It really forces them to 
do what so many have done, and that is freeze or cancel the plans.
  Plans need certainty, and we only provide a little bit of certainty 
in the legislation before us; 2 years of continuing this interim fix. I 
wish it had been 5 years. I believe maybe even 7 years might have been 
appropriate. Two years, in my opinion, falls short of what will be 
required to give employers some relief. I am not at all sure, even if 
we pass this, that we are going to stop this trend of canceling the 
defined benefit plans. But certainly it is better than nothing, and I 
will be voting for it. It is far short of what we should have done.
  More work lies ahead, and I would point to two areas, in particular, 
that are going to need some attention. The airline industry, in 
particular, has been battered by terrorism and battered by a recession 
in the economy. They have also been battered, unfortunately, by the 
statutory reserving requirements on the pension plans. We should be 
able to address their unique circumstance. This bill does not do that. 
I believe they need relief, and was proud to work with my colleague, 
the gentleman from Michigan (Mr. Camp) on bipartisan legislation to get 
that done.
  Other plans, in particular those protecting the retirement interests 
of older workers, those places of employment that have, on balance, an 
older-age mix in their place of employment are going to potentially be 
very heavily hit on pension reform. And without giving them some 
assurance, I believe we are going to see the freezing of plans 
accelerate in these industries. Those who most need the protection, 
those plans with older workers, will be most likely to have the 
benefits cut or frozen or discontinued all together. We really have not 
addressed that in this legislation. I believe this is absolutely the 
fault of the United States Treasury

[[Page 24317]]

Department under this administration. We deserve more from them than we 
have received.
  I also believe that the Pension Benefit Guaranty Corporation has only 
looked with a green eyeshade at whether or not plans are solvent. The 
preceding director of the Pension Benefit Guaranty Corporation, an 
individual from my hometown, understood that the PBGC has two missions; 
one was making certain that the plans were adequately funded, but the 
other was continuing defined benefit pension plans in the workforce. 
And that is why some balance is needed. That is why the existing 
administration needs to incorporate more balance in looking at these 
issues, so that we look at them over a long time frame and in a way 
that is compatible with continuing defined benefit pension plans, or 
even increasing the number in the workforce, because it is that 
important.
  I thank, again, my colleagues for their responsible bipartisan work 
on this issue. Obviously, we have a lot more heavy lifting to do.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume, 
and I want to thank my colleague. He ended up by saying that he 
appreciates the responsible bipartisan work that has been done in this 
area. I want to thank him and the gentleman from Maryland (Mr. Cardin), 
who spoke earlier, and I also want to thank the gentleman from Texas 
(Mr. Sam Johnson), who we heard from a moment ago, and I want to thank 
the gentleman from Ohio (Mr. Boehner), who we will hear from in just a 
minute.
  This has been a bipartisan effort from the start, and it is something 
we need to continue to focus on. We need to do two things: One, today 
we need to do this short-term fix. Second, we need to look more 
comprehensively at these issues. First, at all the funding issues and 
other PBGC issues, some of which were raised by the gentleman from 
North Dakota (Mr. Pomeroy) and the gentleman from Maryland (Mr. 
Cardin), the lump-sum issues, and that will be done in the next 2 years 
if we are to meet our commitment under the legislation we are passing 
today.
  The second thing we need to do, though, is we need to look more 
comprehensively at retirement security generally, and that is what the 
Portman-Cardin legislation builds on, and, hopefully, we can continue 
to do that.
  Mr. Speaker, I yield back the balance of my time.
  Mr. CARDIN. Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Oklahoma (Mr. Cole).
  Mr. COLE. Mr. Speaker, I rise today to support H.R. 3108, the Pension 
Funding Equity Act. This bipartisan, shorted-term fix is important so 
we can develop a long-term solution to the challenges faced by both 
employers and employees who participate in defined pension plans.
  This interim solution is necessitated by an unusual combination of 
events: Record-low interest rates, although they are beginning to tick 
up; a stock market decline, although, frankly, that has now reversed 
itself and become a stock market rally; growth in the number of 
retirees; and discontinuation of the 30-year Treasury benchmark that 
previously provided the means used for determining funding liability.
  Unless we make this temporary adjustment in H.R. 3108, employers will 
face demands on their capital that will lessen their ability to create 
jobs and invest in our future. Workers will have less certainty in 
terms of their own pensions, and that, in turn, may well affect 
consumer spending and affect this economic recovery.
  H.R. 3108 provides the time necessary for the recovery generated by 
the Bush tax cuts, which is clearly underway, the continued generation 
of new jobs, and new increases in stock market values, which over time 
will ease some of the pension challenges that we face, and, frankly, 
ultimately provide a better environment in which to find a long-term 
bipartisan solution to this problem.
  I urge my colleagues to support H.R. 3108. It is simply the right 
thing to do.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield such time as she may 
consume to the gentlewoman from Tennessee (Mrs. Blackburn).
  Mrs. BLACKBURN. Mr. Speaker, I would like to thank our chairman for 
his excellent work on this issue, and I do rise today to support H.R. 
3108, the Pension Funding Equity Act.
  We have talked about all the reasons that have caused this, the stock 
market fluctuations, the growing retiree population, interest rates, 
and that the plan is underfunded. Over the past year, we have heard 
from so many of our constituents about the concern of the condition of 
the Pension Benefit Guaranty Corporation and concern with its weakening 
and with the deficit of $5.7 billion. What we have got, basically is 
$80 billion in unfunded pension benefits among financially weak 
companies that are looming on the horizon, those pension benefits that 
may eventually come to the PBGC and be their responsibility.
  This Pension Funding Equity Act creates a short-term replacement for 
the 30-year Treasury bond interest rate and allows us to work out a 
long-term bipartisan solution. I join my colleagues in urging all of 
our Members to support H.R. 3108 and support our constituents who are 
indeed very concerned about this issue.
  Mr. BOEHNER. Mr. Speaker, I am prepared to close on our side.
  Mr. CARDIN. Mr. Speaker, I yield back the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
  Let me thank all my colleagues on both sides of the aisle for their 
work in moving this very important piece of legislation to help 
strengthen the Pension Benefit Guaranty Corporation and, more 
specifically, to help strengthen defined benefit plans. Making this 
change in the 30-year bond rate to a corporate bond index rate will, in 
fact, strengthen a lot of defined benefit plans, single-employer plans. 
Multiemployer plans use a different index.
  There has been some discussion on the floor today about this fact 
that this is temporary, that it is only 2 years. Frankly, that is by 
design. Putting this in place we all know needs to happen because the 
current temporary fix is about to expire. It has been my intention, as 
the chairman of the Committee on Education and the Workforce, who 
shares jurisdiction with our friends on the Committee on Ways and 
Means, to continue our work on defined benefit pension plans, both 
single employer and multiemployer plans. There are long-term issues 
that have to be dealt with.
  Congress, over the last number of years, has kind of shoved this off 
and shoved it off. Allowing for a 3-year fix or a 4-year fix, in my 
opinion, provides far too much time. It gets people unengaged in the 
process, when, in fact, we need to stay with this difficult process in 
order to come up with a longer term solution.
  We have to walk a very fine line, as all of my colleagues know, in 
terms of getting the appropriate funding levels in many plans, securing 
the retirement security for millions of American workers, without 
unduly or unnecessarily pushing employers out of the defined benefit 
system. These are voluntary plans offered by employers to their 
employees. It is very critical, I believe, and others believe, that we 
find the right balance in terms of restructuring the regulatory system 
for how these plans operate and the contribution levels that need to be 
made.
  While others want to make changes, and we have heard some of the 
suggestions made on the floor today, to fix the lump-sum problem, to 
fix the mortality-rate issue, all of these issues in defined benefit 
plans are interrelated. And as you begin to pull on that string, what 
we do not want to have happen, and what usually happens around here, is 
that the law of unintended consequences jumps up and bites us.
  I know that our committee is going to take a very serious look at 
what needs to be done to improve the health of these plans, to ensure 
that the money is there to pay the benefits to American working 
families and to try to maintain some stability so that employers will 
continue to offer these plans. I suspect my colleagues on the Committee 
on Ways and Means will do

[[Page 24318]]

the same. It is my plan, Mr. Speaker, to have a bill through the House 
next year. And I do believe that this 2-year temporary fix will, in 
fact, keep pressure on us to do the heavy lifting that needs to be 
done.
  There have been calls for a commission to look at this. In all 
honesty, I do not know that we need a commission. What we need to do is 
the heavy lifting of legislating. And to legislate, we need to talk to 
people in the administration and in the real world about the kind of 
changes that need to be made in order to make sure that these systems, 
these defined benefit plans, are there for American working families 
and that they work properly and are funded properly.

                              {time}  1200

  Mr. Speaker, I intend in our committee to do the work that is 
necessary, and I believe our colleagues on the Committee on Ways and 
Means will do likewise. I urge Members to support the bill.
  Mr. McKEON. Mr. Speaker, I rise today to urge my colleagues to 
support H.R. 3108, the Pension Funding Equity Act. Two years ago, the 
benchmark interest rate used to determine various pension 
calculations--the 30 year Treasury Bond rate--was discontinued, but 
some employers have continued to use it to fund their defined benefit 
pension plans.
  The problem is that after the rate was discontinued, it reached 
historic lows and now no longer correlates with the rates on other 
long-term bonds, thereby artificially inflating its funding liability. 
This has justifiably left many employees concerned about the certainty 
and security of their defined benefit programs, which many Americans 
depend on for their retirement.
  Last year, my colleagues and I passed a temporary fix by allowing 
employers to use a higher rate to calculate their pension liabilities, 
but because this fix expires at the end of 2003, employers, unions, and 
workers are once again concerned that defined benefit pension plans are 
going to be jeopardized.
  Mr. Speaker, this is unacceptable. The lack of a long-term solution 
to the 30-year interest rate is putting worker and retiree benefits at 
risk. Taking no action now could jeopardize employers' willingness to 
continue their defined benefit programs that provide a stable and 
secure pension benefit to workers during retirement.
  Mr. Speaker, H.R. 3108 is by no means a permanent solution but it 
will provide a short-term replacement to ensure certainty and security 
for workers and employers while committing Congress to immediately 
proceed with efforts to identify a permanent long-term solution. I 
encourage my colleagues to join me in supporting this common sense 
legislation and voting in favor of the Pension Funding Equity Act.
  Mr. CASTLE. Mr. Speaker, during House consideration of H.R. 3108 I 
was in Iraq visiting U.S. troops and touring U.S. reconstruction 
efforts. Had I been here, I would have supported passage of H.R. 3108, 
the Pension Funding Equity Act of 2003.
  I support H.R. 3108 as a temporary response to a pressing issue that 
ultimately affects the retirement benefits of millions of American 
workers, their families, and beneficiaries. Today the House will 
protect the benefits of those workers who have a pension benefit under 
our defined benefit system.
  The Pension Funding Equity Act would replace the current standards 
that employers must use to determine their pension liabilities--the 30-
year Treasury bond interest rate--with a corporate bond index rate for 
2 years through December 31, 2005. The 30-year Treasury bond interest 
rate is set to expire this year, jeopardizing pension funds across the 
country. The bill gives the Treasury Department the flexibility to 
establish the discount interest rate based on a blend of corporate bond 
index rates. This change will provide employers with greater certainty 
and short-term funding relief and strengthen defined benefit pension 
plans workers in the short term while Congress takes a broader look at 
the defined benefit system as a whole and the issues that affect the 
retirement security of American workers. As we progress down the road 
of defining the long-term answer, the bottom line must be to enable 
businesses to fill their pension funds, and, more importantly, that 
they are fully funding them.
  As a Member of the House Committee on Education and the Workforce, as 
well as the House Committee on Financial Services, I have participated 
in hearings that highlight the plight of American workers, beyond 
defined benefit plans, who have suffered from a lack of retirement 
security. It has also become all too clear that addressing this issue 
is an extremely delicate and difficult task.
  It is imperative that this Congress work overtime to ensure today's 
workforce retire with the benefits they have spent their adult life 
building. I am committed to asking the difficult questions and pressing 
for the sometimes controversial answers. We are all aware of Enron and 
World Com, but we must look beyond these most recent crises. We must 
look at past documented instances of corporations using innovative ways 
to rob pension assets. For example, some have projected unrealistically 
high rates of returns to claim that the plan is overfunded, declare 
bankruptcy but set up a special bankruptcy-proof pension plan for top 
executives, and define employees as independent contractors. In asking 
these tough questions we will be able to give business the tools they 
need to create fair funds, absent any deceit. For the sake of the 
millions of workers who rely on the security of their retirement we 
must be tough on fiscal trickery and strong on pension protection.
  Mr. BOEHNER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Latham). All time for debate has 
expired.
  Pursuant to the order of the House of Tuesday, October 7, 2003, the 
previous question is ordered on the bill, as amended.
  The question is on engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. BOEHNER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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