Preservation of Defined Benefit Plans Act of 2005

Mr. Speaker, I offer a motion to instruct.

Mr. Speaker, I yield myself 5 minutes.

Mr. Speaker, as we just heard in the colloquy between the majority leader and the minority whip, there is expectation that a conference committee may conclude on the pension reform bill, and that is why I rise today because that bill may, in fact, be coming to the floor of the House of Representatives and to the Senate within the next week.

I rise to urge my colleagues to vote again to send a message to the conferees that they should not conclude this report until they provide for the protection of older workers who are facing the conversions to cash balance plans. That means older workers who the companies are now putting on notice that they will change their benefits, they will no longer realize what they had long anticipated, the benefits of a defined benefit plan, that they will now get a substitute plan for their current pension plan, what is called a cash balance plan.

Despite overwhelming votes in support of protecting older workers' pensions in the House and in the Senate, the Republican leadership plans to thumb its nose at older workers and exclude the vital transition protection. That means that many workers will lose hundreds of dollars a month in expected retirement benefits. Many of these workers will be in excess of 50 years of age, and it is highly unlikely they will be able to recover the loss of their retirement benefits, retirement benefits they have been counting on for many years, retirement benefits they have been counting on in exchange for their labor, that they signed a contract in exchange for their labor with their employers; and today, the Congress is getting ready to tell them we are sorry, we are not going to make the employers live up to their agreements, and we are not even going to provide a transition to you to soften the economic blow.

If this is permitted to happen, it is shameful and it is an abuse of power by the Republican leadership, arrogantly defying the clear wishes of Members of both the House and the Senate on behalf of very special interests that do not happen to be the workers of this country.

The conference language draft by the Republican conferees is a pension Trojan horse and allows companies to legally renege on their promises to workers who played by the rules, who were told that they could accrue benefits to retire, especially those who spent decades at the company.

Here is what AARP CEO William Novelli says about this backroom Republican deal for older workers. ``AARP is deeply troubled that members of the pension conference committee may be considering adopting language from the House bill that would severely undercut pension protections against age discrimination currently provided older workers under the Age Discrimination in Employment Act. We cannot support legislation that would undermine the age discrimination laws and permit the reduction of pension benefits for older workers, thus discouraging older workers from continuing to participate in the workforce. Our members, and older workers in general, care a great deal about these issues, and we will be informing them of the outcome of this action.''

The Senate passed its pension bill with these protections 97-2. And the House voted on these measures overwhelmingly in a motion to instruct earlier.

It also not only cuts cash balance, but it cuts the protections to the pilots. Pilots who are required under Federal law to retire at age 60 now take a double hit with their pensions going into the PBGC. Because they retired early, not that they wanted to retire, they are required under Federal law to retire early, but because they retired early, they take an additional hit on their pension, and this affects many, many airline pilots and is an unfair treatment to these individuals.

Again, the House and the Senate have voted twice to protect older workers in cash balance conversions. The House voted twice to protect airline pilots from unfair pension cuts at the PBGC.

This motion to instruct is about fundamental fairness to older workers, specifically for those older workers suddenly faced with cash balance conversions and for those airline pilots faced with federally mandated early retirement.

During the 1990s, hundreds of large employers switched to these cash balance plans, including IBM, CSX, Verizon, and the Federal Government. When we changed our pension plan back in the 1990s, we did this. Motorola, Dow Chemical, Federal Express, Wells Fargo Bank and Honeywell, they all made the decision to provide a transition and a protection for older workers, realizing that those older workers had an expectation of retirement benefit. That was not going to happen, but they would provide them some protection so they didn't take the full brunt of those changes.

It is the decent thing to do. It is what Secretary Snow did when he was at CSX. It is what he voted to do at Verizon. This is the decent thing to do for workers. The benefits to the companies are immense, even if they protect these older workers in this situation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentleman from New Jersey (Mr. Andrews).

(Mr. ANDREWS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 3 minutes to the gentlewoman from California (Ms. Woolsey).

Mr. Speaker, I yield 3 minutes to the gentlewoman from Ohio (Mrs. Jones).

Mr. Speaker, I yield 9 minutes to the gentleman from Vermont (Mr. Sanders).

Will the gentleman yield?

I think that is an important point. When the Federal Government made the decision to change to the TSP system, which is turning out to be a very successful system, we provided this kind of transition. What the conference committee is about to impose on the American working public no Member of Congress would impose on themselves. They would be asking for some kind of transition, some kind of hold-harmless so that people would be protected who are older, who have more years into the system, because they don't have the ability to gather other income.

And I think the gentleman makes a very important point that, once again, life is different inside of the Beltway than it is outside of the Beltway. And the people outside of the Beltway have a lot less ability to try to make up for that lost savings to manage their retirement.

I thank the gentleman for making the point. I continue to yield.

I just want to again thank him for the point that this pension bill cannot be considered in a vacuum. The very same people who are going to be punished as a result of companies that convert to cash balance that will not provide this kind of protection, they can do it voluntarily, but they will not, and many of them won't, and the gentleman has struggled with companies who thought that they didn't have to.

These are the same people that are getting their retirement health care benefits cut back, that are having trouble with or are going to have trouble with paying for prescription drugs. Today, people are continuing to work and people say to people, you know, just save more money.

Well, as we know, most people, the average American working person has a great deal of difficulty saving. And to now tell them to save, if you are 50 years old, according to the GAO, you will lose about $238 a month. If you are 40 years old, you will lose about $188 a month. If you are 50 years old, this has to be net savings that you are going to have to try to save. You'd have to save, before your retirement, a net $40,000, outside of your rent, outside of your house payment, outside of your kids, outside of everything else, if you could get 5 percent return on your money.

Where does the American family go to get that kind of money that Congress is about to take away from them? Where do they go?

Most families, both people are working. And if you are 50 years old, it is highly unlikely that you are going to go out and find a job that is going to replace this loss of savings.

So when people say, well, we can't guarantee the expectations of these workers. No, what we are guaranteeing is a contract that this worker made with the company and the company made with the worker. We understand the benefits and the changes for younger workers, and this isn't about being against cash balance plans. It is about fairness.

I yield to the gentleman.

The idea, again, the suggestion is somehow, when the Senate passed this, 97-3, and when we voted overwhelmingly in a motion to instruct to do this, that somehow you are trying to reserve the status quo. The fact is that CSX, a very successful railroad company, Verizon Telecom, the Federal Government, Motorola, Dow Chemical, Federal Express, Wells Fargo, these are not slacking companies. These are leaders in their industry. They all realized billions of dollars in savings. They also took care of their older workers. And that is what we are asking that this conference committee do.

You do not have to throw these older workers onto the wood pile. They can be protected. The company can realize billions of dollars over the life of the pension plans in savings that they can reinvest in their company, and they can change their pension plans. We just ask that you don't decimate older workers.

I yield to the gentleman.

The vote was 97-3.

It was 97-2.

Mr. Speaker, I reserve the balance of my time.

Let me inquire how much time I have left.

Mr. Speaker and Members of the House, I would hope that when this vote comes on Monday, that the House would, once again, reaffirm its obligation and its commitment to older workers in this country.

This is a defining moment for these workers. This is a defining moment about what kind of retirement many workers in this country who have been working for 20 or 30 years in a company, what kind of retirement they will have.

Will they have the retirement that was promised to them and that they have expected and that they have built their financial planning around, that they have built the decisions today about tomorrow around their families, their children, and others? That is really what this is about.

The gentleman is quite correct. They are quite close. They have been working very hard. It has been a one-party bill, but they have been working very hard, the Members of the House in this conference committee, and they are very close. They are just also very wrong. They are very wrong in how they treat the older workers of this country because, as we see from the GAO report, under the GAO report, under the plan that the Republicans want to bring to the floor, if the conversion plan is done the way it is allowed under the conference report, which will be Federal law, the average 50-year-old worker will lose about $238 in income each and every month of their retirement plan.

The question that most Members of Congress will not ask is, Where does that worker, where does that family, go to make up that income? Where do you go to earn the 40, the 60, the $80,000 you have to have over your retirement life to get that yield back? Most people cannot accumulate that kind of money in a 5- or 10-year period of time. So these workers who are under assault in terms of the retirement health care benefits, their retirement benefits, where do they go?

We know what the savings rate is. We keep telling America to save more. And the fact of the matter is most American families at the end of the month have very little left to save. It is simply not there. Can Congress be that insensitive to how most of America lives? Most of America is bombarded with advice from Money Magazine, from CNN, from Lou Dobbs, from all these people about how to save for your retirement. And they try. Some could do better. But for many families they are doing the best they can. But one of the bedrocks for many people in their fifties is knowing that they have a retirement plan that they thought they could count on. But the fact of the matter is when they pick up and read the business section of the newspaper, they read the headlines of the newspaper, they see that some of the biggest, most reliable corporations in the country are changing their pension plans. United Airlines just went into bankruptcy. Without any showing of desperate need, they just got rid of the plan for their employees. Talk to those fight attendants when you fly home tonight or you fly home tomorrow. Talk to those pilots and realize the extent to which their retirements have been devastated, absolutely devastated. But it has happened to people in all of the industries around the country.

And all that we are saying is follow the model by companies that have done it the right way, companies like Verizon, companies like Federal Express, companies like Wells Fargo Bank, Honeywell. There is a way you can do this and you can realize billions of dollars of savings, which are necessary. These plans are going to be changed, but they ought to be changed in a way that protects the older workers.

That is why the AARP, the American Association of Retired People, is so dead set against this provision. It recognizes the impact this is going to have on future retirees. It recognizes the impact it is going to have on current workers and on their ability to plan for their retirement.

They want to act like this is a carefully crafted pension plan and anybody who wants to suggest another alternative is only for the status quo and does not care about pensions.

The Senate voted 97-2 to treat these older workers right. It is the Republican leadership that has stepped in and twisted that away. We didn't get a chance to vote on that in the House. When I finally did get a vote after the bill passed, the House voted overwhelmingly to protect older workers.

Another class of workers who are at risk in this pension plan are the taxpayers. We now see that PBGC is telling us that current law is a better deal for the taxpayers than the plan they are coming up with to the tune of about $2 billion over the next decade.

Don't shake your head. It is right here. You guys had this information for months. We just had to get it under a FOIA agreement under your wonderful bipartisan arrangements.

So there is a lot to be concerned about with this pension plan. It is going to have a lot of bells and whistles, a lot of tax breaks. It is going to have more things than a monkey going to the circus. And a lot of people are going to vote for it. But what it is not going to have, it is not going to have protection for older workers. And Members of Congress ought to understand that when those older workers start to come to you, as their pension plans are dramatically changed by companies with no obligation to protect workers 50 and over, they are going to want to know where you were, and this is a vote which will tell them where you stand on this. And, hopefully, you will influence the pension conference, because this can be done. As we said, the Senate, after long deliberations on the pension bill, they voted 97-2 to do it the right way.

So I would hope that people would support this motion to instruct. I would hope they understand what this truly means to working people in this country and to their families and to their retirement.

It is a devastating picture when you meet your constituents who have lost their retirement, who have lost big chunks of their retirement, and they come up and they talk to you at the shopping center, they talk to you at the grocery store, they talk to you at a town hall, and they tell you what it means to their plans.

We were all stunned as a nation when pensioners got their plans wiped out and devastated by Enron. We called those people criminals. Here we call them legislators, because people are going to get a devastating hit on their pensions and we are going to say it is the law. There we said it was a crime. We said it was a crime.

You have plenty of time on your side.

You say it is a crime.

What are you doing to people? What are you doing to people?

You have controlled the conference. You control the White House. You control the House. You control the Senate. Control your time.

The fact of the matter is this is the same thing. We are making a conscious decision, a conscious decision, to rip away these pension benefits from these workers. And the most devastating thing about this decision is it is not necessary. You can have massive pension reform to the benefit of the employees, to the benefit of the employers, to the benefit of the shareholders, without devastating the older workers.

So why don't we do it right? Why don't we do it in a humane way? Why

don't we do it right, recognizing the situation that America's older workers find themselves in, people 50, 55, 60 years old? What are they going to do? Take a second job for their retirement? Maybe their spouse can go out and take a third job for their retirement?

That is not the way we should treat American citizens. That is not the way we should treat taxpayers. And that is not the way we should treat hardworking American families who simply do not have enough money to make up for this kind of devastating cut in their retirement.

I urge my colleagues to vote for the motion to instruct. It will be up sometime, I believe, Monday; and I would strongly encourage you to vote ``aye'' on this motion to instruct.

Mr. Speaker, I yield back the balance of my time.

No. Well, read the words back. Maybe we can clarify it.

I object, Mr. Speaker.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I rise today in strong support of the Miller motion to instruct, and I commend the gentleman from California for his leadership on this issue.

Mr. Speaker, the middle class in America today is under assault. Over the past 5 years, 5 million more Americans have slipped into poverty, 6 million have lost their health insurance, and nearly 3 million manufacturing workers have lost their jobs. The Republican leadership has refused to increase the minimum wage, $5.15 an hour, which hasn't been raised in nearly a decade, and is now at a 50-year low in terms of purchasing power.

And adding insult to injury, it is expected that next week we will be voting on a conference report that will allow large corporations to discriminate against their older employees by slashing their pensions up to half through cash balance pension schemes.

Mr. Speaker, this motion is our only attempt to say no. Age discriminatory cash balance pension schemes are wrong. We must protect millions of employees who have seen their pensions slashed by as much as 50 percent through age-discriminatory cash balance pension schemes. That is what this motion is all about.

Mr. Speaker, pension anxiety is sweeping the country. Millions of American workers who have worked at a company for 20 or 30 years, where promises have been made to them in terms of what their retirement would be, are now waking up to the fact that those promises are being reneged upon.

Unfortunately, over the past two decades, large corporation after large corporation have been breaking the retirement promises they made to their employees, and that is wrong. Some companies are declaring bankruptcy so that they can break their retirement commitments. Other companies are freezing pension plans in order to slash the retirement benefits of older workers.

And over 300 companies throughout this country have slashed the pensions of their employees through cash balance pension schemes, sometimes up to 50 percent.

Congress must tell corporate America in no uncertain terms that when they make a promise to workers about their pensions, they must keep that promise.

Mr. Speaker, last December, the House passed a so-called pension reform bill that was hundreds of pages long. Included in that bill was an obscure provision to legalize age discrimination in cash balance plans prospectively. No floor amendments were allowed to strike this provision or offer any alternatives to it. Members were forced to vote up or down on the entire bill.

But the Senate did the right thing. In its bill, they provided important protections for older workers who would be negatively impacted by cash balance schemes.

The Senate language is supported by the AARP, the AFL-CIO, the National Committee to Preserve Social Security and Medicare, the National Legislative Retirees Network, and the Pension Rights Center.

Today, just like we did in April, we have an opportunity to do the right thing for American workers. We can and should instruct the conference committee to adopt the Senate language on cash balance plans.

Mr. Speaker, there are some who support cash balance schemes. They argue that these plans benefit employees.

Well, a couple of years ago I asked the Congressional Research Service a simple question: What would happen to Members of Congress if their pensions were converted to a cash balance scheme? If it is so good for millions of American workers, clearly it must be good for the Members of Congress.

Well, shock of all shocks. Our Republican friends decided not to debate that issue on the floor of the House. And unless I am mistaken, they still do not want to convert Members' pensions to cash balance schemes, for good reason. Because if they did it, every Member would see a huge reduction in the pensions that they are looking forward to.

I would be happy to yield.

Let me just pick up and agree with the gentleman.

The CRS did a study on this issue: What would happen to congressional pensions if we went the direction of cash balance? Well, among other things, the Speaker of the House would not be too happy about this. His pension went down by 70 percent.

So, today, I would ask the opponents of the Miller motion this question: If cash balance plans are so good for American workers, why don't we go first and adopt them here?

Well, obviously, that is not going to happen. If it is not good for Members of Congress, it is not a good idea for millions of American workers. Let's support the Miller motion and stand for the rights of millions of American workers today.

I would yield.

Let me reiterate the point Ms. Woolsey made a few moments ago. We have people who have worked for a company for 20 or 30 years. During their careers, in many instances, they had offers to move elsewhere, but they said, no, I am going to stay here because I have a good retirement plan. And suddenly, for no fault of their own, that retirement plan is being pulled out from underneath them. They had dreamed of what their retirement would be. It is no longer. And they are 50 years of age. They are 52 years of age. Where do they go?

What was the vote in the Senate on this issue?

So overwhelmingly a bipartisan vote. Let's stand with the Senate. Let's protect American workers.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in opposition to this motion to instruct for two reasons, because of process and because of substance.

First, on process. As the pension conference draws to a close, the matter before us today is little more than a last desperate attempt by some to distract from the fact that we are on the verge of the most fundamental reforms to the private pension system in a generation. In fact, this is more of a motion to obstruct than it is a motion to instruct.

This kind of obstruction shouldn't surprise us, however. It has been going on for quite awhile. Let's not forget that those offering this motion were the same Members who could not even bring themselves to vote ``yes'' or ``no'' on the House pension bill when it was being considered by the House Education and Workforce Committee last summer. Rather, they voted ``present,'' acknowledging that they were, in fact, in the room.

While they attempted to politicize this issue, did they ever offer a comprehensive pension reform plan of their own? No. They just stood on the sidelines trying to obstruct our progress, just like they are today.

I also oppose this motion because of its substance. This pension reform debate is and always has been about the massive underfunding in worker pensions, about the need to change the status quo. This obstructionist motion to instruct does just the opposite: It essentially preserves the status quo and even makes the situation worse.

First, on hybrid plans. This motion to instruct essentially codifies benefit expectations in hybrid plans, tying the hands of those who voluntarily offer them. To require a guarantee of minimum benefits before participants have actually earned them sets a very bad precedent. Let's not forget that hybrid plans are the sole bright spot in the defined benefit world. If not for these plans, the defined benefit system would be withering on the vine. To place restrictions on a system that actually provides more generous benefits for the majority workers than do traditional plans would be neither reasonable nor responsible.

And on the airline pilots provision, again, this would make matters worse for the pension system and the American taxpayer. The motion to instruct would actually increase the deficit of the PBGC even though this pension reform process is designed to save the agency from insolvency and taxpayers footing the bill for a massive bailout. It is estimated that if this provision were applied, the cost to the PBGC for all pilots' plans would probably exceed $2.5 billion over the next 10 years. That additional debt would be borne by all the other companies that sponsor and fund defined benefit pension plans. Again, this is neither reasonable nor responsible.

Mr. Speaker, our ultimate goal is to ensure our defined benefit system remains viable for generations to come. This motion to instruct would undermine that effort. It is as simple as that. I urge my colleagues to vote ``no'' on the motion to instruct and reject this attempt to obscure progress on pension reform.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I continue to reserve.

Mr. Speaker, I find it absolutely fascinating to listen to the speakers, one extolling the virtues of cash balance plans, and the other condemning them.

I believe that the gentleman from California has the right to close, so at this time I would like to yield the balance of our time to the chairman of the Education and Workforce Committee, the gentleman from California (Mr. McKeon).

Mr. Speaker, I thank my colleague for his leadership on this motion to instruct.

I agree we need to protect the pension benefits of airline pilots, as well as ensure that when an employer converts from a traditional defined benefit plan to a cash balance plan, that their workers receive their full benefits.

We also need to draft rules that protect older workers because they can be vulnerable during such conversions. But we must also address the issue of providing retroactive legal certainty to 1,100 employers whose cash balance and hybrid pension plans are unfairly caught in limbo.

Addressing retroactivity is important to the retirement security of thousands of American workers that gain from these hybrid pensions which are defined benefit plans. It has been for 7 years that employers of sponsored cash balance and other hybrid plans have been caught in a web of legal uncertainty.

Beginning in 1999, the Internal Revenue Service felt it necessary to temporarily stop issuing determination letters for converted hybrid plans, and litigation through our court system has left the legality of all cash balance plans up in the air.

In my congressional district I have four major employers that offer pension benefits to their employees through either a cash balance or other hybrid pension plan. Some of these plans were acquired through merger and acquisition, while some were adopted through conversion.

These employers treated their employees fairly, giving them the choice as to whether or not to convert their plans and ensuring that workers' benefits were not diluted. And these four employers are not alone. There are a lot of good actors out there.

According to a recent AARP-funded study, 23 of the 25 largest cash balance plans, in other words, 92 percent, provided transition protections for their older employees when converting from defined traditional plans to cash balance plans.

Nonetheless, four employers in my district, as well as 1,100 others, are caught in a web of legal uncertainty. And we are in an era where companies are eliminating pension plans, including hybrid plans.

Failing to fix this problem will only perpetuate that trend. A cash balance plan is a defined benefit plan, and it is the future of our defined benefit system.

It is not correct that others have not offered alternatives. I specifically introduced H.R. 4274 to address this specific issue.

I ask all of my colleagues to pay attention to the issue. Cash balance plans are the future plans. They are portable. It is a way a worker can go from one place to another.

We need to protect older workers, and we need to make sure that this motion to instruct is passed.

I thank Mr. Miller for his leadership on this issue.

Mr. Speaker, I rise in support of the motion to instruct; and I hear my friend's comments about process and responsibility. This has been the most irresponsible pension conference process one could imagine.

Mr. Speaker, I was sent here, as were my colleagues, duly elected by my constituents to speak for them. I was appointed by the leadership of my party to participate in this conference to speak for all of our constituents. There have been many meetings; we have been invited to none. There have been many discussions; we have participated in none.

So if you want to talk about a responsible process, let's talk about one where every person duly elected to represent his or her constituents has a chance to do so. This process is a travesty.

Now, on to the substance.

The words ``cash balance plans'' are a little hard to understand. They are theoretical, they are abstract; but they are very easy to understand if you are 50 years old and you have been working somewhere for 25 years and you are planning your retirement assuming you are going to get a certain amount every month in the mail as a check that you have earned.

And then, one, the HR department comes in and says we have changed our mind. Instead of getting a check for a certain amount every month that you have earned, we are going to give you a lump sum instead, and assume that when you invest it, you will get about the same amount.

Mr. Miller's motion says two things: It says that the version of this idea that passed the Senate 97-2 should be the version that applies; that maybe we should give some workers the chance to choose whether to go into this system or not, to put more power into the hands of the worker and the retiree to choose what happens to them, rather than have the employer make that decision. That sounds reasonable to me.

And the second thing that Mr. Miller does is to say let's take the assumptions that are most protective to

the retiree. Let's err on the side of giving the retiree too much, not too little. I don't think that is too much to ask.

I think the House should join with 97 Senators from both parties and adopt the version of this idea that is in the Senate bill. Vote ``yes'' on Mr. Miller's motion to instruct.