Mr. Speaker, I rise to claim the 10 minutes of the Committee on Education and Labor. Mr. Speaker, I rise in support of the legislation and would like to echo the comments of my friend from Minnesota in thanking the efforts of so many…
Mr. Speaker, I rise to claim the 10 minutes of the Committee on Education and Labor.
Mr. Speaker, I rise in support of the legislation and would like to echo the comments of my friend from Minnesota in thanking the efforts of so many people to make this bill possible, beginning with Chairman Rangel, Mr. McCrery, Chairman Miller of the Education and Labor Committee, Ranking Member McKeon, Subcommittee Chair Pomeroy, Mr. Ramstad and others. This has been a very cooperative and good effort.
Healthy pensions are healthy for the economy of the United States. When the tens of millions of people who are covered by pension funds feel more confident about the security of their money and the likelihood that it will continue on into the future, they are more likely to be consumers and investors and engines of economic opportunity for the rest of us in the economy.
This act makes a number of important corrections that will strengthen and therefore make more healthy the pension funds of our country. I embrace and support each of those changes. I would like to highlight three of them that I believe are of significant and important relevance.
The first has to do with the so-called smoothing provisions, which will particularly benefit the larger employers. We have significant and rigid new standards under the 2006 act which require underfunded plans to catch up so that they are fully funded as soon as reasonably possible. But it is important that those rigid standards do not choke off the economic activity of the plan sponsor, and when they are too rigid, they run that risk. So these smoothing provisions give the plan sponsor, the employer, the flexibility to make a rational judgment about how much money is needed to be put into the fund to catch it up how soon.
In my view, this reform is a win for the taxpayers, it is a win for the pensioners and employees and a win for the employer. It is a win for the taxpayers in that a plan that is caught up in a rational way by a successful employer is qualitatively less likely to go into default, to go into insolvency and to call for a bailout by the Pension Benefit Guaranty Corporation. Ultimately, the taxpayers of the country stand behind the PBGC. The fewer claims of insolvency, the less risk to the taxpayer.
Second, I believe that these provisions are very good for pensioners and employers because these provisions substantially increase the likelihood that the pension fund will be stable, permanent and a source of income for the person for the rest of his or her life.
Finally, this is most certainly an advantage for all those who benefit from the pension system. So I think that this is a very important change.
This is an important change for small business as well. One particular change that lets small businesses rely upon a fixed 5.5 percent rate of interest in their pension calculations means that the person running a dental practice or a small manufacturing plant does not have to incur unnecessary legal or accounting or actuarial fees to calculate and recalculate changing assumptions. The matter of a few thousand dollars for that plan sponsor is very important, and it leads to the result that more employers will keep these plans, as my friend Mr. Pomeroy expressed concern about earlier on.
Finally, I would join with the comments of Mr. Pomeroy and Mr. Ramstad about the very significant importance of the public employee pension fund provisions in this bill. The history of public employee pension funds in this country is a very stable and positive one. With a few rare exceptions, fund trustees around this country have made proper fiduciary choices with the investment decisions for the men and women who rely upon those decisions, and one of those decisions they make is the credit interest rate that ought to be used in calculating certain distributions to retired firefighters, teachers, police officers and other public employees.
There is a saying that is not unique to pension law, but unique to common sense, which is if it ain't broke, don't fix it. Public employee trustees around the country have done an excellent job in managing their funds, by and large. This bill has a provision in it that assures that those trustees will continue to have the freedom and flexibility to make their own determination as to what that credit interest rate ought to be and that that determination should not be supplanted by the judgment of any Federal agency or by this Congress.
You might say, well, what about the issue of exposure of the Federal taxpayer? Aren't we subjecting the Federal taxpayer to risk if the State and local trustees make the wrong decision?
Mr. Speaker, we are most emphatically not, because the plans about which I speak are not backed by the Pension Benefit Guaranty Corporation. So the idea of Federal regulation imposing itself upon the decisions of these trustees is without any merit or
justification. This will mean that police officers and firefighters and teachers and other public employees will get the fair pension for which they bargained and to which they are entitled.
I would like to express my appreciation to the minority and majority staff for their hard work on this bill. I think it well serves the country. I would urge my colleagues on both sides of the aisle to support it.
I reserve the balance of my time.
I would just reiterate that we urge passage of this well-thought-out bill, and I yield back the balance of my time.