Washington, D.C. – U.S. Senator Mike Enzi, R-Wyo., Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, today hailed the Senate’s passage of a sweeping pension reform bill that he said would dramatically strengthen pension funding rules, help curb record pension failures and better protect the retirement dreams of millions.
“The stakes in this battle are far higher than most of us can conceive. About $120 billion in pension benefit checks are issued each year and those funds are spent by 20 million retirees in Wyoming and every state in the union,” Enzi said. “Any shortfall in those amounts will result in a decrease in the standard of living of those retirees and the economies of the communities that depend on their support.”
The bill, “The Pension Security and Transparency Act,” S.1783, is a combination bill by the HELP Committee and the Senate Finance Committee and is designed to ensure that pension plans are properly funded and that the retirement funds of an estimated 43.5 million Americans - covered by both single employer and multiemployer plans - are secure. Moreover, it will strengthen the Pension Benefit Guarantee Corporation’s (PBGC) ability to safeguard financially-troubled plans by requiring increased premiums be paid by businesses in the system to the PBGC. The Senate passed the bill with a vote of 97-2.
“Hard-working Americans who spend a lifetime earning their pensions deserve to reap the benefits they were promised in retirement. Today, we’ve made a breakthrough in curing the nation’s pension deficit disorder,” Enzi said. “As the Senate’s lone accountant, I’m particularly proud that we worked together to find a compromise the Senate could approve - one that provides for both the financial needs of retirees and the financial resources of the employers funding their pension plans.”
Under current funding rules, the PBGC is carrying a deficit of $22.8 billion, a level expected to climb even higher by the end of this year. Making matters worse, the PBGC reports that overall, pensions continue to be underfunded by $450 billion and of that amount, and $108 billion is at risk of being turned over to the PBGC in the near future.
S.1783, which is co-sponsored by Senator Edward M. Kennedy, D-Mass., the HELP Committee’s Ranking Member, and Senator Chuck Grassley, R-Iowa, Chairman of the Senate Finance Committee and Senator Max Baucus, D-Mont., Ranking Member of the Finance Committee, is a merged version of separate legislation approved by the two committees.
The “The Pension Security and Transparency Act,” goals and elements include:
• Getting more money into pension plans through new funding rules;
• Special provisions for the airline industry to help improve the funding level of the airlines’ current plans, while protecting pension benefits accrued by their plan participants;
• Creating new funding rules for troubled multiemployer plans that will demand greater accountability to pension holders and government regulators while providing relief to troubled airlines at risk of turning their plans over to the PBGC;
• Stopping growth of the PBGC’s $23 billion deficit through premium increases and restrictions on irresponsible behavior by plan sponsors.
