Roth Statement at Hearing on Pension Reform Legislation
WASHINGTON -- The Senate Finance Committee today held a hearing to examine pension reform legislation. The following is the statement of Chairman William V. Roth, Jr. (R-DE):
"Today the Committee will hear testimony about legislative proposals concerning pension plans. I have been a proponent of personal savings for retirement and have introduced, along with my friend, the Senator from Montana, Max Baucus, the Retirement Savings Opportunity Act which will help expand retirement savings opportunities for working Americans.
"Others on the Committee have also made pension reform a priority. Senators Grassley and Graham have been leaders in this area, supported by Senators Jeffords, Baucus, Hatch, Breaux, Kerrey, Mack, Robb, Chafee, Thompson and Murkowski, and they have introduced the Pension Coverage and Portability Act. Senator Moynihan has been active in this area too with his Pension Right to Know Act, co-sponsored by Senators Kerrey, Robb and Chafee. And we will also be hearing today from our friend, Senator Tom Harkin, who will be introducing legislation soon on cash balance plans.
"We should all be concerned about the lack of pension coverage in this country. According to the Bureau of Labor Statistics, 78 percent of employees of large and medium size employers are eligible for a employer sponsored and only 48 percent of individuals who work in small business establishments are eligible for any retirement plan in 1994. And we know that the number of defined benefit plans has been decreasing from 59% in 1991 to 50% in 1997. Clearly there is a need to do something to promote the employer system. We will hear testimony today from many who sponsor and administer retirement plans on how the proposed legislation will do that.
"In addition, we will specifically hear testimony about a new type of plan - the cash balance plan. While there are fewer defined benefit plans, more and more employers are considering switching from their traditional defined benefit plan to a cash balance plan. Younger employees like these new plans, since these plan reflect the reality of a mobile workforce, where less than ten percent stay with one employer for more than 20 years. Older, long service employees are not happy with this switch. The reason for their unhappiness is the older workers' reliance on these pension benefits which were heavily weighted towards employees who stay with the employer until retirement.
"Senator Moynihan's bill would add disclosure requirements when employers amend their plans, so employees would know what they are getting under a new plan. Employers, however, are worried that extensive disclosure and the attendant administrative burdens would impede employers from joining the only defined benefit plan that is growing in popularity. This hearing will examine the many sides of this important issue.
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