Enzi Gets Nod as Chair of Congressional Pension Reform Conference Committee
Enzi told the panel that he wanted to finish hashing out the differences between the Senate’s “Pension Security and Transparency Act” and the “Pension Protection Act of 2005” from the House by the end of the month and have a final bill ready for votes by April 7 – just before lawmakers leave Washington for a spring recess (See House and Senate Must Now Reconcile Reform Bills ). Both bills currently carry the HR 2830 bill number.
One of the GOP representatives is House Majority Leader John Boehner who has played a privotal role in moving prior pension bills with a particular focus on how to give retirement plan participants appropriate investment education and advice. “I look forward to working with my House and Senate colleagues and reaching agreement on a package of balanced reforms that will both improve the health of the defined benefit pension system and safeguard the retirement security of millions of Americans,” Boehner said Wednesday in his opening statement.
While both measures bolster rules governing the funding of workplace pension programs and help strengthen the deficit-ridden balance sheet of the Pension Benefit Guaranty Corp (PBGC) – the agency that insures private-sector defined benefit traditional pensions, there are key differences between the two.
According to a 134-page point-by-point comparison between the two measures as prepared by the Joint Committee on Taxation, the areas where differences between the two bills were more significant included:
Flat rate premiums for PBGC – In the House bill, per-participant premiums for single-employer plans that are adequately funded would be $21.20 in 2006, $23.40 in 2007, $25.60 in 2008, $27.80 in 2009 and, in 2010 and thereafter, $30 as adjusted after 2006 for increases in average wages. Premiums for plans that were funded by less than 80% in the preceding year, would be $22.67 in 2006, $26.33 in 2007 and, in 2008 and thereafter, $30 as adjusted after 2006 for increases in average wages. In the Senate bill, the premiums would be $30 in 2006 “with indexing thereafter based on increases in average wages.
Automatic enrollment arrangements – The House bill would require that automatic enrollment arrangements allow not more than 10% of compensation in automatic elective contributions and at least 3% in the first year of participation, 4% the second year, 5% the third year, and 6% each year thereafter. The Senate bill would require that automatic enrollment arrangements allow for elective contributions of at least 3% of compensation, which would increase by 1% or higher each year that an employee participates, up to 10%, or a higher uniform percentage rate under the plan.
Interest rates for lump-sum payments – The House bill would change the interest rate used in determining minimum value to three segment rates based on the corresponding portion of a yield curve, which would generally be based on interest rates on investment-grade corporate bonds for the month before distribution. It would be phased in from 2007 to 2010 and also would change the mortality table used in determining minimum value to a mortality table based on RP-2000 Mortality Tables, projected to the year of distribution. The Senate bill would change the interest rate, to one “drawn from a yield curve (based on average interest rates on high-quality corporate bonds for business days during the preceding three months) that match the timing of the expected benefit payments under the plan.” It would be phased in from 2007 to 2009, but would not change the mortality table used in determining minimum value.
align=”left”>The Joint Tax Committee comparison also compares how the two bills would change:
- the provision of investment advice – particularly in the area of fiduciary responsibilities and prohibited transactions, and
- the rights of defined contibution participants to diversify their assets including selling company stock shares.
align=”left”>One Bush Administration official recently discussed in a Washington speech the range of concerns the Administration continues to have about the provisions of the pension bills (See Official: Administration has “Serious Concerns” about Pension Reform Bills ).
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Members of the House included in doing the work of developing a final version of the pension reform measures are:
Republican
Majority Leader John Boehner (Ohio), Howard "Buck" McKeon (California); Bill Thomas (California); Sam Johnson (Texas); John Kline (Minnesota.), Pat Tiberi (Ohio), and Dave Camp (Michigan.).
Democrat
George Miller (California); Charles Rangel (New York); Rob Andrews (New Jersey) and Donald Payne (New Jersey)
Members of the Senate contingent of the conference committee, in addition to Enzi, are:
Republican
Charles Grassley (Iowa), Orin Hatch (Utah), Trent Lott (Mississippi), Olympia Snowe (Maine), Rick Santorum (Pennsylvania), Judd Gregg (New Hampshire), Mike DeWine (Ohio), and Johnny Isakson (Georgia).
Democrat
Max Baucus (Montona), Edward Kennedy (Massachusetts) John Rockefeller (West.Virginia), Kent Conrad (North Dakota.), Jeff Bingaman (New Mexico), Tom Harkin (Iowa), and Barbara Mikulski (Maryland).