>US Representative George Miller (D-California) said the Pension Fairness Act of 2004 would protect workers and retirees in two situations:
- Corporations that file for bankruptcy protection and shift unfunded pension liabilities to the Pension Benefit Guaranty Corporation (PBGC) – the insurer of private-sector pensions – would be prohibited from paying or promising executive deferred compensation for directors and officers for five years.
- Corporations that convert traditional pension plans to ‘cash balance’ retirement plans, reducing the pensions of older workers, would be prohibited from paying or promising executive deferred compensation for directors and officers for five years.
>A statement on Miller’s House Web site said the bill was designed to create “more of a level playing field in the corporate retirement world.”
“This is about fairness,” Miller said in the statement. “There are too many examples of private companies taking care of their executives’ retirement compensation plans while they allow their employees’ hard-earned retirement plans to be ruined. From Enron on, many companies are taking care of the captains while leaving the sailors adrift. My bill says that if you drop the employee pension plan, you cannot simultaneously add to the executive compensation plan for five years. I think most Americans would say that’s fair.”
>The statement said other details of Miller’s bill include:
- The prohibition would begin on the date of any notice of intent to terminate or date of adoption of a cash balance amendment (with a one year look-back to prevent “gaming” by executives).
- The bill applies to all directors and executive officers as defined under the Sarbanes-Oxley corporate reform act.
- The bill applies to all executive deferred compensation agreements or arrangements, including excess benefit plans, top-hat plans, deferred bonuses, rabbi trusts, stock options, phantom stock, golden parachutes and pensions.
>Any deferred compensation paid or promised in violation of the act is enforceable under ERISA (by Department of Labor or participant civil actions) and is subject to an automatic 100% excise tax under the Internal Revenue Code.