The House today approved H.R. 10, the Comprehensive Retirement Security and Pension Reform Act, by a margin of 407 to 24.
The vote followed several hours of discussion on the floor, and the rejection of a substitute measure proposed by Representative Richard Neal (D-Massachusetts) that would have added tax credits to encourage employees and employers to establish and contribute to these programs.
The same measures were introduced and rejected by the House Ways and Means Committee last week. Neal characterized the additions as “a couple of small issues”, including:
- a tax credit for up to 50% of up to $2,000 in contributions made to a qualified retirement plan for low income workers
- tax credits for contributions to a qualified retirement plan for small employers
- tax credits for startup costs incurred within three years of establishing a retirement plan for smaller employers
Pricing it in
However, Representative Rob Portman (R-Ohio) noted that those changes would cost $46 billion, roughly doubling the $51 billion cost of the proposed pension reform bill, over ten years. He noted that he would support the start-up credits, a provision that he said was a “small issue”, costing just $177 million over the next decade.
However, he noted that the employer tax credit would cost $5.4 billion over that period, while the employee tax credit would cost some $35.5 billion.
In response to challenges on the cash balance issue, Portman noted that H.R. 10:
- addresses the issue of disclosure, and requires it in “plain English”
- provides for early notice
- includes notice of changes to early retirement benefits, not called for under current law
The alternative bill was rejected.
Representative Bernie Sanders (I-Vermont) presented an enthusiastic case to recommit the bill with instructions in an effort to remedy concerns with pension plan conversions to cash balance plans.
While acknowledging that H.R. 10’s supporters said the bill “dealt” with the issue, Sanders protested that the legislation “does not deal with it in a meaningful way.” Sanders called for all employees to be given a choice of old or new plans in a cash balance conversion, noting that “disclosure alone is not good enough.
” Counter Caution
Countering Sanders motion, Representative Bill Thomas (R-California) cautioned the House against support for a “detailed 22-page” set of instructions, which noted that it was “clear” that cash balance programs violate age discrimination rules, while at the same time directing Treasury to draw that conclusion.
Representative John Boehner (R-Ohio) countered that cash balance plans were, in fact, “very good for younger workers.” He also cautioned that Sanders proposal would, in effect, require employers to maintain two pension plans, and that forced to choose between maintaining two plans, or closing down an existing program, employers would either terminate the pension plan, or convert to a defined contribution plan.
Thomas was also concerned that on the last page of the bill to recommit, its provisions were to be applied with an effective date for plans amended ? after December 31, 1998.
Voting against H.R. 10 were 22 Democrats, 1 Republican and 1 Independent.
– Nevin Adams email@example.com