On February 7, PLANSPONSOR’s Editor-in-Chief and CEO Charlie Ruffel sat down with these standard-bearers of pension reform – Representatives Rob Portman (R-Oh) and Benjamin Cardin (D-Md) – to discuss the issues, questions and perspectives expressed by our readers.
In the first of our four-part series, the Congressmen talk about the current status of their bill, and its counterpart in the Senate.
PLANSPONSOR: There was obviously divergence last year between the House Pension Reform bill and its counterpart in the Senate on a number of important issues. While the details of the Senate bill have not yet been divulged, is it your sense that the two bills will be closer this year?
Congressman Cardin: Well, first I would say I think there was a great deal of agreement. The basic bill was the same in both the House and the Senate [last year]. The major provisions that we’ve been working on for a couple years – which basically make things easier for employer-sponsored plans – are virtually identical in the House and the Senate bills. This bill was developed in a very bi-partisan way, with consultation with all the effective players, and I think that agreement held up well with both the House and Senate.
To the extent that there were differences in the Senate version, their bill had some additions, including ones that dealt with cash balance plans, at least in the committee version. I think they would have modified that as it went to the floor, because it was advertised differently during the committee markup than after the committee markup. They also wanted to do something about low-income workers-their bill was more expensive than our bill. But basically I think the bills were very similar.
Congressman Portman: I would agree with that. The focus is the same, which is expanding participation through simplifying pension rules and allowing people to set more aside in all of the programs, both defined contribution and defined benefit plans, as well as IRAs. There might be a difference in some details – my understanding is that the Senate is still in the process of hearings, so I don’t know how it will come out of that.
Cardin: I think we’re going to find that a bill will come out of the Senate that will be very similar to the bill that passed the House last year.
PLANSPONSOR: How do you answer critics that say the beneficiaries of this proposed legislation will primarily be upper-end wage earners?
Cardin: The focus of this legislation is to have more employer-sponsored retirement plans. Workers will benefit by having more employer-sponsored plans – we have too many low-wage workers today who have zero in private retirement savings. We expect that this legislation will mean that there will be many more participants in retirement plans sponsored by employers, and that will help lower-wage workers.
Much of what is in this bill will make it easier for those employers who decide to sponsor retirement plans. As we said many times, we make progress by going backwards, taking out of law many of the provisions that have caused employers to drop their pension plans or indeed never start them. As for increasing funding limits, if you adjust for inflation with the proposed new caps we’re still far below where we would have been when these limits were put in place.