The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“THE INTRODUCTION OF THE RETIREMENT ENHANCEMENT ACT OF 2001” mentioning the U.S. Dept of Labor was published in the Extensions of Remarks section on pages E2304 on Dec. 14, 2001.
The publication is reproduced in full below:
THE INTRODUCTION OF THE RETIREMENT ENHANCEMENT ACT OF 2001
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HON. ROBERT E. ANDREWS
of new jersey
in the house of representatives
Thursday, December 13, 2001
Mr. ANDREWS. Mr. Speaker, I rise today to introduce the Retirement Enhancement Act of 2001. The Retirement, Enhancement Act of 2001 consists of two bills, one amending the Employee Retirement Income Security Act (ERISA) and the other amending the Internal Revenue Code
(IRC).
These bills are the result of my work as the Ranking Member of the Subcommittee on Employer-Employee Relations, which last Congress and earlier this year held a number of bipartisan hearings to consider improvements to ERISA. The Subcommittee heard from a wide variety of witnesses representing pension participants, employers, and financial advisors. They presented us with a variety of proposals to improve the retirement security of American workers. The Retirement Enhancement Act seeks to take the best of these contributions, and couple them with other pension provisions that I have either advocated or supported in the past,
Joining with me as cosponsors of the Retirement Enhancement Act of 2001 are numerous members of the Committee on Education and the Workforce, including Representatives Miller, Kildee, Owens, Payne, Mink, Scott, Woolsey, Rivers, Hinojosa, Tierney, Kind, Sanchez, Ford, Kucinich, Holt, Solis and McCollum. They share my belief that enactment of these bills will improve workers' access to and adequacy of needed retirement benefits.
Since the enactment of ERISA, the number of Americans who participate in a pension plan has nearly doubled from 38.4 million in 1975. While this growth is considerable, it still leaves about half of the workforce without access to a pension plan through their employer. Both the General Accounting Office and Congressional Research Service have completed studies analyzing pension coverage in the United States. The studies found that approximately 53 per cent of workers, roughly 68 million people, lacked a pension plan in 1998. About 39 per cent of those without coverage worked for an employer that did not sponsor a plan, while 14 per cent lacked coverage because their company's plan did not include them.
These bills seek to eliminate the remaining weaknesses in ERISA and lay the groundwork to help those not covered by an employer pension. These bills seek to improve pension coverage and adequacy, Under these bills, employers that sponsor plans would be required to offer pension coverage to all employees who meet current minimum eligibility requirements such as completion of one year of employment. These bills also improve coverage for part-time workers who represent one of the largest groups without pension coverage. Women represent 70 percent of the part-time workforce.
With the ever-changing, workforce, it is also important that we decrease the vesting period for workers in defined contribution plans. For workers who will have many employers during their working, lives, we need to ensure that they will earn pension benefits that will benefit them in retirement. The bill reduces pension vesting from 5 to 3 years for defined contribution plans.
The Retirement Enhancement Act seeks to expand pension availability to those workers without it. One of the innovative ways in which it would do so is to create a model small employer group pension plan into which small employers could buy in with minimal administrative responsibilities. The Departments of Labor and Treasury would work with associations or financial institutions to establish and advertise these model plans so that employers and employees would know that easy and accessible pension options exist.
The Retirement Enhancement Act includes important pension protections for women. These bills establish a 75 per cent joint and survivor annuity option that would provide surviving spouses greater benefits in retirement. It provides enhanced protection to divorced spouses' pension rights and improves spousal information rights. These bills would also allow for time taken off from work under the Family and Medical Leave Act to count toward pension participation and vesting requirements.
The Act improves ERISA's safeguards for the investment of pension plan monies. It creates an expedited prohibited transaction exemption approval process under which plans would be able to more easily and quickly provide participants with new investment products. It does so, however, without weakening participant protections. It permits employers to provide qualified investment advice, including self-
interested advice provided advisors meet minimum qualifications, adequate notice is provided, employees have an independent option and also effective remedies are available to employees for breach of the advisors fiduciary duties. This will be extremely helpful to those workers in defined contribution pension plans who bear the primary responsibility for their pension plan investment decisions.
In recent months tens of thousands of participants in defined contribution plans have suffered great loss when their company stock price dramatically declined, most notably in the case of Enron. Too many participants have had their retirement savings effectively wiped out. The Retirement Enhancement Act would give pension participants enhanced rights to diversify their employer pension contributions. The bill would require all employers to notify employees of their right to diversify employer contributions and would require employers to diversify employer contributions.
The Retirement Enhancement Act of 2001 improves access to pension information and strengthens enforcement mechanisms. It would require that plan participants regularly receive statements apprising them of the status of their earned pension benefits. Pension plans would also have to provide more detailed financial information about their earnings and investments. These bills would improve the current pension auditing system by requiring accountants to conduct full scope audits and report irregularities to the Department of Labor.
The bill includes important incentives to increase meaningful access to pension plans for low and moderate wage earners. It makes refundable the new tax credit for individuals who make pension contributions either to an IRA or 401 (k) plan and it also includes a tax credit to small businesses that would subsidize 50 per cent of their pension contributions for the first 3 years of a plan.
The bills create an alternate dispute resolution system to resolve benefit disputes. The Department of Labor, along with dispute resolution organizations, would develop an early neutral evaluation program. This would allow for participants to receive benefits in a timely manner instead of after years of litigation, The bills also strengthen ERISA's remedies to ensure that participants have meaningful access to court, and that the courts can adequately remedy violations of the law.
Finally, the Retirement Enhancement Act of 2001 requires the timely distribution of defined contribution cash-out amounts, which would have to be made within 60 days of an employee's termination. It permits employees to work longer without being required to start pension receipt by delaying the minimum distribution of benefits from age 70\1/
2\ to 75. Furthermore, for workers who are involuntarily terminated, it permits them to borrow against their pension earnings in order to pay for health or job training expenses.
Mr. Speaker, it is now time for the Congress to build on what was started with the enactment of ERISA in 1974, and take additional steps to ensure retirement security for our workforce. Advances in medical technology, environmental protection, nutrition, and improved living standards give us reason to believe that Americans are going to live longer lives. Whether the quality of these lives, after retirement, is good or not, will depend upon the existence, nature, and security of each person's pension plan. Because employers are rapidly shifting to the use of employee-directed pension accounts, more and more workers will be making decisions that are critical to their future financial health. I believe that the Retirement Enhancement Act of 2001 will help make those decisions easier, and make the benefits of those decisions more secure. I look forward to working with my colleagues and the pension community to continue to improve these bills and advance their consideration.
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