Grassley, Breaux Seek to Expand Pension Rights for Workers


Jill Kozeny

202/224-1308


Sens. Chuck Grassley of Iowa and John Breaux of Louisiana today introduced a bill to supply valuable tools to help pension participants and retirees better understand the fundamentals of their pension plans, encourage workers to play a pro-active role in ensuring pension accuracy and empower pensioners with cost-effective ways to resolve conflicts with employers regarding their pensions.

Today's proposal is the second bill advanced by Grassley and Breaux in response to the pension problems exposed during a June hearing conducted by the Senate Special Committee on Aging. Grassley serves as Chairman of the Committee and Breaux is the Ranking Member.

"While pension miscalculations are not necessarily the result of intentional wrongdoing, they impact a substantial number of people. Retirees who rely on their pensions like they depended on their paychecks need the right equipment to work through a complicated system and obtain the pension that's rightfully theirs. The bill we introduced today contains the tools they need. For those who are still working, it puts in place mechanisms to help individuals become more knowledgeable about their pensions as they're earning them. This legislation is part of our long-term effort to educate workers about the need to prepare for retirement," Grassley said.

"I am pleased to introduce legislation that better informs Americans about their pension benefits and what their rights are under their own plans. Because the pension rules are so complex, we need to start convincing workers to think about their pensions long before retirement so they don't come up short when they do retire," Breaux said. "Our measure builds on legislation we introduced earlier this year to improve pension counseling. If we want people to take a more active role in pension planning and saving, we have to provide ways to ensure that calculations are accurate."

The Grassley/Breaux bill --the Pension Tools Act of 1997 -- updates the Employee Retirement and Income Security Act of 1974 (ERISA). The proposal introduced today would give pension plan participants and beneficiaries access to benefit statements and plan documents. It requires greater cooperation from plan administrators and empowers the Secretary of Labor to penalize a pension plan that refuses or fails to disclose information as required. The Grassley/Breaux bill also prompts the development of model procedures for alternative dispute resolution. The senators said the enforcement option now open to pension participants -- a lawsuit -- is simply too costly for many who live on a fixed income.

"A major source of the problems here is that pensions are very complex. It's hard for employers to administer pensions even with expert advice. And it can be even more difficult for a layperson to understand his or her pension. The committee will continue to seek ways to alleviate some of the pressure on employers in pension administration," Grassley said.

This summer, Grassley and Breaux asked the General Accounting Office (GAO) to review the changes in the law since the passage of GATT, which had an impact on which interest rates plans must use to calculate pension payments. The interest rate is one of the issue areas where experts have seen most problems in pension errors.

Senate Special Committee on Aging

Summary of the Pension Tools Act of 1997

The primary goal of the Employee Retirement & Income Security Act of 1974 (ERISA) was to provide stronger protections for participants and beneficiaries of pension plans. The Act created funding protections. It protected employees against discrimination and increased participant and beneficiary access to information about their pensions. While great strides have been made since the Act went into effect, participants and beneficiaries still lack access to basic but vital information, and cost-effective tools to enforce their rights.

The Pension Tools Act of 1997 was introduced to help participants and beneficiaries keep track of their pension benefits. It encourages workers to play a more pro-active role in ensuring that their pensions are accurate. And it expands ways to resolve conflicts about benefits with employers. The legislation amends ERISA in the following ways:

  • Provides automatic benefit statements containing pension estimates every three years for participants in defined benefit plans. Provides automatic benefit statements containing an exact pension calculation every year for participants in defined contribution plans. In addition, the legislation would require multi-employer plans to provide benefit statements to participants.
  • Clarifies that individual pension benefit calculations should be disclosed to participants and beneficiaries upon request. This would include the benefit worksheet showing how the benefit was calculated.
  • Ensures that former participants who received a benefit from the pension plan are able to access information about the benefit that was paid to them. Currently, employees who are cashed out of the plan often are barred from seeking information about their payments.
  • Develops model alternative dispute resolution procedures and model language that could be adopted by a pension plan sponsor. Access to alternative dispute resolution would be a less costly alternative to participants, beneficiaries, and employers than filing a civil cause of action in a court of law.
  • Permits the Secretary of Labor to impose a civil penalty on a pension plan which refuses or fails to disclose information to a participant or beneficiary. The change would encourage employers to provide information promptly, as well as help participants and beneficiaries avoid filing a civil action in court to get information about the pension plan or pension benefits.

In June, Sens. Grassley and Breaux introduced the Pension Counseling & Assistance Act of 1997 to reestablish funding and expand pension counseling projects which serve as resources for people with pension problems and to modify the Older Americans Act to establish a toll-free number to serve as a single source of entry for those seeking pension assistance. In September, the Senate approved a spending bill containing a recommendation advanced by Grassley and Breaux that pension counseling projects be funded by the federal government.