UAW Opposes "Pension Protection
Act of 2005" (H.R.2830)
By Alan Reuther
International UAW Legislative Director
Last week Representatives Boehner and Thomas introduced
the so-called "Pension Protection Act of 2005" (H.R.2830).
The UAW is still evaluating the complicated funding and interest rate
provisions in this legislation to determine their impact on companies,
workers and retirees, and the entire defined benefit pension system.
However, we want to immediately register our strong opposition to
the punitive provisions in this bill that would deny pension benefits
to workers and retirees and undermine their retirement income security.
First, the UAW strongly opposes the provisions in H.R. 2830 that would
completely outlaw plant closing benefits, without regard to the funded
status of a pension plan or the potential exposure of the Pension
Benefit Guarantee Corporation (PBGC). There are many cases where companies
have maintained well funded plans that have provided plant shutdown
benefits for many years, without any liabilities being transferred
to the PBGC. These plant closing benefits have allowed management
and labor to provide a humane response to situations where downsizing
is necessary, by allowing older workers to retire rather than being
laid off. In our judgment, it is unnecessary and unfair to prohibit
these plant shutdown benefits, especially if a pension plan is well
funded and the PBGC has no exposure.
Second, the UAW strongly opposes the provisions in H.R. 2830 that
would impose arbitrary and discriminatory restrictions on pension
benefits and accruals for rank-and-file workers, without imposing
similar restrictions on management. Specifically, the bill would prohibit
benefit improvements in flat-dollar plans covering blue collar workers
in situations where the plan is less than 80 percent funded, even
where the benefits are simply being updated to keep pace with the
growth in wages. In contrast, the bill would allow salary-related
plans covering management personnel to automatically increase benefits
as salaries increase, even where these plans are substantially under-funded.
The bill also would permit management to deliberately under-fund a
pension plan covering rank-and-file workers, thereby subjecting them
to harsh restrictions on their pension benefits and accruals, while
at the same time providing adequate funding for their own defined
benefit plan and escaping equivalent restrictions on their own pensions.
As a matter of fundamental fairness, the UAW submits that any pension
legislation should treat management and rank-and-file workers the
same, and that any limits on pension benefits for the rank-and-file
should automatically be extended to all defined benefit plans covering
management personnel. This would give management a strong incentive
to properly fund all of their plans. Furthermore, instead of the arbitrary
and discriminatory restrictions contained in H.R. 2830, the UAW believes
it would be better for Congress to enact a "plan reorganization"
process for situations where a company has filed for Chapter 11 bankruptcy,
to give employers more flexibility to continue their pension plans,
while protecting workers and retirees to the maximum extent feasible
and reducing the exposure of the PBGC.
The provisions in the Boehner-Thomas bill that deny pension benefits
to workers and retirees are not necessary to avoid a financial "crisis"
at the PBGC. Although the PBGC's long-term liabilities have recently
increased due to the termination of a number of pension plans in the
airline and steel industries, the Executive Director of the PBGC has
testified that the agency still has sufficient funds to pay all promised
benefits until 2020 or even longer. Thus, there is no imminent danger
that PBGC will be unable to pay benefits or continue its operations.
The UAW believes that the long-term challenges facing the PBGC can
best be solved by strengthening the rules for funding pension plans,
and by taking steps to address the special situations facing the airline
and steel industries. However, we do not believe there is any justification
for the arbitrary and discriminatory limits on pension benefits and
accruals contained in H.R. 2830.
The retirement income security of America's working families is already
under attack from those who would privatize Social Security and make
huge cuts in Social Security benefits for future retirees. The provisions
in the Boehner-Thomas bill that would cut pension benefits and accruals
represent a similar attack, reflecting the same hostility to defined
benefits. The UAW strongly urges you to oppose these fundamental threats
to workers' retirement income security. Contact
your elected representations today and urge them to vote against H.R.
2830.
