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Wyden provision keeps companies
with ailing pension plans from hoarding
cash for executives
The pension fairness measure was included
in the Senate bill passed late yesterday

August 4, 2006

Washington, DC – A provision championed by U.S. Senator Ron Wyden to keep companies with significantly under-funded employee pension plans from locking away retirement funds for top company executives was included in a major pension reform bill passed by the full U.S. Senate late last night.

"Everyone’s retirement savings, whether they’re an executive or an entry-level employee, should be treated fairly,” Wyden said. “This provision will ensure that if a company’s pension plan is in financial trouble, the company cannot hide the CEO’s pension away in a lockbox while their employees get creamed."

The provision prohibits companies from giving executives deferred compensation – or retirement funds held in accounts outside of the same program used for all other company employees – if the company’s pension plan is less than 80 percent funded. This provision seeks to hold executives accountable for the performance of their company’s pension plans, and to prevent them from protecting their benefits while company employees’ benefits are threatened.

In June 2005, Wyden questioned airline industry executives at a hearing of the Senate Finance Committee about drastic pension cuts that hurt rank-and-file workers while allowing some industry executives to keep their retirement cash. Also at that hearing, Wyden shared the story of a United Airlines employee from Tigard, Oregon whose cash pension income was cut to $138 per month when the airline defaulted on its pension obligation. The taxpayer-funded Pension Benefit Guaranty Corporation is now paying some United workers’ pensions at less than half their original levels while United’s current CEO retains his company-funded $4.5 million retirement benefit. Some experts have warned that other airlines could soon default on their pension plans as well.

The legislation approved by the U.S. Senate late yesterday will now go to the President for his signature.

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