June 7, 2005

Democrats Are Working to Strengthen Retirement Security

Reid Calls for Congress to Strengthen American Workers Pensions

Democratic Leader Harry Reid released the following statement as the Finance Committee begins to exam pension reform:

“Throughout this Congress, I’ve argued that the Senate ought to spend less time debating radical judges and more time focusing on issues that can improve the lives of working Americans. One such issue is the gradual erosion of retirement security. Instead of working to replace Social Security’s guaranteed benefit with a risky privatization scheme, we should work to strengthen retirement by shoring up our pension system. In no industry is this looming pension crisis more acute than the airline industry. The Finance Committee held a hearing on the pension problems facing the airline industry this morning, and I hope that the Committee will move soon on legislation to fix those problems.

“Last month, we learned just how worrisome this issue is, as the Pension Benefit Guaranty Corporation and United Airlines agreed to terminate the four pension plans maintained by the airline as the company struggles to emerge from bankruptcy. At the same time, Northwest, Delta and American Airlines face similar pension liabilities and are requesting Congress’s help so that they can avoid bankruptcy. To their credit, they are fighting to preserve their workers’ pensions but need some time to allow them to recover from the effects of the post-9/11 travel downturn.

“While the pension funding problems facing the airline industry are substantial, the industry is not alone in inadequately funding their employee pension plans. Congress needs to carefully review the rules that apply to the broad spectrum of employers that offer pension plans to their employees. Congress needs to make sure that those rules are strengthened to require greater funding for the pension promises being made. Let me be very clear about one thing; the pension promises made by companies to their employees carry with them an obligation to make sure those promises are kept. An employer’s obligation is to have sufficient funds set aside to meet the pension promises it has made, not merely to have met the minimum funding requirements of the tax code or ERISA.

“As Congress strengthens the pension funding rules, we also need to be cognizant of the potential negative consequences of these changes. Pension plans, like all employee benefits, are voluntarily offered by employers. Congress created tax and other incentives that encourage companies to offer pension plans because it believes these are important benefits for employees. Many of the Administration’s proposals go too far and will discourage companies from maintaining and offering these important benefits. The proposal Congress considers must be more balanced. We should join together to enhance retirement security for all Americans by strengthening Social Security, shoring up our pension system and encouraging more Americans to save.”

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