Neal Opening Statement at Subcommittee Hearing on Private Employer Defined Benefit Pension Plans

(Remarks as prepared)

Mr. Chairman, I would like to thank you for calling this important hearing on private employer defined benefit pension plan. This is an issue that deserves our much needed attention, and it is my hope that this hearing will serve as a catalyst for action. It is fitting that we are calling this hearing days after we celebrated the 40th anniversary of the passage of ERISA. Before ERISA, there was little to no protection for American workers enrolled in pension plans. In fact, there were high profile cases of Americans losing their retirement benefits. Congress responded to this crisis by passing ERISA.

Today, ERISA serves as an example for us to follow, standing as a testament to how working together in a bipartisan way ensures Americans have access to financially secure retirement. Unfortunately, it took Americans losing their retirement benefits before Congress responded. Today, we should not allow the same thing to happen again before we act.

We are at the precipice of an impending retirement crisis in America that is seemingly twofold – Americans are not either saving enough or at all for retirement, and for those that remain in defined benefit plans, those plans are underfunded. We all know the sobering statistics, the United States has a retirement income deficit of $6.6 trillion, and PBGC estimates that for the next decade private sector employer defined benefit pension plans will carry a significant deficit. These staggering statistics demonstrates that we, as Americans, need to do more to prepare for our financial future.  We must do all we can to encourage more individuals to save, whether through financial literacy programs or through the tax code.  Now is not the time to cut the hard earned benefits of millions Americans.

It has been put forward by some that the best way to address the private sector defined benefit pension deficit is to cut benefits. I could not disagree more. Pension benefits have been earned through hard work, and these employees have relied on these guarantees to fund their retirement.

Before looking to cut these earned benefits, we need to look at our current funding rules, along with the insurance guarantee through the Pension Benefit Guaranty Corporation, to see if there are ways to reform the current system before looking to cut benefits. Remember that if the PBGC is not strong, then the guarantees given to the workers are eroded.

Many new entrants into the private sector workforce will never know the security of a defined pension plan, which provides the employee predictable and secure benefit for life. Under defined benefit plans, workers are promised a specific benefit at retirement, a benefit they know in advance and one that is not subjected to the instabilities of the stock market. We can only look to previous decades for examples on the perils of investing the stock market, whether the 401(k) tragedies of Enron, WorldCom or the financial meltdown in 2008.

I commend the Chairman for calling this hearing. It is extremely important for us to find a solution to the problems vexing private sector defined benefit plans, and to hear solutions that will be put forward today. Solutions that maintain the integrity of the defined benefit, and ensures that promises made will be promises kept.

Thank you, Mr. Chairman.

###