Washington, D.C. - In a Reuters article published yesterday, April 4th, titled “Lawmakers Mull Pension Aid Beyond Airlines”, Senator Trent Lott (R-MS) declared, “You’ve got to get away from defined benefit plans.”  Senator Lott’s statement came as House and Senate conferees continue consideration of legislation that would tighten the rules and regulations on companies that offer defined benefit plans without simultaneously eliminating loopholes that would allow these companies to easily dispose of their pension obligations in bankruptcy.  The measure would also increase the national deficit by $70 billion.

Millions of American workers rely on defined benefit plans for their retirement security.  In calling for the elimination of defined benefit plans, Senator Lott proposed aiding companies in freezing their traditional pension plans so that no additional guaranteed pension benefits would accrue for today’s workers and new employees would not qualify to participate in the plans at all.  In the future, if the Lott proposal became law, workers would be limited to saving for retirement through 401(k) savings plans or other individual retirement accounts with little or no assistance from employers.

The so-called pension reform bill currently being considered by a conference of representatives and senators would force employers to accelerate funding to traditional pension plans they offer their employees.  An independent study conducted by a major benefits consulting firm found that financially healthy companies could see an increase in their required annual contributions to their pension plans by as much as 240%.  This dramatic increase in annual cash outlay would come at a time when many companies are struggling financially.  There is concern that the so-called pension reform bill’s funding requirements would be so burdensome that many employers would either “freeze” their plans or terminate an underfunded plan in bankruptcy.

“Senator Lott’s statements make clear that Republicans want to do to our private pension system what they failed to do with Social Security and are trying to do with employer-provided health care – dismantle the system and demand that hardworking Americans be completely on their own,” said Ways and Means Ranking Member Charles B. Rangel (D-NY).  “Let’s be clear, Senator Lott is merely echoing the views of the Bush Administration.  The Senator’s statements and the Republicans’ support of a flawed pension ‘reform’ bill evidence a lack of support for the average American worker,” concluded Rep. Rangel.