Pension Security Act of 2002 (HR 3762)
April 9, 2002
To Members of the United States House of Representatives:
On behalf of the U.S. Chamber of Commerce, representing three million businesses and organizations of every size, sector and region, I would like to express our views on H.R. 3762, the Pension Security Act of 2002, which is scheduled for House floor consideration on Thursday, April 11, 2002.
We recognize and appreciate the significant improvements that have been made in the retirement security proposals, H.R. 3669 and H.R. 3762, which will form the base bill for consideration in the House. However, we remain concerned about the possible long-term impact of these provisions on defined-contribution plans. Employers offer pension benefits to their employees on a voluntary basis and any additional regulations will have some adverse effects on the willingness of employers to establish such programs. We hope to continue to work with the Congress as the legislative process continues.
However, we are seriously concerned with an amendment expected to be offered by Representative George Miller (D-CA), based on H.R. 3657, which, under the guise of responding to the unfortunate Enron situation, in fact, constitutes a radical revision of this nation's pension laws. Although what happened at Enron was wrong and indefensible and cannot be excused or trivialized, nothing in the record justifies the sweeping nature of this proposal.
Clearly, the Enron debacle raised certain areas such as diversification and blackout periods as legitimate issues for review. However, the Miller proposal takes these areas of good faith debate and uses them to bootstrap massive changes to pension law—changes which will threaten the viability of our voluntary pension system. Many of these seem driven more by a political agenda than substance.
For example, the Miller proposal provides for new causes of action in court, with expanded liability, and creates a new potential pool of defendants, without any demonstration that the already broad remedies under ERISA have proven to be inadequate to address the Enron situation. Indeed, massive litigation has already been filed and consolidated against Enron and numerous defendants in Tittle v. Enron Corp., pending in the Southern District of Texas — suggesting that ERISA does provide an adequate vehicle for redress. The limitations on arbitration, a favorite of the trial bar, reverse established case law and will result in more expensive court litigation. The bill imposes a requirement, long on organized labor's agenda, for joint trusteeships on single employer plans, with patently absurd election requirements, which will alone drive employers away from providing pension benefits and which has no understandable linkage to what happened at Enron. The required diversification option after only one year of service will provide a clear disincentive to employers to provide matching employer stock contributions. The requirements for mandatory insurance, particularly in view of the expanded liability provisions under the bill, may in fact be literally unattainable in the real world and will simply impose additional costs on plans.
We strongly urge your opposition to the Miller amendment, or any similar proposals that may be offered as a substitute to H.R. 3762. Because of the importance of this issue, the Chamber will use votes on this amendment in our annual "How They Voted" ratings.
R. Bruce Josten
Executive Vice President, Government Affairs
U.S. Chamber of Commerce