Opening Statement of the Hon. William J. Coyne, a Representative in Congress from the State of Pennsylvania

Hearing on Retirement Security and Defined Benefit Pension Plans

June 20, 2002

I want to thank Subcommittee Chairman Houghton for scheduling today’s hearing on issues related to defined-benefit plan issues.  Retirement security in America is one of the most important issues under the Ways and Means Committee’s jurisdiction.  This issue has become more important as we prepare for our aging workers.

Americans are living longer than ever before.  The average life expectancy of Americans born in 2000 has been estimated to be 76.4 years, compared to 69.7 for those born in 1960.  As more people live into old age with a longer life expectancy, the adequacy of financial resources available to them during their retirement becomes a crucial issue.

Retirement savings, including savings under employer-sponsored pension plans, will be stretched over longer retirement periods.  Thus, every step must be taken to ensure that all workers have a secure retirement.  Defined benefit plans should play a major role is accomplishing this goal.

Defined-benefit pension plans provide workers with a specific pension benefit upon retirement.  This benefit is guaranteed by the Pension Benefit Guarantee Corporation (PBGC).  Today, more than 44 million workers participate in defined-benefit pension plans and rely on this important source of income during their retirement.  Unfortunately, the number of defined-benefit plans has decreased in recent years, particularly with plans having less than 100 participants.

According to the Pension and Welfare Benefits Administration (PWBA) of the U.S. Department of Labor, the number of defined benefit plans declined from 175,000 to 59,500 between 1983 and 1997.  Although the greatest drop in the number of plans was among plans with fewer than 100 participants, the decline in the greatestnumber of plan participants was among larger plans. 

This downward trend in defined benefit plans puts the retirement  security of American workers at risk.  This risk has been widely recognized in the pension community.  A working group organized by the PWBA recommended that the Secretary of Labor support legislative and regulatory changes that will restore the viability of defined benefit plans.

On March 5, 2002,  when the Oversight Subcommittee held its hearing on defined-contribution pension plans, we agreed that there should be a similar hearing on defined-benefit plans.  Thus, it is appropriate that the Oversight Subcommittee, through this hearing,  review:

• the role of defined-benefit pension plans in providing retirement security for all workers;
• the advantages to employers of offering defined-benefit plans, and the advantages to the workers who receive benefits under this type of plan
• the role of the PBGC in achieving retirement security for all workers, and the financial status of the agency (including the impact of pending cases); and
• any recommendations the pension experts can share with us on how to improve the viability of defined-benefit pension plans.

I would like to personally welcome Karen Friedman of the Pension Rights Center to today’s hearing.  The Pension Rights Center, along with The Women’s Institute For A Secure Retirement (WISER), were very helpful to me in preparing H.R. 3488, the Retirement Opportunity Expansion Act of 2001.  If the Chairman is agreeable, I would like to include the written statement of Cindy Housell, Executive Director of WISER, into the hearing record. 

Also, I would like to thank all the other pension experts for appearing as witnesses at today’s hearing.  I look forward to their testimony.

Thank you.