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Congressman Pat Tiberi (R-OH), Chairman of the Subcommittee on Select Revenue Measures, today announced that the Subcommittee will hold a hearing on defined benefit pension plans offered by private sector employers, including both multiemployer plans and single employer plans. The hearing will take place on Wednesday, September 17, 2014, in 1100 Longworth House Office Building, beginning at 10:15 A.M.
In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing. A list of invited witnesses will follow.
Multiemployer (“ME”) pension plans collectively are less than 50-percent funded, with underfunding exceeding $400 billion. The Congressional Budget Office estimates that the Pension Benefit Guarantee Corporation’s (“PBGC”) ME insurance program, financed by premiums from ME plans and not backed by taxpayers, will run out of cash in 2021 and requires $9 billion over the next decade to pay statutory benefits. PBGC’s projected ME deficit for 2023 is $50 billion. With respect to ME plans that become insolvent: (1) retirees will receive a maximum annuity of $12,870 from PBGC until PBGC runs out of cash, and (2) employers will be subject to substantial withdrawal liability that can exceed the value of the employer.
The current investment environment and low interest rates combined with increasing life expectancies also present challenges to single employer (SE) plans, although they generally are better funded than multiemployer plans. (PBGC projects a deficit in its SE program of $8 billion for 2023.) Still, workers participating in, and employers sponsoring, such plans face a variety of challenges. For instance, employees whose employer is transitioning new employees into a defined contribution plan (e.g., a 401(k) plan) face the prospect of their employer being forced to freeze the defined benefit plan for all employees to avoid violating the non-discrimination rules. H.R. 5381, introduced July 31, 2014, by Chairman Tiberi, and H.R. 2117, introduced May 22, 2013, by Ranking Member Richard Neal (D-MA), are designed to protect longer-service participants in defined benefit plans that are closed to new entrants by allowing cross-testing between defined benefit and defined contribution plans. Other issues affecting single employer plans include the impact of the in-service distribution rules on employees’ retirement schedules and the effect of mortality tables on funding requirements.
In announcing this hearing, Chairman Tiberi said, “I have heard for years now from hundreds of businesses and nonprofits about the need for pension reforms, especially for defined benefit plans. Increasing pension costs have hampered both the job growth and capital investment needed to grow the economy and have threatened retirement security for American workers. The cost of doing nothing is too high a price to pay. This hearing will give us the opportunity to examine challenges facing, and opportunities to strengthen, the defined benefit pension system.”
FOCUS OF THE HEARING:
The hearing will focus on some of the challenges facing employers, employees, and retirees who rely on defined benefit pension plans to help provide retirement security. It will examine the funding rules governing multiemployer plans, as well as selected issues that affect single employer plans.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, https://waysandmeans.house.gov, select “Hearings.” Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.” Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Wednesday, October 1, 2014. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225-3625 or (202) 225-2610.
The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All submissions and supplementary materials must be provided in Word format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. All submissions must include a list of all clients, persons and/or organizations on whose behalf the witness appears. A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.
The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.
Note: All Committee advisories and news releases are available on the World Wide Web at http://www.waysandmeans.house.gov/.