LEXIS-NEXIS® Congressional Universe-Document

LEXIS-NEXIS® Congressional

April 13, 2000, Thursday

SECTION: PREPARED TESTIMONY

LENGTH: 401 words

HEADLINE: PREPARED TESTIMONY OF JIM JEFFORDS UNITED STATES SENATOR VERMONT

BEFORE THE SENATE COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS

SUBJECT - PROTECTING PENSION ASSETS IN BANKRUPTCY

BODY:
Good morning. I want to thank all the witnesses who have joined us this morning to help us better understand protection of pension assets in personal bankruptcy. While the Bankruptcy Code generally determines what assets of a debtor are available for creditors in bankruptcy, there are special protections for pensions under ERISA. In the near future, the House and Senate may vote on a final version of H.R.833, the Bankruptcy Reform Act of 2000. The Senate-passed bill contains a provision, Section 303(c), that causes me great concern. The provision would permit boilerplate language to be inserted into credit card applications, requiring individuals to sign over their pensions in bankruptcy.

I fear that many individuals will sign away their pensions unknowingly. Even for knowledgeable consumers, the cost of applying for a credit card should not be one's retirement security.

To prevent this very thing from happening, anti-alienation protections were written into ERISA in 1974 and similar protections were put into the Internal Revenue Code back in 1938. I strongly oppose any change in bankruptcy law that could put pensions at risk. No changes should be made to the anti-alienation rules without consideration by the HELP Committee.

As Chairman of the HELP Committee I am not alone in my opposition. Senator Roth, the Chairman of the Senate Finance Committee, has written a letter to the Judiciary Committee opposing this provision.

This all comes on the heels of a similar idea considered last year in the Judiciary Committee. That proposal would have placed a cap on the amount of pension assets protected in a bankruptcy. After I discussed that provision with Chairman Hatch, the provision was dropped from consideration. The provision that now appears in the Senate-passed bill is even worse. (More)I hope that this hearing will provide the understanding needed to evaluate section 303(c) in the context of our long-standing national goal of retirement income security.

This morning we will hear from the Administration on the anti- alienation provisions of ERISA and get the Administration's view of section 303(c). We will hear from a bankruptcy law professor and a member of the board of the AARP. Finally, we will hear from pension plan administrators their views on the administrative consequences of section 303(c) if it or similar proposals were to be enacted.

END

LOAD-DATE: April 15, 2000