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``(B) amounts received in the Treasury from asset transfers and contributions under section 911,
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``(C) amounts credited to the Trust Fund under section 9602(b) of the Internal Revenue Code of 1986, and
``(D) the premiums paid by retirees under the program.
``(2) AUTHORIZATION OF APPROPRIATIONS.--There is authorized to be appropriated to the Trust Fund each fiscal year an amount equal to the excess (if any) of--
``(A) expenditures from the Trust Fund for the fiscal year, over
``(B) the assets of the Trust Fund for the fiscal year without regard to this paragraph.
``(c) EXPENDITURES.--Amounts in the Trust Fund shall be available only for purposes of making expenditures--
``(1) to meet the obligations of the United States with respect to liability for steel retiree benefits transferred to the United States under this title, and
``(2) incurred by the Secretary and the Board of Trustees in the administration of this title.
``(d) BOARD OF TRUSTEES.--
``(1) IN GENERAL.--The Trust Fund and the retiree benefits program shall be administered by a Board of Trustees, consisting of--
``(A) 2 individuals designated by agreement of the 5 qualified steel companies which, as of the date of the enactment of this title--
``(i) are conducting activities described in subparagraph (A) or (B) of section 901(b)(1), and
``(ii) have the largest number of retirees, and
``(B) 2 individuals designated by the United Steelworkers of America in consultation with the Independent Steelworkers Union, and
``(C) 3 individuals designated by individuals designated under subparagraphs (A) and (B).
``(2) DUTIES.--Except for those duties and responsibilities designated to the Secretary, the Board of Trustees shall have the responsibility to administer the Trust Fund and the retiree benefits program, including--
``(A) enrolling eligible retirees and beneficiaries under the program,
``(B) procuring the medical services to be provided under the program,
``(C) entering into contracts, leases, or other arrangements necessary for the implementation of the program,
``(D) implementing cost-containment measures under the program,
``(E) collecting revenues and enforcing claims and rights of the program and the Trust Fund,
``(F) making disbursements as necessary under the program, and
``(G) acquiring and maintaining such records as may be necessary for the administration and implementation of the program.
``(3) REPORT.--The Board of Trustees report to Congress each year on the financial condition and the results of the operations of the Trust Fund during the preceding fiscal year and on its expected condition and operations during the next 2 fiscal years. Such report shall be printed as a House document of the session of Congress to which the report is made.
``(e) TRANSFER INVESTMENT OF ASSETS.--Sections 9601 and 9602(b) of the Internal Revenue Code of 1986 shall apply to the Trust Fund.''
Mr. SPECTER. Mr President, I have sought recognition at this time to comment briefly on legislation that I am pleased to cosponsor with my colleague, Senator Rockefeller. That legislation, the ``Steel Industry Retiree Benefits Protection Act of 2002,'' would set the Nation on a path of assuring the retirement health care benefits of the Nation's retired steelworkers and their dependants, and the survival of a domestic integrated steel industry. I crafted this bill jointly with Senator Rockefeller with extensive consultation by the integrated steel industry and representatives of the United Steelworkers of America. I am pleased to note that labor and management have joined in a common effort to resolve the near-intractable problems that face the industry today, and I thank them for that spirit of cooperation and compromise.
The reasons for this legislation are succinctly stated in the findings set forth in the preamble of the bill. The domestic steel industry has been forced to compete over the last 30 years in an international marketplace in which foreign governments have subsidized both domestic production and employee healthcare costs and, simultaneously, stimulated the creation and maintenance of excess world steelmaking capacity. During the 1980's and 1990's, the steel industry adapted, but literally hundreds of thousands of steel workers were forced into early retirement as the industry streamlined productions methods. Since 1997, the situation has worsened, due to the unfair practices of overseas producers and governments and a resultant glut of foreign imports, to the point that 32 American steel companies have had to resort to bankruptcy protection , causing 45,000 steelworkers to lose their jobs and over 100,000 steel industry retirees to lose vital medical insurance benefits. Record-low steel prices place remaining steel producers, and their workers and retirees, in an increasingly untenable position.
A clear consensus now exists that the only way a domestic integrated steel industry can survive is through consolidation. It is true that the ranks of U.S. integrated producers have been decimated; one need only drive through Pennsylvania to see ample evidence of that. But a domestic industry does indeed survive. It will continue to survive only if there is further consolidation and the emergence of a relatively few domestic companies with the muscle to compete in a global marketplace with subsidized foreign behemoths. But there is a significant impediment to such consolidation: the so-called ``legacy costs'' of domestic producers which might otherwise be acquired and consolidated into larger, more efficient U.S. operations.
To summarize, a relatively healthy domestic steel producer might find the acquisition, and the continued operation, of a weaker steel company's manufacturing operations to be quite attractive but for one major problem: such operations typically are owned by companies which are weighed down by the health care costs of prior generations of retirees, retirees who are relatively young due to the premature withdrawal of workers from the rolls due to downsizing in the 1980's and 1990's. Potential acquirers of such assets have ``legacy costs'' of their own to deal with; they cannot afford to assume those of their former competitors, a result that would be unavoidable were they to simply purchase and consolidate the assets of former competitors. If we want consolidation to happen, and it is unquestionably in the Nation's self-interest that it happen; few would dispute that the common defense requires a viable domestic steel industry, potential acquirers of these assets must gain relief from the ``legacy cost'' obligations that would otherwise run with the acquired assets.
My colleagues might ask: if an acquiring steel company is relieved of these obligations, who would take them on? The answer is this: a Federally-sponsored trust fund, financed with steel tariff receipts; funds previously placed in trust by acquired companies for retiree health and life insurance benefits; fees to be paid by acquiring companies; and, yes, as necessary to cover shortfalls, appropriations. To those who say the public cannot take on these obligations, I offer the following logic: when steel producers go under, as they will if we do not act, the public may very much face exposure to these obligations via the Medicare and Medicaid programs; taking them on before the companies go under will at least assure that the defense-critical steel industry survives. It is an unpleasant choice we face, but it is one which we must face: we may either assume ``legacy cost'' obligations now and save a vital industry; or we can wait and watch a vital industry die and face up to ``legacy costs'' later.
I strongly appeal to my colleagues in the Senate to seriously consider this Hobson's choice. If they do, I trust they will come to the same conclusion that I have: we must save this industry by clearing the way for the consolidation that will be necessary to compete in the international market of the future. And we must protect those who have lost, or may yet lose, their health care benefits due to unfair competition from abroad. The steelworkers of America, many from the ``Greatest Generation'' and from my home, Pennsylvania, built the Nation in the 20th Century. They made the United States the world's only superpower. We need to assure that their post-retirement years are secure.
By Mr. KERRY (for himself, Ms. SNOWE, Mrs. FEINSTEIN, and Mr. CHAFEE):
S. 2190. A bill to amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to provide employees with greater control over assets in their pension accounts by providing them with better information about investment of the assets, new diversification rights, and new limitations on pension pla blackouts, and for other purposes; to the Committee on Finance.
Mr. KERRY. Mr. President, I rise today with a great deal of pride to introduce the Senate's first bipartisan
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As you know, Enron's bankruptcy, which caused thousands to lose their retirement savings, since their pensions were invested heavily in Enron stock, has prompted many members of Congress in both parties to introduce pension-related legislation. President Bush has also suggested several reforms. Many of these proposals share some common elements, while others contain measures that are objectionable to one side or the other. Senator SNOWE and I share the view that worker retirement protection is much too important to become another partisan issue, where the upcoming elections cloud our judgment and prevent us from passing much-needed legislation. We can, and should, pass critical pension reform this year that helps American workers fee secure about their retirement savings. In my view, the playing field has been tilted against workers for far too long, and it is unfortunate that it takes a travesty like Enron to make those of us in Congress act in their interests.
Of course, the pension issue is one that falls in the jurisdiction of two Senate committees. I strongly support Senator KENNEDY'S bill, which recently passed out of the HELP committee here in the Senate. Soon, however, the Senate Finance Committee will also consider pension reform. Given that the history of that Committee is one in which the best bills are often bipartisan, I wanted to work with Senator SNOWE to develop a pro-worker bill for the Finance Committee that can be combined with Senator KENNEDY'S bill later on.
The House of Representatives has also followed such a two-committee approach, although I have some significant reservations that the final bill that passed last week does not do enough for workers. I hope to work within the Finance Committee and with Senator KENNEDY to develop a better bill here in the Senate, so we can pass legislation this year that the President will sign. Our goal should be to pass a bill that receives a two-thirds vote in both chambers not because we think President Bush will veto it, but because we want to signal to the country that partisan politics can be pushed aside when the true interests of hard-working Americans are at stake.
Despite all of the news in recent months about corporate greed and excess, recent polls show that nearly two-thirds of the public believes that the most important issue with Enron's collapse is the loss of jobs and savings. With 38 million people controlling nearly $1.7 trillion in 401(k) plan assets, and with nearly 40 percent of large-plan assets tied up in company stock, much of which cannot be sold until workers reach a certain age, it is clear that the playing field needs to be tilted back towards workers. Our bill does just that, and because it is a complete approach, including all types of so-called ``defined contribution'' plans, as opposed to just some plans, it does so without opening any major new loopholes that would allow workers to be further
exploited.
The first thing workers need out of a pension reform bill is better information, because for millions of Americans, their retirement savings is their only true asset other than their homes. Under our bill, all covered workers would be given basic, unbiased information on the basics of investing, as well as personalized information from their employers to help them know if they are adequately preparing for their retirement years. This additional information will make a huge difference to millions of workers who currently have no knowledge about the basics of investing, or if they are saving enough to live comfortably in retirement.
Next, since current law prevents most workers from receiving any sound guidance about financial planning, our bill includes the text of S. 1677, the Bingaman-Collins investment advice bill. Under this bill, millions more workers will benefit from professional, independent investment advice paid for by their employers. Workers will be able to select appropriate investments and better plan for their retirements without the creation of new conflicts of interest.
Like other bills, our bill addresses the issue of blackout periods, those times when plan participants are prevented from making changes to their asset allocations. Senator SNOWE and I believe that companies should provide adequate notice before any blackout period, our bill requires 30 days' notice, and inform workers of its expected length. In addition, blackouts should generally be limited to 30 days for plans that are heavily invested in company stock. Exemptions could be granted to small businesses or companies in unusual circumstances, such as a merger. This latter rule is one that distinguishes our bill from many of the others. But it seems common-sense to use that plans with more volatile assets, such as plans heavily invested in company stock, should be forced to end blackout periods as quickly as possible in order to minimize market risk for the workers.
Moreover, during blackout periods, management should be prohibited from selling large blocks of stock on the open market. We command President Bush for suggesting this additional protection for rank-and-file employees, and we will work with him to help it become law.
But most important, workers want and deserve a greater say in where their money is invested. Diversification is a key principle in any balanced investment strategy. Workers should be empowered with the ability to direct where their retirement savings are invested.
While the shift to more broad-based stock ownership is generally a positive trend in our society, employees should no longer be forced to buy company stock with their own contributions. In addition, if workers choose to buy company stock with their own funds, they should be able to diversify these contributions whenever they wish. It's their money, after all, and they should never be forced to relinquish control of it.
For employer contributions to retirement plans, workers should be allowed to begin diversifying these contributions once they are vested in the plan. Our bill accomplishes that goal while avoiding new loopholes by applying different diversification rules based on the type of contribution, worker payroll deduction, employer matching contribution, or employer nonmatching contribution, rather than the type of plan. We want to make sure that the situation with Enron never happens again, and the protections in our bill will accomplish that goal.
In our view, Congress should also provide special diversification rights for older workers, because the closer you are to retirement, the more you have to lose should stock prices fall. Therefore, under our bill, once a worker turns 55, he or she would be permitted to completely diversify their retirement assets, with no restrictions. This will be the case regardless of tenure with the firm, and regardless of the type of plan. Companies must notify workers of this right to diversify when the worker has reached 55 years of age, thereby giving older workers the additional layer of protection they deserve after a lifetime of work and saving.
I want to say a word about ESOPs. Employee stock ownership plans are important in that they give rank-and-file employees an ownership stake in their firms, which is largely a good thing. We should continue to encourage firms, both public and private, to include their workers in their success. Many public companies are converting parts of their 401(k)s to ESOPs to take advantage of a feature in the tax code that allows them to deduct dividends paid on the shares in the plan. However, these conversions to so-called KSOPs have downsides, in that these plans are generally more restrictive than 401(k)s when employee diversification right are concerned.
As a result, Congress must include both KSOPs and ESOPs in any new diversification rules, to the extent that the plans are at public companies. If we fail to include them, or include one but
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Finally, the government should create an Office of Pension Participant Advocacy, similar to the Taxpayer Advocate Service, where both unionized and non-unionized workers can turn to voice their concerns about pension policy. The Pension Participant Advocate would issue an annual report to Congress recommending changes to the pension laws. This idea is one that appears in several bills before Congress, and it is long overdue.
All of these proposals will protect our workers, and more importantly, they will do so without prompting reductions in benefits. Businesses could still contribute stock to retirement plans. Workers will be empowered to diversify their assets, but they would not face any new rules that limit their own choices, such as a hard cap on the amount of a single stock they could own. Our bipartisan approach will ensure that workers are better off in the long run, and that's the outcome we all want.