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Big Picture

Will the tax portion of the balanced budget agreement include pension provisions? No one knows yet, although committee staff have been somewhat pessimistic about the chances. As in other years, we are relying on a larger legislative vehicle to move the buy back provision (see below) and the nondiscrimination bill. Traditionally, free standing pension provisions do not move through Congress on their own. House Ways and Means Committee Chairman Bill Archer says he'll release a bill June 9, with mark up to follow June 11 and 12. The budget agreement requires the Committee to complete work by June 14. The Senate Finance Committee intends to complete its work by the June 20 deadline set in the agreement. Once we have word on the bill's contents, we'll be back in touch. Meanwhile, action on the balanced budget agreement has been delayed and Congress may not give final approval until June 10. Disagreement over the 10-year cost of the tax cuts has slowed down progress.

Buy Back Provision

As we have reported, Congresswoman Nancy Johnson (R-CT) has agreed to sponsor legislation to resolve the conflict between purchase of service credit and the Section 415 DC limits ("buy back problem"). We are pleased to report that Congressman Jerry Kleczka (D-WI) will be the lead Democrat on the bill, thus providing bipartisan support. The Wisconsin Retirement System was instrumental in bringing the Congressman aboard. If the provision is not in Ways and Means Committee bill (see above), Reps. Johnson and Kleczka will be introducing a free standing bill. On a related matter, thanks to all the NCTR members who provided feedback on both on Rep. Johnson's draft and on the potential federal cost of resolving the problem.

Pension Issues to Watch

Nondiscrimination. We are continuing to seek House Members and Senators to cosponsor the nondiscrimination relief (House bill, H.R. 1740, and Senate bill, S. 622). We've done a lot to generate interest in the issue. Cindie Moore spoke to a Senate aide this week who said, "you've gotten that nondiscrimination provision in just about every pension bill produced this year."(Well, not quite, but we're working on it.)

Pension Integration. Congresswoman Barbara Kennelly (H.R. 766) and Senator Carol Moseley- Braun (S. 320) have introduced a bill dealing with women's pension issues. It includes a repeal of pension integration, beginning in 2004. Integration permits the reduction of a portion of the employer-provided benefit based on the Social Security benefit the employee will be eligible for at retirement. Under current law, sponsors of retirement systems are free to determine whether they wish to integrate or not. According to the 1996 Comparative Study of the Major Public Employee Retirement Systems by the Wisconsin Retirement Research Committee, 60 of the 68 plans surveyed do not integrate. Of those that do integrate, 5 use a step-up formula, 2 use a formula offset, and 1 uses a combined maximum. Integration is common in private plans.