President Clinton left many in the pension community stroking their chins, trying to remember when pension issues were so prominent in a State of the Union address.
During the speech, Mr. Clinton urged every small business that could afford it to start a pension plan. He also urged Congress to pass pension simplification.
Mr. Clinton also declared he would again veto any bill making it easier for companies to recapture surplus pension assets.
Veteran industry experts who spoke with Pensions & Investments couldn't recall pensions coming up in a State of the Union message. Those that did, couldn't recall a specific instance.
"Ronald Reagan was big on savings, and I am sure he must have mentioned something about it," said Gary Pines, principal with Towers Perrin, Chicago. "I can't tell you exactly what it is. It's too far back".
When asked why President Clinton focused on pensions, James A. Klein, executive director of the Association of Private Pension and Welfare Plans, Washington, said: "I think politicians are recognizing that pension issues resonate with the electorate.
"There is a recognition that it is a heart-and-soul security issue for the elderly, and baby boomers are thinking about it as they look forward to their retirement years."
Ann Combs, principal in the Washington office of William M. Mercer Inc., suggested Mr. Clinton's emphasis on pensions in his State of the Union address might have been a trial balloon for floating the issue in this year's presidential race.
"The White House is hoping to make pension protection, coverage and portability issues in the 1996 campaign," Ms. Combs noted in a memo to clients circulated after the speech. The president's pollster and political advisers apparently have tested pension issues with the public and received a very strong response, she said.
But the president played loose with the facts, linking disparate issues to strengthen his argument against pension reversions.
Mr. Clinton tied pension reversion to the Retirement Protection Act that was adopted in 1994.:
"Two years ago, with bipartisan support that was almost unanimous on both sides of the aisle, we moved to protect 8 million working people, and to stabilize the pensions of 32 million more," the president said.
"Congress should not now let companies endanger those workers' pension funds.
"I know the proposal to liberalize the ability of employers to take money out of pension funds for other purposes would raise money for the Treasury, but I believe it is a false economy.
"I vetoed that proposal last year, and I would have to do so again."
Mr. Pines said the president spoke out of context when he linked reversions to the law passed in 1994.
"I would beg to differ with him," said Mr. Pines. "The security being set up before you can take a reversion leaves a lot of security. The probability is slim that a fund would be in trouble," he said.
"I wasn't pleased with the statement," Mr. Pines said. "I don't think he understood the issue.
"It played well with the populace."
Indeed, Mr. Klein said the Clinton administration "rhetorically stretched the limits."
He added: "Reversions relate to overfunding; the Retirement Protection Act relates to underfunding."
Noted Jim Kaitz, vice president of government relations for the Financial Executives Institute, Washington: "One has nothing to do with the other.
"Those that support (reversions) are not seeking to reduce benefits or are threatening benefits," Mr. Kaitz said.
Plan sponsors would be more inclined to fund pensions more liberally and generously if they could take the reversion, said William F. Quinn, president of AMR Investment Services, Fort Worth, Texas.
"Secondly, it would encourage the growth of defined benefit plans, rather than the demise we see today," said Mr. Quinn.
It is unlikely, however, the reversion proposal would pass or be considered this year, either on its own or as part of the budget package, most professionals concluded.
Ms. Combs, however, believes pension simplification has a chance to be adopted, as part of a comprehensive federal budget package.
Mr. Clinton, in his speech, said: "I want to challenge every business that can possibly afford it to provide pensions for your employees, and I challenge Congress to pass a proposal recommended by the White House Conference on Small Business that would make it easier for small businesses and farmers to establish their own pension plans."
If a "mini-budget" is adopted, said Ms. Combs, pension simplification probably will be left out because it is an item that loses revenue.
Added Mr. Klein: "There is a lot of bipartisan support for it. So much depends on the overall budget process.
"If they do a modest (budget) bill, there may be room for non-controversial low-cost items that do good, and this seems to be a good candidate," he said.
Regardless of when the budget is resolved, Mr. Quinn doesn't believe there will be pension simplification.
"We have been talking about it for 20 years. I don't think it's going to happen," he said.