A catch-all pension package will be a prominent part of the Democrats' mission statement they will unveil at the Democratic Party's convention this month in Chicago.
Republican legislators say they too will address the nation's looming retirement income crisis in their party's political manifesto, but have not yet worked out the details. The Republican Platform Committee was to release a draft of the party's agenda Aug. 5, a week before the Republican convention in San Diego.
The Democratic Party has tapped a huge brain trust of lawmakers to frame an "omnibus pension bill" to be revealed at the Chicago convention. The players include Democratic senators Tom Daschle of South Dakota, Barbara Boxer of California, Jeff Bingaman of New Mexico, David Pryor of Arkansas and Carol Moseley-Braun of Illinois.
The bill is intended to improve pension coverage, portability and protection. A few provisions are new, but most are pieces of legislation introduced earlier this year. Among the key provisions:
Easing the steep price employers have to pay for running afoul of federal tax law. Instead of forcing employers to give up the tax-favored status of their pension plans for minor delinquencies, the Democratic bill would let employers off with a penalty in line with the problem. What's more, the pension plan would not lose its tax benefits if the employer fixes the problem before an Internal Revenue Service audit. Nor would employees end up having to pay taxes on their company-sponsored nest eggs even if a pension plan does get disqualified.
Allowing employers, when times are good, to make higher contributions to their pension plans beyond the current limits without invoking a 10% penalty.
Forbidding employers from holding art, coins and other collectibles as investments in defined contribution plans. They would also be limited to a 10% cap on company-related securities in 401(k) plans. Ms. Boxer's current bill would be amended so that it exempts employee stock ownership plans and employer matches to retirement plans.
Permanently exempting public pension plans from non-discrimi nation
Eliminating non-discrimination tests on employer contributions at small businesses, proprietorships, limited partnerships and limited liability corporations.
Giving small businesses a $1,000 tax credit for setting up pension plans.
Creating a flexible, portable pension plan for small business to encourage offering retirement benefits to workers. The plan is modeled on the Teachers Insurance Annuity Association-College Retirement Equities Fund plan and the Federal Retirement Thrift Investment Board.
It would allow workers to transfer their retirement assets from job to job.
The proposal, introduced earlier by Mr. Bingaman, would create a national clearinghouse, similar to the way in which TIAA-CREF functions, that would let employers contribute 1% of pay up to $5,000 a year and let workers contribute up to twice that amount up to $5,000. Employees would be vested within six months.
A provision knocked out of the pension simplification package passed by Congress last week that would give participants a choice in ensuring their survivors receive two-thirds of their pension benefits, instead of only half, as required under current law. The survivorship provision was introduced by Ms. Moseley-Braun earlier in the year.
On the Republican side, Social Security, an overhaul of the nation's tax structure and retirement issues are "very important issues," expected to be addressed in their draft, said Rep. Henry Hyde. Mr Hyde of Illinois is the head of the 1996 Republican Platform Committee.
But the last word on those issues rests with the economic growth and opportunity subcommittee, headed by California Attorney General Dan Lundgren and Jo Ann Davidson, speaker of the Ohio House of Representatives.
Both parties also are likely to point fingers at what they claim are misguided legislation introduced by the other side.
The Democratic platform will try to paint the Republicans as pension raiders; the Republicans will attempt to describe how the Democrats have crimped the nation's ability to save for retirement.
The Democratic Party platform probably will attack Republican legislation such as a provision in the tax package vetoed by President Clinton in December that would let corporations siphon surplus assets from pension funds to pay for miscellaneous corporate expenses.
"The Democratic Party will be holding the Republican Party accountable for the pension reversion provision between now and the elections," noted Rep. Earl Pomeroy, D-N.D., in a recent interview with Pensions & Investments.
The Republican Party platform might attack President Clinton's 1993 budget law that cut back the ability of companies to set aside money for their employees' retirement.
Republicans also might be suggesting different ways to safeguard the private pension system from erosion if the nation's tax system is overhauled.
"Many of these ideas which are being initiated on the other side of the aisle not only miss the mark, but they actually aggravate the problem because.... most of these ideas come out of the position that big government resolves problems," Sen. Judd Gregg, R-N.H., said in a statement on the floor of Congress recently.
Mr. Gregg sits on the Senate Labor & Human Resources Committee, which has jurisdiction over pension matters.