WASHINGTON - Pension reform is not finished for the Pension Benefit Guaranty Corp., even though pension simplification was passed and signed by President Clinton in August.
PBGC Executive Director Martin Slate, speaking at a National Employee Benefits Institute conference earlier this month, listed three items not included in the pension simplification package: expanding individual retirement accounts by doubling income limits; tightening pension fund monitoring through full-scope audits; and doubling benefit levels guaranteed by the PBGC in multiemployer plans. All of these issues should be included in legislation Senate Minority Leader Tom Daschle, D-S.D., expects to introduce before Congress adjourns this month (Pensions & Investments, Sept. 16).
"These represent just some of the unfinished business we still have to attend to, and there is more," Mr. Slate said, adding only about half of the private sector work force participate in a pension plan.
Mr. Slate stressed the need to find creative ways to provide pensions to all workers, while keeping sight of the importance of defined benefit plans. The number of defined benefit plans has decreased, but people need to know the advantages of the federally backed plans, he said.
The number of defined benefit plans insured by the agency declined 53% to 53,000 in 1996 from 112,000 plans in 1985, Mr. Slate said, noting the drop reflects the large number of sufficiently funded terminations by small plans. Meanwhile, the number of larger plans - with more than 1,000 participants - increased 28% to 4,600 from 3,600 in 1980. Today the agency protects pensions for 32.6 million workers and retirees in single-employer plans.
Although he did not offer examples of incentives that might be used to encourage the growth of defined benefit plans, he said he hoped midsized companies would take another look at the advantages defined benefit pension plans offer.
"As baby boomers are finding out, a predictable retirement income, backed by federal insurance is very attractive," Mr. Slate said. "While defined benefit plans may not be practical for smaller companies, they certainly could be for midsized firms that need some stability in their workforce.
"I fear that the value of defined benefit plans in areas of employee motivation, productivity and retention is being overlooked. We need to find ways to combine the stability and protection offered by a defined benefit plan and the portability offered by a defined contribution plan."