Assistant Secretary Combs Testifies on Bush Proposal To Strengthen Defined Benefit Pension Plans

Archived News Release — Caution: Information may be out of date.

Washington, DC - Ann L. Combs, Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA), today testified on the Administration’s proposals to enhance disclosure and safeguard against pension underfunding to strengthen defined benefit pension plans.

In testimony before a joint hearing of the House Education and Workforce Subcommittee on Employer-Employee Relations and the House Ways and Means Subcommittee on Select Revenue Measures, Combs said, “One of the Bush Administration’s hallmarks has been an aggressive agenda to improve retirement security. Defined benefit plans are an important source of guaranteed retirement income and must be encouraged. Benefit promises made to workers and retirees must be kept.”

To improve the transparency of pension plans, the Administration is proposing that all companies disclose the value of their defined benefit pension plan assets and liabilities on termination basis in the annual reporting provided to their participants and beneficiaries. “Workers, retirees and financial markets need accurate and timely information,” Combs said.

The Administration also proposes that certain financial data already collected by the Pension Benefit Guaranty Corporation (PBGC) from companies sponsoring pension plans with more than $50 million in underfunding be made public.

To safeguard against further deterioration in pension funding, the Administration proposes that companies with below investment grade credit ratings whose plans are less than 50 percent funded on a termination basis cannot grant benefit increases, continue benefit accruals or make lump sum distributions unless the company contributes cash or security sufficient to pay for them. Workers and retirees at these companies bear the greatest risk of seeing their retirement benefits cut.

The full text of the testimony is available on EBSA’s Web site.

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

Archived News Release — Caution: Information may be out of date.