I’d like to thank Representatives Bernie Sanders and George Miller for their leadership on this issue, and also Senator Tom Harkin for bringing this issue to the forefront.

American workers are facing a retirement crisis. Employers are routinely converting American workers’ hard-earned pensions to cash balance plans, leaving millions of workers out in the cold - - and especially hurting mid-career workers who have put in years of service believing that they could retire with security and dignity.

The Pension Benefits Protection Act will help to make sure that this promise is still a reality. It’s especially important today as hundreds MORE companies are planning to move forward with conversions once regulations proposed by Treasury Department last December are finalized - -rules which don’t adequately help protect older workers. Without congressional action, millions of workers could be hurt.

What’s wrong with converting to cash balance plans? Under a traditional formula, workers accrue more benefits late in their careers. Cash balance formulas, however, provide benefits on a career-average basis. Changing the rules mid-career denies workers significant benefit accruals. And they’re often too close to retirement to be able to make up the difference in other ways.

The spread of cash balance plans - - particularly conversions without adequate safeguards - - is a major threat to workers. Today, nearly one-in-four full-time, private-sector workers with a defined benefit plan is participating in a cash balance plan, and most of these were the result of conversions.

Union members have an enormous stake in the future of the pension system. Today, seven-in-ten union workers in the private sector participate in defined benefit plans, which hold roughly $1 trillion in assets. As a result, millions of union members now count on negotiated pension benefits when they reach retirement.

Workers without a union are helpless to prevent their employer from unilaterally converting their pension to a cash balance plan. Employees with a union, however, have a voice in their retirement and can require an employer to negotiate about a cash balance conversion.

The Treasury Department’s proposal is deeply troubling despite having some restrictions.

Number one, the proposal allows employers to deprive workers of the end-of-career accruals - - workers end up accruing benefits under the cash balance formula at a rate much lower than they would have earned under the traditional defined benefit formula.

Number two, employers may still design plans which have special exclusions for those workers eligible for early retirement under old formulas—so-called wear-away periods—robbing those workers of new benefits after the conversion.

The Pension Benefits Protection Act will give many mid-career workers a choice at retirement to get their original retirement or the new cash balance formula. It will also protect workers against “wear-away” periods during which they earn no additional benefits during the time of the conversion.

America’s workers deserve to have full, defined-benefit pensions which honor their years of service. Congressmen Sanders and Miller and their more than 100 cosponsors are proposing to do what the Treasury Department has refused to do—protect mid-career and older workers against the worst effects of cash balance conversions.

Contact: Kathy Roeder (202) 637-5018