What: All Issues : Labor Rights : Pension Protections : H.R. 2989. Fiscal 2004 Transportation-Treasury Appropriations/Vote to Prevent the Treasury Department from Finalizing Rules Which Would Encourage Companies to Transition from Defined-Benefit to Cash Balance Pension Plans.
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H.R. 2989. Fiscal 2004 Transportation-Treasury Appropriations/Vote to Prevent the Treasury Department from Finalizing Rules Which Would Encourage Companies to Transition from Defined-Benefit to Cash Balance Pension Plans.
house Roll Call 485     Sep 09, 2003
Y = Conservative
N = Progressive
Winning Side:
Progressive

In July of 2003, a federal judge ruled in Cooper v. IBM that so-called cash balance pension plans were age-discriminatory because those plans favored younger workers over their older colleagues. While defined-benefit retirement plans offer employees a guaranteed and fixed benefit upon retirement based on length of service and compensation, cash balance plans take a percentage from employees' paychecks for investment in a company-managed retirement account. In light of Enron's collapse and the thousands of Enron employees whose cash retirement accounts were wiped out, many lawmakers on Capitol Hill have advocated for stronger regulations on employee pension accounts. During debate on the 2004 Transportation and Treasury appropriations bill, Representative Sanders (I-VT) offered an amendment which would prevent the Treasury Department from finalizing new rules encouraging companies to adopt cash balance pension plans. Progressives supported the Sanders amendment. In their view, cash balance pension plans are risky and can be manipulated by companies. In the IBM case cited above, IBM employees brought a lawsuit against the company after their cash balance pension accounts were cut by fifty percent for no apparent reason. In another case of pension manipulation, Enron prevented its employees from selling their Enron stock, which comprised most of the value of their pension accounts, even as the failed energy company headed toward bankruptcy. Employee pensions, Progressives argued, should be protected from manipulations and volatile market conditions which may erode or eliminate their retirement accounts (and especially the retirement accounts of older workers who may need their pensions in the short term). Conservatives generally favor cash balance plans and voted in opposition to the Sanders amendment. In their view, cash balance plans can earn employees a higher rate a return and offer greater financial protection than can defined benefit plans. On a vote of 258-160, the Sanders amendment was adopted and language was added to the House version of the 2004 Transportation and Treasury appropriations bill to prohibit the Treasury Department from finalizing rules which would encourage company's to shift to cash balance pension plans. (A similar provision was not included in the Senate version of the legislation; to become law, then, the Sanders amendment must survive conference committee negotiations between the House and the Senate, must be included in the conference report, and must be signed by the president.)

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