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House
Bill Would Boost Retirement Savings WASHINGTON
- A
House committee on Friday approved a $50 billion pension bill that would
allow Americans to put more tax-deferred income into personal retirement
accounts, but only after the Republican chairman summoned police in the
midst of a Democratic boycott and protests over the way the measure was
being handled. The legislation, which over the next 10 years would also
allow retirees to wait longer to draw money from their retirement funds, was
approved by Republicans while Ways and Means Committee Democrats were
huddled in an adjacent room. It could be considered by the full House next
week. Committee Chairman Bill Thomas, R-Calif., summoned police
because he thought the lone Democrat to remain in the room, Rep. Pete Stark
of California, was speaking out of line, other Republicans on the panel
said. He asked police to remove Democrats from the adjacent room, but later
rescinded that request, the Republicans said. Assistant to the Sergeant of Arms Donald Kellaher, called in
to mediate, said that "clearly the police in this circumstance have no
role or authority to intervene." Democrats were upset because they said the final version of
the 90-page bill was circulated around midnight Thursday and they weren't
given sufficient opportunity to study it before Friday's meeting. Democrats, who have long clashed with Thomas over what they
say are his autocratic practices, said they would consider filing a
complaint against Thomas and his staff for filing a false report of a
disturbance. But Rep. Jim McCrery, R-La., a committee member, said
Democrats were even less considerate of minority rights when they were in
power. The Democratic argument that Republicans are undemocratic has
"been their story for a long time and they're sticking to it." The legislation to extend the age for drawing pension money
is part of a broader bill designed to encourage individuals to save more for
retirement. Bill sponsors Rob Portman, R-Ohio and Rep. Benjamin Cardin,
D-Md., want to boost the age at which individuals must start withdrawing
money from their retirement accounts from 70 1/2 to 75. The current age was set in 1962, and they hope to update it
to reflect the longer life expectancy of retirees. The bill would also expand a tax credit designed to encourage
savings in low-income households and speed already planned increases on
retirement account contribution limits. Individuals would be allowed to put
up to $5,000 in their individual retirement accounts and up to $15,000 in
their 401(k) accounts each year beginning in 2004. Lawmakers will also consider changing the way companies
measure their future obligations to retired workers under the 32,000
traditional pension plans offered by private employers. A change in calculations for traditional, defined benefit
pension plans would replace the 30-year Treasury bond as the basis for
calculating defined benefit obligations. The government stopped issuing new
30-year bonds in 2001, and a temporary measure that simulates the 30-year
bond rate will expire at the end of this year. Portman and Cardin want to replace the 30-year rate with a
long-term corporate bond rate to measure pension liability for three years,
while the Congress and the Treasury Department collaborate on a permanent
solution. "The way we are doing it is a responsible approach to
the current economic situation," Portman said. The bill ignores a Treasury Department proposal that would
have used high-quality corporate bonds to measure pension liabilities for
two years, followed by a formula that takes into account the demographics of
a company's work force. That formula drew criticism from businesses and workers
worried that it will introduce too much volatility in pension plan funding
and discourage companies from establishing or continuing pension benefits. Many
traditional pensions currently face funding shortfalls. More than half of
employer-sponsored plans are underfunded by a total of $300 billion, the
Pension Benefit Guaranty Corp. told Congress in April. The Pension Benefit
Guaranty Corp. insures the plans and assumes some of the obligations of
failed plans. Copyright ©
2002 Global Action on Aging
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