This letter was sent the all members of the House

December 15, 2005

United States House of Representatives
Washington , DC 20515

Dear Representative:

The House may soon consider H.R. 2830, the Pension Protection Act of 2005, reported by the Committees on Ways and Means and Education and the Workforce. On behalf of the 4.6 million members and supporters of the National Committee to Preserve Social Security and Medicare, I write to express our opposition to H.R. 2830.

We applaud the legislation's effort to address pension retirement income, especially the provisions making the Saver's Credit permanent and transferable to a retirement savings vehicle. However, we must oppose the bill because the (hybrid) pension plan provisions legitimize cash balance pension conversions that would reduce promised benefits for older, long-tenured employees. We are also concerned by the $70 billion price tag this bill carries. At a time of record deficits and spending cuts, the high cost of H.R. 2830 would drain resources from social programs upon which seniors rely.

While we recognize the need to clarify the legal status of cash balance pension plans to encourage employers to remain in the defined benefit pension system, we find that the provisions of H.R. 2830 do not do enough to protect older, long-tenured employees whose traditional defined benefit plan converts to a cash balance plan. In many cases, conversions from traditional defined benefit plans to cash balance plans deprive older workers of the benefits derived from long service and a higher salary that they would have received in a traditional plan, and erode early retirement subsidies often provided in traditional plans. By prospectively condoning conversions from traditional defined benefit plans to cash balance plans without any transition protections, HR 2830 would unfairly burden older and long-tenured employees, a group that is least able to make up for any losses because of their proximity to retirement.

Separate from the cash balance issue, we are also concerned about the $70 billion dollar price tag of H.R. 2830. Presently, the nation is faced with mounting federal debt and spending cuts, which are being used not to reduce the deficit but to offset a portion of the cost of tax cuts. Financial security for America 's seniors is directly linked to fiscal responsibility by the Congress and the President. Record federal deficits -- $317 billion in fiscal year 2005 -- make it harder to strengthen our pension system and meet our commitments to fortify Social Security and Medicare.

We look forward to working with Congress to forge legislation that will strengthen defined benefit pension plans, protect older workers, and address the legal uncertainty surrounding cash balance pension plans.

Cordially,