Illinois Valley news., May 07, 2003, Page 18, Image 18

Page 18
The Savvy Senior
by Carol Martin
AARP commends Con-
gressmen Bernie Sanders
and George Miller for their
leadership in introducing
the "Pension Benefits Pro-
tection Act." AARP sup-
ports this bipartisan legisla-
tion which would add the
critical benefit protections
needed for older and
longer-term workers in a
cash balance pension con-
version.
This is clearly the top pen-
sion issue on the minds of
members. As a measure of
the intensity of their con-
cern, just since the begin-
ning of this year, AARP
members have used the
web site for over 60,000
contacts to the Treasury
Department and to their
elected officials asking for
better protections for older
workers.
Over the past few years,
negative publicity over
cash balance plans has
focused attention on em-
ployers proposing to con-
vert their plans. As a result,
a number of major employ-
ers - knowing full well the
dramatic benefit reductions
that may occur - have cho-
sen to offer their longer-
term workers some type of
protection such as permit-
ting employees the choice
to remain under the old
plan formula.
Unfortunately, the recently
proposed IRS regulations,
rather than addressing the
transition problem and en-
suring best practices, will
lower the bar. The IRS
regulations give a green
light to plan sponsors to
again convert their tradi-
tional plans to cash bal-
ance plans without ade-
quate protection for their
employees.
AARP has called on the
Treasury Department to
modify or withdraw its cur-
rent proposed regulations
for its failure to protect
older workers and comply
with the prohibitions
against age discrimination.
The Sanders-Miller legisla-
tion introduced recently
would protect older and
longer-term
workers
whether or not the Treas-
ury Department revises its
regulations by ensuring
that those most likely to be
harmed by a cash balance
conversion - those age 40
or over and those with 10
years of service - can re-
main under the old plan
formula.
Cash balance conversions
disproportionately hurt
older workers and they will
continue to do so unless
protections are put in
place. With the decline in
stock market savings and
escalating health care
costs, today's longer-term
workers need every dollar
they've been promised to
be able to take care of
themselves in retirement.
Yet cash balance conver-
sions can cost those near-
ing retirement as much as
half the benefits they
counted on.
By depriving these older
workers of the benefits
they expected so late in
their career, employers
break implicit promises
made in their traditional
defined benefit pension
plan and penalize their
most loyal longer-term
workers. That is why the
protections in the Sanders-
Miller legislation are so im-
portant.
(c) 2003 DBR Media, Inc.
WORD OF THE WEEK
Decrypt - 1. Decipher
2. Decode
( Random House Webster’s
College Dictionary)
Illinois Valley News, Cave Junction, OR Wednesday, May 7, 2003