Senators ‘Send a Warning’ on Pensions

Alarmed by reports of widespread pension underpayments, the chairman of the Senate Committee on Aging said Monday that he may promote legislation requiring companies to send workers statements detailing the pensions they have earned and how the benefits are calculated.

A detailed pension report for each worker before retirement should become as “routine” as the W-2 tax forms mailed by companies to their employees, Sen. Charles Grassley (R-Iowa) said after a committee hearing.

Grassley also said he would support an expansion of federal funding for local projects that help retirees with pension problems and the creation of a nationwide 800 number for advice.

Under current law, personal pension reports are available only if a worker specifically requests the information from the employer.

Joining in a bipartisan exhortation to workers, Sen. John B. Breaux (D-La.), the committee’s ranking Democrat, said the committee wants to “send a warning to all pension recipients” to ask questions. “What do they have in their pension plans? Where is it? When can they get it?”

Grassley called on workers to learn more about their pension rights years before they retire. “We’re talking to every man or woman, young or old, to take charge of your future and ask questions,” he said at the hearing.

Grassley and Breaux said they would prefer not to impose new laws or rules on the already- complex structure of federal pension regulations. But it may take a law to ensure that workers are educated about their pension benefits, Grassley said.

“I want to get reaction from people” to a proposal that companies be required to issue a personal report to each worker every three years, he said.

The problem of pension uncertainty affects millions of workers because the complexity of the law and calculation methods lead to numerous errors, according to government audits.

Paul Francione, who worked for Pan American World Airways for 14 years before leaving the job with total medical disability because of rheumatoid arthritis, told the committee about his struggles to get his pension.

He was living on Social Security disability payments and, in 1992, at age 62, he tried to find out what he would receive as a pension. Pan Am filed for bankruptcy and did not respond to his letters. Neither did his former union, the Teamsters.

The Pension Benefit Guaranty Corp.--the federal agency that ensures payments to workers when plans go broke--reviewed his case twice and said he was entitled to nothing. With help from the Pima Council on Aging, an Arizona group, he sent a third letter to the federal agency, which then it said he was entitled to $309 a month.

Another witness, Edwin Witort, thought the $103-a-month pension he was receiving was too low. The Illinois metals company he had worked for twice contended that the amount was correct, he said. But he got a $10,000 lump-sum payment and an increase in his monthly payment to $220 after hiring so-called “pension detectives,” a private firm named the National Center for Retirement Benefits in Northbrook, Ill. Its fee is 30% of the amount recovered.

“I congratulate both of you for your perseverance,” Breaux told Francione and Witort, praising them for pushing ahead despite letters of rejection. “Thousands of people may have gotten the same letter you did and put it away and are now struggling unnecessarily.”

Even when companies provide individual statements, they are often written in technical language that is hard to understand, said another witness, Karen Ferguson, director of the Pension Rights Center, a Washington advocacy group that helps retirees.

The Labor Department should provide a model form in plain English, she said.

The existing disclosure rule requiring a company to provide a statement when it is requested applies to private employers. But multi-employer plans, such as those operated by unions and employers in the construction and garment industries, are exempt from any reporting at all.