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CCH® PENSION AND BENEFITS — 5/16/06

House accepts motion to restrict executive pension increases when plans are underfunded

The House has approved a motion, offered by Rep. George Miller (D-CA), designed to extend to corporate executives the same restrictions on benefit increases from underfunded plans that would apply to rank-and-file employees. The motion was passed by the House on May 3, 2006, by a 299 to 125 vote.

"We need pension rules that are fair to all workers," said Miller, the senior Democrat on the House Education and the Workforce Committee. "Insisting that America's executives play by the same rules is just basic fairness," he contended.

Motion instructs conferees to pension reform bill

The House and Senate have each passed their version of pension reform legislation (H.R. 2830). Conferees are currently working to iron out differences between the two bills.

Miller noted that, under the House version of the legislation, if an employer allows a defined benefit plan to become less than 80 percent funded, the covered workers cannot receive benefit increases, cost of living adjustments, or lump-sum distributions. Executives, he said, are only prohibited from transferring corporate assets to their own compensation packages once plan funding drops below 60 percent.

The Miller motion instructs the House pension conferees to treat restrictions on corporate executives' retirement benefits the same as they treat restrictions on rank-and-file employees' pension benefits. The motion also instructs House negotiators to make these provisions effective after December 31, 2005. As a result of this effective date, Miller noted in a press release, the bill would apply to the $98 million retirement package of outgoing ExxonMobil CEO Lee R. Raymond, which was announced in 2006.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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