Pension Funding Reforms

Chairman Boehner, Ranking Member Miller and Members of the Committee, I appreciate the opportunity to appear before you to discuss issues relating to underfunding in our private defined benefit pension system and pension funding reforms.

After providing brief background on defined benefit plans, pension insurance, the PBGC, and the taxpayers’ investment in the private pension system (part I, pages 1-4 and Appendix A), this written statement reviews recent developments affecting pension funding and pension insurance (part II, pages 4-7) and the often conflicting public policy objectives that need to be reconciled when formulating policy in this area (part III, pages 7 -8). Next, the statement turns to two threshold questions – whether legislation is needed in the short term and whether broader, permanent changes to the system are called for (part IV, pages 8-9). The main portion of the testimony then suggests ten specific cautions and considerations to bear in mind when considering longer-term reforms (part V, pages 9-17).