March 22, 1999

The Honorable Amo Houghton
Chairman
Subcommittee on Oversight
House Committee on Ways and Means
Washington, DC 20515

Dear Mr. Chairman:

It is our understanding that the House Subcommittee on Oversight will review proposals to enhance our nation's retirement policies, particularly those provisions that were included in recent proposals put forth by members of the Ways and Means Committee and the Administration at a hearing on March 23, 1999. The national organizations listed above, representing state and local governments, public employee unions, public retirement systems, and millions of public employees, retirees, and beneficiaries, support public pension provisions contained in the Comprehensive Retirement Security and Pension Reform Act of 1999 (H.R. 1120), sponsored by Representatives Rob Portman, Benjamin Cardin and others, and provisions in the Administration's fiscal year 2000 budget proposal. Such proposals would strengthen the retirement savings programs of public employers and their employees throughout the country.

Both HR 1102 and the Administration’s FY2000 budget proposal would enhance portability in public sector defined benefit plans and allow workers to take their deferred compensation and defined contribution savings with them when they change jobs. HR 1102 would provide additional enhancements to portability and pension simplification that we support. HR 1102 would provide more extensive portability between all defined contribution and deferred compensation plans. It would also provide greater clarity, flexibility and equity to the tax treatment of benefits and contributions under governmental deferred compensation plans. Finally, it would simplify the administration of and stimulate increased savings in retirement plans by increasing limits that have not been adjusted for inflation and are generally lower than they were fifteen years ago, repeal compensation-based limits that unfairly curtail the retirement savings of relatively non-highly paid workers, and allow those approaching retirement to increase their retirement savings.

In particular, we support the following provisions contained in these proposals:

Permit funds from 403(b) and 457 plans to be used to purchase permissive service credits in public sector defined benefit plans, as is currently permitted within other defined contribution plans;

Allow rollovers of retirement benefits to and from 403(b) and 457 plans when employees switch jobs;

Allow greater flexibility in 457 distributions;

Provide equitable tax treatment to Section 457 plan distributions made pursuant to a domestic relations order.

Remove the compensation-based limits with regard to all retirement plans;

Restore the increased annual limits on contributions to defined contribution plans, the annual benefit limits for defined benefit plans, and the amount of compensation that may be taken into account under qualified retirement plans; and

Increase and index the current catch-up contributions, and allow catch-up contributions under all salary reduction plans for anyone age 50 and older.

All of these provisions would help employees build their retirement savings, especially those employees who have worked among various public, non-profit and private institutions. We appreciate that many of the proposals were included in the President's FY 2000 budget, and that all of them were encompassed in the comprehensive bipartisan legislation introduced by Representatives Portman and Cardin. Our organizations applaud the leadership members of the House Oversight Subcommittee and Ways and Means Committee have shown on public pension issues and are hopeful you will have similar interest in these meaningful proposals.

If you have questions or need additional information, please contact our legislative representatives:

Ed Jayne AFSCME 202/429-1188
John Stanton CTRS 202/637-5600
Tim Richardson FOP 202/547-8189
Tom Owens GFOA 202/429-2750
Barry Kasinitz IAFF 202/737-8484
Tina Ott IPMA 703/549-7100
Kimberly Nolf IUPA 703-549-7473
Neil E. Bomberg NACo 202/942-4205
Susan White NAGDCA 703/683-2573
Chris Donnelan NAGE/IBPO 703-519-0300
Bob Scully NAPO 202/842-4420
Jeannine Markoe Raymond NASRA 202/624-1417
Ed Braman NCPERS 202/429-2230
Gerri Madrid NCSL 202/624-5400
Cindie Moore NCTR 703/243-3494
Frank Shafroth NLC 202/626-3020
Daryll Griffin NPERLA 202/296-2230

March 22, 1999

The Honorable William J. Coyne
Ranking Member
Subcommittee on Oversight
House Committee on Ways and Means
Washington, DC 20515

Dear Representative Coyne:

It is our understanding that the House Subcommittee on Oversight will review proposals to enhance our nation's retirement policies, particularly those provisions that were included in recent proposals put forth by members of the Ways and Means Committee and the Administration at a hearing on March 23, 1999. The national organizations listed above, representing state and local governments, public employee unions, public retirement systems, and millions of public employees, retirees, and beneficiaries, support public pension provisions contained in the Comprehensive Retirement Security and Pension Reform Act of 1999 (H.R. 1120), sponsored by Representatives Rob Portman, Benjamin Cardin and others, and provisions in the Administration's fiscal year 2000 budget proposal. Such proposals would strengthen the retirement savings programs of public employers and their employees throughout the country.

Both HR 1102 and the Administration’s FY2000 budget proposal would enhance portability in public sector defined benefit plans and allow workers to take their deferred compensation and defined contribution savings with them when they change jobs. HR 1102 would provide additional enhancements to portability and pension simplification that we support. HR 1102 would provide more extensive portability between all defined contribution and deferred compensation plans. It would also provide greater clarity, flexibility and equity to the tax treatment of benefits and contributions under governmental deferred compensation plans. Finally, it would simplify the administration of and stimulate increased savings in retirement plans by increasing limits that have not been adjusted for inflation and are generally lower than they were fifteen years ago, repeal compensation-based limits that unfairly curtail the retirement savings of relatively non-highly paid workers, and allow those approaching retirement to increase their retirement savings.

In particular, we support the following provisions contained in these proposals:

Permit funds from 403(b) and 457 plans to be used to purchase permissive service credits in public sector defined benefit plans, as is currently permitted within other defined contribution plans;

Allow rollovers of retirement benefits to and from 403(b) and 457 plans when employees switch jobs;

Allow greater flexibility in 457 distributions;

Provide equitable tax treatment to Section 457 plan distributions made pursuant to a domestic relations order.

Remove the compensation-based limits with regard to all retirement plans;

Restore the increased annual limits on contributions to defined contribution plans, the annual benefit limits for defined benefit plans, and the amount of compensation that may be taken into account under qualified retirement plans; and

Increase and index the current catch-up contributions, and allow catch-up contributions under all salary reduction plans for anyone age 50 and older.

All of these provisions would help employees build their retirement savings, especially those employees who have worked among various public, non-profit and private institutions. We appreciate that many of the proposals were included in the President's FY 2000 budget, and that all of them were encompassed in the comprehensive bipartisan legislation introduced by Representatives Portman and Cardin. Our organizations applaud the leadership members of the House Oversight Subcommittee and Ways and Means Committee have shown on public pension issues and are hopeful you will have similar interest in these meaningful proposals.