A provision tucked into a massive Republican House tax bill could trigger a $30 billion corporate raid on private pension funds, the Clinton administration, unions and senior citizens groups asserted Friday.
The proposal, to be considered next week by the Ways and Means Committee, would permit companies to withdraw excess money from their pension funds at any time and use it for any purpose. Current law permits withdrawals only to pay for retiree health benefits.
Critics say the pension plans that would be tapped are not truly in surplus. Withdrawals could jeopardize the pensions of around 24 million workers and retirees and pose a risk to the Pension Benefit Guaranty Corp., the federal agency that backs pensions, they said.
The change would reverse a bipartisan 1990 reform that ended a practice common in the 1980s, when companies drained $20 billion from pension plans, helping fuel a boom in corporate buyouts.
Ways and Means Chairman Bill Archer, R-Texas, called the provision “perfectly sensible and appropriate.”
Committee aides said the provision would increase government tax revenues by $10 billion over seven years because when corporations withdraw the money from pension funds it would be subject to corporate income tax.