The following is a March of Dimes statement submitted for the record to the Subcommittee on Select Revenue Measures, Committee on Ways and Means, in connection with the hearing on the challenges facing pension plan funding on April 30, 2003.

On behalf of 1,500 staff and over 3 million volunteers nationwide, thank you for the opportunity to submit the March of Dimes’ views on funding challenges being faced by the employer-sponsored defined benefit pension system.

The March of Dimes is a nonprofit organization working to improve the health of mothers, infants and children by preventing birth defects and infant mortality through research, community services, education, and advocacy. Of relevance to this hearing, the March of Dimes sponsors a defined benefit pension plan for its employees, which serves as an important tool for attracting and retaining high-caliber employees who are committed to the mission of the March of Dimes. If retirement plans such as the March of Dimes defined benefit plan are to remain viable as a long-range planning tool providing retirement income security for current and future employees, Congress must take quick action to relieve the very real funding pressures now faced by these plans.

Congress has long recognized the importance of helping Americans achieve retirement income security, and defined benefit plans, in particular, offer a number of features that are critical components of retirement security. Under defined benefit plans, benefits are generally funded by the employers and the employer bears the investment risk that plan assets will be adequate to pay benefits earned under the plan. Importantly, benefits are offered in the form of a life annuity, which protects participants and their families against the risk of outliving their retirement income.

Like many other employers, the March of Dimes is concerned about funding pressures that are straining the stability of the nation’s defined benefit pension system. One of the primary sources of this funding pressure is tied to the required use of an obsolete interest rate – the 30-year Treasury bond rate - as the benchmark for a variety of pension calculations, including those involving pension liabilities, pension insurance premiums, and lump-sum distribution calculations.

Fortunately, there are positive steps that Congress can take to address these funding pressures and enable employers, including the March of Dimes, to provide financially sound pension programs. First and foremost, there is an urgent need to enact a permanent and comprehensive replacement for the 30-year Treasury bond rate, which can be achieved by promptly enacting the provision included in the Pension Preservation and Savings Expansion Act (H.R. 1776), recently introduced by Representatives Portman and Cardin. Their proposal offers a balanced and carefully structured solution to a complicated and urgent pension funding problem. The March of Dimes commends their leadership in offering a bipartisan and workable solution to this pressing matter, and we urge Congress to act quickly to provide this relief to defined benefit plans and to protect the pensions of current and future plan participants.

Conclusion
Mr. Chairman and Ranking Member McNulty, thank you for calling this hearing to explore this important retirement policy question, and for your efforts to find a solution to the defined benefit funding crisis that will enable American workers now and in the future to benefit from the unique advantages of defined benefit pension plans.

Marina L. Weiss, Ph.D.
Senior Vice President, Public Policy and Government Affairs
March of Dimes
1146 19th Street, NW 6th Floor
Washington, DC 20036