May 1, 1991
TO: PENSION MEMBERS NO. 17-91
RE: DEPARTMENT OF LABOR UNVEILS PROPOSED PENSION "POWER" PLAN
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Department of Labor Secretary Lynn Martin yesterday
announced the Bush Administration's proposal to expand pension
coverage and protect retirement assets. The proposal, which
consists of five distinct recommendations, is collectively
referred to as the Pension Opportunities for Workers' Expanded
Retirement or "POWER" plan.
The POWER plan would affect pension law as follows:
1. Expand coverage by means of a retirement program designed
for employers with 100 or fewer employees. The program
would have no discrimination rules, but would require
employers to contribute 2 percent of compensation on behalf
of each eligible employee. Also, employees could make
annual salary reduction contributions to the program up to
approximately $4,200 which could be matched by the employer
up to $2,100.
2. Permit state and local governments and tax-exempt
organizations to establish 401(k) plans.
3. Simplify discrimination and other rules for qualified
retirement plans.
4. Shorten multi-employer plan vesting schedules to 5 years.
5. Facilitate rollover of pension plan distributions to IRAs
or other qualified plans.
The POWER plan will require amendments to the Internal
Revenue Code and the Employee Retirement Income Security Act. No
legislation has been introduced yet in Congress regarding the
POWER plan.
A fact sheet describing the POWER plan is attached. We
will keep you informed of developments.
W. Richard Mason
Assistant Counsel - Pension
Attachment