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Administration Unveils Plan To Expand Access to Pensions

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The Administration estimates that under its plan up to 42 million full-time workers could become eligible for the retirement-investment programs.

Groups representing working and retired teachers called the proposal an important step toward reforming and simplifying pension plans. But they questioned the Administration's resolve after learning that it does not plan to push the proposals as a legislative package.

"Either it is, in large part, an empty gesture, or someone is going to have to come up something to make this come about," said Michael Edwards, manager of Congressional relations for the National Education Association. He added that while ost of the proposals are aimed at the private sector, the package's overall themes are encouraging.

Five-Point Plan

The five-point plan, unveiled by Secretary of Labor Lynn Martin, would:

  • Restore the popular retirement accounts known as 401(k) plans for state and local governments and tax-exempt organizations, a move that could affect up to 12 million workers. The retirement accounts were curtailed by 1986 tax reforms.
  • Simplify pension rules, including those for 401(k) plans, and repeal tax breaks that discourage retirement investment.
  • Encourage workers to reinvest the lump-sum pension payouts they receive when changing jobs into new retirement accounts. About 17 percent of the workers who received such payments in 1987 reinvested the money in a similar account at their new job.
  • Establish pension programs in businesses with 100 or fewer workers, and require uniform vesting for private-sector workers after five years' service.

'Spending America's Future'

In announcing the plan, which marks the Administration's first official stand on the issue, Ms. Martin said the nation's pension system is in need of new choices as well as greater accessibility and flexibility.

"Barely over half of America's workforce is covered by a pension, and those funds are often lost as re tirement income when workers change jobs," she said. "We're spend ing America's future."

Pension-reform advocates saw the announcement as a significant step.

"We are pleased that the Admini tration recognizes that improving pension coverage should be a national priority," said Horace Deets, executive director of the American Association of Retired Persons. He noted that the sheer number of workers who are not covered by a retirement system other than Social Security "clearly indicates the need for reform."

Congressional observers, however, last week said many lawmakers were amazed that the Administration did not plan to pursue pension- reform legislation.

Senator David H. Pryor, the Ar kansas Democrat who chairs the Senate Private Retirement Plans Subcommittee, is expected to introduce a pension-simplification bill later this year. Mr. Pryor, who is recovering from a recent heart attack, did not comment on the Administration's proposal.

In her remarks, Secretary Martin pledged that the Adminstration ''will work closely with the Congress" on the issue.

Education advocates said that de spite the plan's heavy emphasis on the private sector, the Administration's themes may provide an ave nue for addressing the pension con cerns of public-sector workers.

Many school employees face the same portability difficulties as private-sector workers, as benefits and service credit are often reduced when teachers and other school workers change districts or move to a new state, Mr. Edwards said.

Mr. Deets of the aarp argued that any serious expansion of the pension system will require a heavy focus on portability. "The small steps taken in this proposal fall short of the need for a comprehensive solution to the portability problem," he said.

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