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Friday Alert 9/30/05
Alliance for Retired Americans
888 16th Street, N.W. - Washington DC, 20006 - (202)
974-8222 - www.retiredamericans.org
Pension Protection Bill Moves Forward in Senate
Leaders of two Senate committees announced this week a bipartisan deal
on legislation designed to shore up the nation's private pensions system.
Senate action is expected in the next two weeks. The deal likely means pension
overhaul will pass as a stand-alone measure in the Senate. In the House,
pension reform may be part of a larger retirement security bill, including
President Bush's private accounts for Social Security.
The pension protection legislation is aimed at forcing companies to better fund
their pensions plans as well as increase the premiums companies pay the federal
Pension Benefit Guaranty Corporation (PBGC). The PGBC, financed solely by
premiums and interest from assets, went from a $7.8 billion surplus in 2001 to a
$23.3 billion deficit last year after taking over the pension claims of several
troubled steel and airline companies. Under the proposed legislation, companies
will increase premiums to $30 per employee from the current $19.
“This protection legislation is long overdue,” said George J. Kourpias,
President of the Alliance for Retired Americans. “Retirement security for
seniors is rapidly eroding and it's imperative that promises made are promises
kept.”
The Senate agreement would also alter the rules for how companies fund their
plans and imposes tougher funding requirements. Companies, for the first time,
would be required to calculate pension values taking into account any special
benefit features, such as lump-sum distributions or early retirement programs.
New Medicare Drug Plans Make Marketing Debut
Americans 65 and older should prepare for an avalanche of drug plan mail. Ten
large insurance companies have been given the green light by the Bush
Administration to begin marketing their new nationwide drug plans to consumers
October 1. The new Rx offerings are a result of the Medicare law signed into
law in 2004. Private insurers and the federal government plan to communicate
the many plans and their offerings through a barrage of mail, telephone calls,
and advertising aimed at seniors. In-person sales pitches at local drugstores
and community centers are also planned. Medicare beneficiaries in each state
will have at least 11 regional providers to choose from, with some states having
as many as 20 choices. Some providers will offer multiple plans that will
further add to the confusion. Enrollment begins November 15th and lasts for 6
months. Premiums increase 1% each month for those who join after the initial
enrollment period.
Seniors should beware of marketing scams during this heavy promotional period.
Insurers may market their plans over the phone, but must abide by the federal
do-not-call rules and honor “do not call again” requests. Door to door
solicitations are prohibited. Medicare ID numbers, bank account or
credit card numbers or any other personal details should never be given out to
marketers. If you suspect fraud report it to Medicare (1-800-633-4227) or your
state attorney generalï¾’s office.
“All seniors should take the time to make educated and informed decisions. It’s
important to ask questions and know all the available choices,” said Ruben
Burks, Secretary-Treasurer of the Alliance.
Negotiated Drug Prices = Winners; Medicare Prices = Losers
People who get their drug benefits through the Veterans Affairs (VA) Department
paid much less for 49 out of the 50 most commonly used prescription drugs than
those who used the government’s Medicare drug card, a Families USA report
disclosed. The median difference between the lowest Medicare discount card
price and the best price available from the VA was 58.2 percent. This means
that, for half of the top 50 drugs prescribed to seniors, the purchase price
with a discount card was at least 58.2 percent higher than for those same drugs
purchased through the VA for a year-long prescription. The report may be an
indication of how effective the new Medicare drug benefit will be at saving
money on prescriptions for seniors.
The report correlates the VA’s cheaper prices to their ability to negotiate the
prices with drug companies. The Medicare Discount Drug program served as the
first test of whether competing private companies can offer those in Medicare
lower prices than the government could. The private drug companies failed this
test.
“This confirms what we’ve known all along,” said Edward F. Coyle, Executive
Director of the Alliance. “When given the power and leverage to negotiate the
best price, seniors will win. It’s a disgrace Medicare is forbidden by law from
Rx price negotiations.”
To see the full report visit,
http://www.familiesusa.org/resources/publications/reports/getting-the-best-price-sept-2005.html
Santorum Criticizes GOP Social Security Efforts; Proposes Hollow
Guarantee
Chief privatizer Sen. Rick Santorum (R-PA) has publicly criticized the Bush
administration’s strategy for dismantling Social Security, blaming White House
strategists for convincing the public Social Security is in financial trouble
but then failing to rally public support behind private accounts. Santorum, now
tied to an unpopular proposal and facing a strong reelection challenge next
year, is pressing to keep the issue alive. The senator has introduced his own
Social Security bill that would provide a written guarantee to people born prior
to 1950 that they would receive all promised benefits if personal investment
accounts were available under Social Security. However, the proposal is no
guarantee at all since Congress could rescind it at any time, and Santorum’s
proposal also leaves Social Security’s pending insolvency unsolved. Others in
Congress agree that Social Security overhaul is important, but Rep. John Boehner
(R-OH) is reported to have said this week that the American people and Congress
have no appetite for that now. “It’s like asking Congress to eat a bowl of
cold, green peas – they don’t want to do it,” he said.
Vanishing Pensions and Savings: Educational Fund’s
Latest Issue Brief
The latest installment of the Educational Fund’s issue briefs examines
the shifting trends in employer-sponsored pension and retirement savings plans
in the private sector. Available in the publications section of the Educational
Fund website at
http://www.retiredamericansfund.org/.
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