OLDER WOMEN ARE the fastest growing poverty group in the United States and on Aug. 19 the House of Representatives voted 310 to 86 to help that trend going just the way it is.
The vote came on an admendment to the Treasury Department's appropriations bill. Unless the Senate votes otherwise, the Internal Revenue Service will be prevented for yet another year from challenging and disqualifying pension plans that fail to provide benefits for lower-paid, mobile employes, most of whom are women and minorities.
These are plans that are sold by the insurance industry to the 200,000 small professional corporations set up by lawyers, doctors, accountants and other small businessmen whose low-paid employes work as secretaries, nurses, clerks, receptionists and janitors. A popular pension plan for these small corporations is one in which employes become vested -- that is, entitled to benefits -- after four years and become fully vested after 10 years of employment. Should they leave the corporation before four years, they forfeit their benefits. The pension money put into the fund for them stays in the fund and ends up benefiting those who stay in the firm longer -- such as the owner of the business and the higher-paid employes.
When the insurance industry sells these pension plans to businesses they have some obvious appeals, not the least of which is that they are terrific tax shelters. "There's no better tax shelter than this," says Michael Melton, an attorney in the office of tax policy of the IRS.
While providing a tax shelter for owners of businesses, these pension plans also are supposed to provide private pension benefits for their employes. They are not supposed to favor the highly paid executives. But the Internal Revenue Service now believes that the vesting schedule of these plans may be working in some cases in a way that discriminates against the lower-paid employes with less attachment to a firm than its owners.
These lower-paid, mobile employes often are women. The average length of time women have held their current jobs is 2.6 years, compared to 4.5 years for men, according to a 1978 Bureau of Labor Statistics study. It is women who leave work to raise children and care for other family needs and it is women who quit jobs when husbands are transferred.
The IRS, believing that these pension programs are not operating in the way the law intended, proposed to examine how some plans are working, and those that clearly discriminated against lower-paid, more transient employes and clearly favored the executives would lose their tax-exempt status.
"It really rips the rug out of you if we disqualify you," says Melton. "All of those doctors and lawyers who have incorporated face a humongous penalty . . . Some of these guys are socking away $100,000 and $150,000 a year into these plans. If they end up having to declare that as income, well . . ."
Well, of course, that's not what happened. All of those doctors and lawyers and accountants and insurance salesmen and insurance companies got on the stick. They wrote thousands of letters to Congress and the vesting requirements of the small pension plans became one of the hot tax issues of the session.
And what happened on Aug. 19 was that Rep. John N. Erlenborn (R-Ill.) introduced an amendment to the Treasury Department's appropriation that prohibited any Treasury Department money from being used to disqualify these plans. The rider passed with the support of some women in Congress and of others who are usually sympathetic to women's causes.
"We got creamed," says Melton.
Indeed, they did. Part of the reason was the clout of the insurance lobby and part was that there were no hearings on how these plans were working and what could be done to prevent abuses. The debate on the floor centered on whether more stringent regulation of pension funds would provoke small businesses into dropping them and whether the IRS was usurping Congress's authority. The impact of these pension funds on the retirement years of women and minorities was never mentioned during the debate.
"The whole episode really illustrates how badly the women's groups are organized in the pension area," says Edith Fierst, the pension expert on President Carter's Interdepartmental Task Force on Women. "A lot of the people who are friends of women's groups voted the wrong way, surely because they didn't know better . . .
"The real reason nothing gets done on these issues is the public doesn't understand them and the women who are most involved don't understand them," she said. "If the secretaries out there had understood it was their pension that was on the line, they would have done something."