From CQ Politics: “Pension Relief Bill Still Caught in House-Senate Stalemate”
The prospects remain murky for passage this year of comprehensive legislation to ease pension-funding rules, as House Democrats resist a bipartisan Senate bill that would offer relief to businesses and individuals alike…[snip]Under the 2006 pension law overhaul, companies with defined-benefit plans that aren’t fully funded must begin meeting that goal soon. But the 2008 stock-market plunge has decimated many pension plans, and corporations argue that meeting the law’s requirements would consume so much money it would prevent them from hiring and investing. The National Association of Manufacturers has cited a recent report that companies will have to increase their pension contributions by $90 billion in 2009.
The dispute between chambers centers on treatment of tribal pension funds. While important to the Indian tribes and their members, is that really the kind of issue that should hold up legislative changes that could free up billions in private capital for investment NOW? Clarification: We’re now told on good authority that while it’s an issue, the tribal pension plans are not really a sticking point.
In November, the NAM and many other associations, businesses and labor groups sent the members of the House Ways & Means Committee a letter outlining the negative effects the financial crisis was having on pension plans and laying out reasonable steps to ease the serious problems. Excerpt (and PPA refers to the Pension Protection Act of 2006):
We are in no way advocating an overhaul of the PPA funding changes. Rather, we urge Congress to consider making technical corrections to the PPA, that we believe implement Congressional intent, and adopting temporary provisions that deal with the financial crisis. Such provisions should include permitting full smoothing of unexpected losses, removing restrictions on asset smoothing, allowing sufficient time to transition to the PPA’s 100% funded target, providing automatic IRS approval for certain funding elections to keep plans viable, clarifying end-of-year valuations, and permitting fixed interest rates to be used for Code section 415 limit purposes so as to avoid benefit reductions.
You can read the entire letter here.
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