House Takes A Step Toward Pension Relief

By December 11, 2008Economy, Human Resources

The House last evening passed H.R. 7327, making some technical corrections to the Pension Protection Act. Modest smoothing allowed.

From US News:

The bill also includes temporary funding relief for companies with employer-sponsored pension plans that would otherwise be forced to make higher contributions when they are short on cash. “While we remain fully and unequivocally committed to the notion that businesses and unions must fully fund their pension obligations to their workers, the small step we’re taking today will provide much-needed relief to participants, plan sponsors, and beneficiaries in the short term, potentially staving off job cuts, benefit reductions, or financial burdens that would be far more harmful to workers and retirees in the long term,” says U.S. Rep. Howard McKeon (R-CA), a member of the Education and Labor Committee.

Provisions of the Pension Protection Act of 2006 currently require companies to raise their funding for pension plans from 90 percent to 100 percent over seven years. The target funding levels are 92 percent for 2008 and 94 percent for 2009, under current law. If companies don’t meet that benchmark, they are forced to fully fund their pensions immediately. The bill would allow companies that fail to meet the 92 percent target this year to only have to come up with the cash to reach 92 percent, not 100 percent.

The action acknowledges the validity of arguments made for pension relief by the NAM and businesses, as summarized in recent letters to the Hill.

Senate action still needed.

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