Treasury Secretary Timothy Geithner said he would support a proposed pension funding relief measure before Congress. The legislation would provide U.S. employers that sponsor defined benefit pension plans with relief from the Pension Protection Act’s funding-level requirements for 2010 and upcoming years.
Rep. Earl Pomeroy, D-N.D., and Rep. Pat Tiberi, R-Ohio, are the chief sponsors of the bipartisan measure, The Preserve Benefits and Jobs Act. During a hearing of the House Ways and Means Committee on Feb. 3, 2010, Geithner said he was endorsing the legislation so that companies would not be forced to divert money they could otherwise use for job creation.
“We have seen some promising signs that the economy is turning around, but a lot of businesses around the country are still struggling,” Pomeroy said, according to a news release issued by his office. “We need to find every way possible to encourage them to create jobs, and we can do that by helping them deal with the huge losses they suffered when Wall Street crashed. This bill will help ease that burden on these businesses while giving employees assurances that their pensions are safe and will continue to grow.”
“Congressman, I think you’re right,” Geithner said in response to Pomeroy’s statement. “We think there’s a good case for targeted pension relief for just the reasons you said, and we’d like to work with you on doing that.”
In January 2010, a coalition of more than 70 employer and labor organizations signed a letter to Congress urging legislation “as soon as possible to provide much needed relief” for defined benefit pension funds. “Without funding relief, many jobs will be lost and the economic recovery will be significantly slowed,” the letter warned.
“Employers need more time to recover their 2008 investment losses than the current seven-year period in order to keep workers employed or, in the worst case, to prevent companies from going bankrupt in these difficult economic times,” according to Pomeroy.
The Preserve Benefits and Jobs Act would provide employers with the elective choices of:
• An extended contribution schedule of nine years with interest-only payments during the first two years, or
• A 15-year payment schedule. To take advantage of the longer payment schedules, employers would comply with certain limits on executive benefits.
The bill would extend rehabilitation and funding improvement periods for the plans in endangered and critical status, and it would update Pension Benefit Guaranty Corp. benefit guarantees. Multi-employer plans that met a solvency test would also be eligible for funding relief.
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Pension Funding Relief Dropped from Senate Jobs Bill
The Senate Democrat's version of the jobs bill—the "Hiring Incentives to Restore Employment Act"—has dropped provisions related to funding relief, according to a release from the ERISA Industry Committee.
"The failure to include pension funding relief in the jobs bill is both disappointing and short sighted," according to a statement from the group. |
Stephen Miller is an online editor/manager for SHRM.
Related Articles:
Pension Funding Levels Rebound; Still Below 2007 Levels, SHRM Online Benefits Discipline, January 2010
Employers Increasing Pension Contributions, Reducing Risk, SHRM Online Benefits Discipline, December 2009
Pension Tension: Seven Critical Questions Facing Plan Sponsors, SHRM Online Benefits Discipline, August 2009
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