Surrounded by representatives of businesses, labor unions and non-profit organizations that have workers participating in defined benefit pension plans, Congressmen Earl Pomeroy (D-ND) and Pat Tiberi (R-OH) introduced new legislation that will provide pension funding relief which will enable employers to retain and grow their workforce.
In the wake of the historic economic downturn, many employers face pension costs that are double, or more, of those in 2008. The Preserve Benefits and Jobs Act will provide the funding relief necessary to help restore defined benefit pension plans to soundness over time, keeping employers from having to either freeze their pension plans or cut their workforce to make up for pension losses.
“Our country is showing some signs of financial recovery, but exceedingly large pension costs will hamper both job growth and capital investment that are needed to grow the economy,” Congressman Pomeroy said. “The cornerstone of this bill is temporary pension funding relief that eases an employer’s obligation to make up for the investment losses that pension plans experienced in 2008 by making significantly greater contributions in the coming years. At the same time, employees would get important assurances that their retirement benefits will continue to grow. I believe this bill is an important step in ensuring workers’ lifetime income security in retirement.”
“I am pleased to work with Congressman Pomeroy to make a real difference for workers and their peace of mind,” said Congressman Tiberi. “With a little more time to meet government mandates, employers will be able to keep employees working while giving them the security of knowing their pensions will be there when they need them. I look forward to working with my colleagues on both sides of the aisle to pass this important bill.”
Congressman Pomeroy and Tiberi believe Congress should pass reasonable pension funding relief to keep employees working and give them security in knowing their pensions will be there when they need them. The Preserve Benefits and Jobs Act would continue worker and retirees’ protections against pension benefit accruals being frozen in 2009 and 2010, which were enacted last year in the Worker, Retiree and Employer Recovery Act (WERA). The bill would also protect future retirees by prohibiting pension plans from being drained by lump sum ad hoc benefits to certain individuals. Finally, the bill would change the date when pensions are guaranteed to the date of the plan termination.
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. The Preserve Benefits and Jobs Act will provide struggling employers with the elective choices of (1) an extended contribution schedule of nine years with payments during the first two years consisting of interest-only; or (2) a fifteen year payment schedule. To take advantage of the longer payment schedules, employers would have to guarantee to offer ongoing retirement benefits and comply with certain conditions.
Multi-employer plans that meet a solvency test would also be eligible for relief. Two options would allow employers to repay recent losses over a 30-year period, and employers would be unable to increase plan benefits for two years. The bill would extend rehabilitation and funding improvement periods for the plans in endangered and critical status; or the bill would facilitate mergers of funds and allows the Pension Benefit Guarantee Corporation (PBCG) to provide assistance when it can to lower long-term loss. This bill would also update PBGC benefit guarantees.
SOURCE: Congressman Patrick J. Tiberi (R-OH)