Pension Relief Bill Clears Key House Committee
On February 11, 2021, the House Ways and Means Committee approved the Butch Lewis Emergency Pension Plan Relief Act of 2021 as part of the budget reconciliation legislative recommendations. The bill provides relief for multiemployer pension plans, funding changes for single-employer pension plans, changes for community newspaper plans, and changes in certain limits that apply to all pension plans. This alert provides a brief summary of the key provisions for multiemployer and single-employer plans.
For multiemployer plans, the bill generally
- Provides for financial assistance for “eligible multiemployer plans” (as defined) to pay full benefits (including reinstated benefits) through 2051 without repayment,
- For eligible plans, provides for reinstatement of benefit suspensions that have been made under the Multiemployer Act of 2014, or pursuant to the insolvent plan provisions of existing law,
- Increases PBGC premiums to $52 per participant in 2031,
- Allows a plan to elect the prior year’s zone status to apply for one of two designated plan years,
- Allows a plan to elect to amortize losses due to COVID-19 similar to how 2008 investment losses were amortized, and
- Allows a plan to elect a 5-year extension of the funding improvement period or rehabilitation period.
The bill contains many provisions relating to the financial assistance that address the details of the timing and approval of applications, treatment of funds received, payment of reinstated benefits, and other relevant issues.
For single-employer plans, the bill generally
- Replaces the 7-year amortization period for unfunded accrued benefits (the funding shortfall) under current law with a 15-year amortization period, and
- Revises the corridor used to stabilize segment rates around a 25-year average by extending the phase-in to a 30% corridor, and establishes a floor of five percent on the 25-year average of a segment rate.
Cheiron Observation – The bill still has to be passed by the House of Representatives and be considered by the Senate. During the process there may be changes in the overall provisions or in the many details.
Cheiron will continue to monitor the progress of the legislation and keep you informed of significant developments.