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Bipartisan pension funding relief bill covers multi-, single-employer plans

A bipartisan legislative proposal introduced in Congress Oct. 27 would give both multi- and single employer pensions more breathing room to help them overcome the impact of 2008 portfolio investment losses.

The "Preserve Benefits and Jobs Act of 2009," co-sponsored by Rep. Earl Pomeroy (D-North Dakota) and Pat Tiberi (R-Ohio) is a follow-up to pension relief legislation enacted earlier this year.

The measure "will provide the funding relief necessary to help restore defined benefit plans to soundness over time, keeping employers from having either to freeze their pension plans or cut their work force to make up for pension losses," according to Rep. Pomeroy.

Under the measure, multiemployer plans that satisfy solvency tests would be allowed to amortize investment losses over a 30-year period, provided that the plans do not increase plan benefits for a two-year period. The provision also strengthens and streamlines current amortization extension provisions and allows a 10-year smoothing and a 130% corridor for 2008 and 2009 investment losses, according to a detailed summary of the legislation issued by Rep. Pomeroy's office.

Multiemployer plans in endangered or critical status would benefit from a five-year extension of pre-WRERA rehabilitation period and the funding improvement periods.

The measure also authorizes the PBGC to facilitate multiemployer pension "alliances," with financial and technical support, when the PBGC believes an alliance would lower its own exposure to losses from failing multiemployer plans. (Additional multiemployer provisions are described in the summary.)

The bill would exempt social security level income options from payment restrictions for both multiemployer and single-employer plans. In addition, it would give single-employer plans two new investment loss amortization schedules for such losses incurred in 2008: a nine-year schedule with payment during the first two consisting of interest only, or a 15-year payment schedule, subject to meeting one of three "maintenance of effort" options. Single-employer plans would also get a 10% asset smoothing corridor extension (to 120%), as well as relaxed thresholds for certain PBGC reporting and plan restriction purposes.

The proposal drew immediate praise from the American Benefits Council. "This is far more than a pension bill. This is a fundamental jobs issue and a critical economic recovery issue," said the Council's president, James Klein.

 
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