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Urge legislators to enact pension funding legislationBackground: The recent economic turmoil and market downturn have had a devastating effect on the funded status of defined benefit pension plans across the country. In accordance with the aggressive funding rules in the Pension Protection Act of 2006 (PPA), plans with suddenly undervalued assets will be forced to direct significant resources toward their funding obligations. This is true despite passage of the Worker, Retiree and Employer Relief Act in December 2008 that included two provisions that could potentially reduce funding obligations for many plan sponsors. Resources that must be directed to meet funding obligations are resources that could otherwise be used for job creation, and other capital investment that would contribute to economic recovery. Despite the relief already provided, funding obligations for 2009 are estimated to be, on average, double those for 2008 and in some cases much higher. As expected, lawmakers have been reluctant to take additional action for several reasons. First, there is uncertainty as to how much the legislation in 2008 helped plan sponsors. Second, there continues to be bipartisan concern about the potential increase in PBGC deficits and the potential to undermine PPA. There is some desire by the Obama Administration to wait for key agency personnel to be in place since their input would be sought on any legislative proposal. It is very unlikely any funding relief will be included in the economic stimulus bill which has already passed the House of Representatives and will be considered very soon by the Senate. There is receptivity to considering additional funding relief legislation if a sufficient case for the need is made by plan sponsors and their providers but the timing and a vehicle are uncertain. The Council is advocating five solutions that build on the PPA and the 2008 legislation, but that are intended to help companies come as close as possible to a “look-back” effect, putting plans on the same funding footing as they were for 2008. The solutions are all consistent with the principles we believe are critical to getting legislation passed. The solutions include:
Resources: These measures are described in greater detail in a document prepared by the Council and sent to appropriate members of the House and Senate. The Council also sent a letter to congressional leaders on January 30 urging their support for additional relief. PLEASE HELP: We ask you to make immediate calls to the key groups listed below and specifically explain the connection between the funding obligation and the decisions your company is facing. Additional funding relief legislation is unlikely without your efforts. Smoothing clarification and fixing the transition "cliff" are very significant and expressing appreciation for inclusion of those provisions in the 2008 legislation is important. But they do not fully address the challenges caused by the recent financial turmoil. More needs to be done to provide both retirement security for millions of Americans and promote economic recovery. Key contacts and resources are provided below. For more information or assistance, contact Lynn Dudley, senior vice president, policy, or Diann Howland, vice president legislative affairs at (202) 289-6700.
Congressional directory and House/Senate leadership
House Ways and Means Committee
House Education and Labor Committee
Senate Health, Education, Labor and Pensions (HELP) Committee
Senate Finance Committee
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