NEWS RELEASE

March 24, 2009
PR-09/11

For additional information:
Jason Hammersla
202-289-6700
(202) 253-5458 (cell)
jhammersla@abcstaff.org

Council expresses support for Savings Recovery Act

WASHINGTON, D.C. — “The American Benefits Council applauds the upcoming introduction of the Savings Recovery Act. The Council believes that bold initiatives like this are critically needed to address the dire effects that the economic downturn has had on the retirement security of millions of Americans,” said American Benefits Council President James A. Klein upon House of Representatives Minority Leader John Boehner’s (R-OH) preview of the bill earlier today.

“The provisions directly related to defined benefit pension plans and defined contribution retirement savings plans are critically important to protect retirement income security for millions of Americans. The bill provides critically needed temporary funding relief for defined benefit pension plans, while continuing to ensure that these plans will be fully funded in the long-term and will provide all promised benefits,” Klein said.

“These funding relief provisions are an essential component of economic recovery,” Klein continued. “A principal purpose of the legislative and executive branch responses to the economic turmoil since last fall has been to ensure the flow of credit to businesses and individuals. Absent pension funding relief, however, many companies are finding it impossible to obtain that credit which is essential to save jobs and invest in job-creating initiatives. Helping businesses recover is the most effective way to keep defined benefit plans healthy, since such plans depend on employers for future contributions and new benefits.”

The Council also supports temporary increases in the limits on elective contributions and catch-up contributions to retirement savings arrangements, such as 401(k) plans. “Employees’ retirement savings accounts have plummeted in value, leaving many workers far less prepared for retirement. Increases in the limits will help employees replenish depleted accounts. Moreover, the applicable nondiscrimination rules will ensure that the higher limits will not be available for an employer’s highly compensated employees unless the employer’s moderate income employees have comparably higher contributions made on their behalf. Alternatively, the employer may ensure access to the higher limits by adopting a safe harbor plan that offers robust contributions to all eligible employees,” Klein said.

“The Council has long had concerns about the rules that require retirees to take certain minimum distributions from their plans even if they are not currently needed. Retirement security often would be better served by keeping the savings in the plans to ensure there are sufficient assets to meet retirees' greater longevity. Those concerns about forced withdrawals have been exacerbated by the economic downturn and the decline in retirement savings. Now is not the time to force individuals to deplete their savings,” Klein said. “We applaud the bill’s three year extension of the current suspension of the required minimum distribution rules. This will provide needed relief and provide Congress the opportunity to revisit these complex and often counterproductive rules.”

For more information, or to arrange an interview with Council staff, please contact Jason Hammersla, Council director of communications, at jhammersla@abcstaff.org or by phone at 202-289-6700 (office) or (202) 253-5458 (cell).

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council’s members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.