Charities Urge Congress to Offer Pension Relief

December 10, 2008

Charities Urge Congress to Offer Pension Relief

Independent Sector, the coalition of big charities and foundations, and 77 nonprofit groups have sent a letter to Congressional leaders asking them to ease rules requiring charitable organizations to make certain payments to “defined-benefit” pension funds.

Noting that charities and foundations had been hit hard by the bad economy and stock market declines, the December 8 letter said: “Without some immediate help, the pension obligations will force our organizations to divert millions of dollars away from programs at the time they are needed most.”

The Pension Protection Act of 2006 requires employers that offer pension plans with defined benefits, or specific amounts of money, to retired workers to make catch-up payments when the value of the plan’s assets falls below certain levels.

“The abrupt market decline has turned those pension funding obligations into a severe problem never anticipated when the act was drafted,” says the letter, addressed to Reps. Nancy Pelosi, speaker of the House, and John Boehner, minority leader.

The groups asked the House leaders to provide transitional relief like that offered in a Senate bill introduced in November — the Worker, Retiree, and Employer Recovery Act of 2008.

The bill would allow employers to take account of unexpected market losses in determining the value of a pension plan’s assets — using a formula known as “smoothing.” It would also lower the amount employers must pay when their plan’s fund target falls below a certain level and allow them to look at the plan’s fund level in 2008, rather than 2009, in determining whether to apply automatic restrictions on benefits for “underfunded” plans.

Among the groups that signed the letter, all of which have defined-benefit pension plans, are Easter Seals, Lutheran Services in America, the National Wildlife Federation, United Way of America, and a dozen local United Ways across the country.

— Suzanne Perry

Comments

The attempt by those charities to be relieved of their contractual — to say nothing of their moral — obligations to their employees is nothing short of reprehensible.

— Jeff Steele Dec 10, 07:48 PM #

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