October 29, 2009
Bill in Congress Seeks to Ease Pension Requirements
By Grant Williams
Washington
Two members of Congress have introduced a bill that would ease rules that govern how charities and other employers make payments to defined-benefit pension plans, which provide specific amounts of money to retired workers.
The stock-market crash has left many nonprofit organizations struggling to set aside money for future payments to retired employees.
“The cornerstone of this bill is temporary pension funding relief that eases an employer’s obligation to make up for the investment losses that pension plans experienced in 2008,” said Rep. Earl Pomeroy, a North Dakota Democrat who is sponsoring the bill with Rep. Patrick J. Tiberi, an Ohio Republican. “At the same time, employees would get important assurances that their retirement benefits will continue to grow.”
Both members of Congress have seats on the House Ways and Means Committee, which has jurisdiction over tax matters and recently held a hearing on challenges faced by employers that offer defined-benefit plans.
A federal law, called the Pension Protection Act of 2006, significantly increased the pension obligations of charities and other employers to guarantee that they will have enough money to pay retired workers.
“Minimum funding rules” in federal law specify the amounts that employers must contribute each year to trusts that pay for pension plans. Benefits that are promised in defined-benefit plans are paid for through contributions from employers, as well as the earnings on those contributions.
The bill introduced by Representatives Pomeroy and Tiberi, which is called the Preserve Benefits and Jobs Act, would give employers more time to recover their investment losses in 2008 to meet federal requirements for building up required sums of money.
Independent Sector, a national coalition of charities and foundations, praised the bill.
“Unless relief is enacted soon, current law will force nonprofits that sponsor these plans to divert substantial financial resources away from vital community services to individuals and communities at a time when they are desperately needed,” said Diana Aviv, president of Independent Sector.
The new legislation “will help nonprofit organizations and other sponsors of defined-benefit plans maintain services and jobs in our communities while continuing to meet their financial obligations to employees,” said Ms. Aviv.
Comments
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Defined benefit is a PROMISE. For charities to seek permission not to honor their contractual obligations to employees is nothing short of contemptible.
— Jeff Steele Oct 29, 03:09 PM #
I think all of us should take hold of the lesson here. If you cannot pay for it today, do not make the promise for tomorrow. It was a bad idea to introduce these defined-benefits plans in the first place. The auto industry, educational institutions, and state governments are all paying the high price for them. Not to mention all of us who pay the taxes.
— Bob Croft Oct 29, 03:28 PM #
I believe a company should not be able to acquire other companies or make big deals over seas, then cry to the Unions that they need cuts for their employees. A contract should be just that,our pensions are what we work for all our life. Trucking companies and unions should have never started the multi employer pension plan. Yrc is showing us what they are all about for the future of pensions.The only reason Zollars backs this Bill is to save even more money for future deals.
— Dudley Whited Oct 30, 08:51 AM #