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Witnesses Plead For Action On Pension Bill

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Defined contribution plan provisions in the pension compromise bill now being hammered out by Congress are of prime importance to small businesses.

Witnesses delivered that message here Wednesday at a hearing on small business pension plans that was organized by the Senate Finance Committee’s long-term growth subcommittee.

The compromise version of the pension bill, which focuses mainly on shoring up defined benefit pension plans, has been stalled in a conference committee for weeks, and some fear the conference committee may not finish its work by the time Congress leaves for a month-long recess July 28.

Steven Bjerke, an investment representative in the Pendleton, Ore., office of Edward Jones Investments, said small businesses need pension bill provisions that would allow employers to enroll employees in 401(k) plans automatically.

Other provisions important to small businesses include a provision in the House version of the pension bill that would make it easier for agents to give investment advice to participants in 401 (k) plans, Bjerke said.

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Daniel Hall, a regional pension manager at Standard Insurance Company, Portland, Ore., said Congress could encourage more small businesses to offer retirement plans by providing a tax credit to help offset either the employer contribution or the expense of implementing plans.

“Typically,” Hall said, “small employers are required to pay an annual administrative fee to cover some of the costs of servicing a plan.”

The plan administrative fee can amount to several thousand dollars per year, Hall said.

“A tax credit on employer contributions or an annual tax credit equal to all or part of the annual administrative fee would encourage the formation of these plans,” Hall said.