Insurance groups, benefits groups and other business groups are turning to the House Ways and Means Committee for Pension Protection Act implementation relief.
The informal coalition of groups joining to plead for an easing of PPA pension asset valuation rules includes the American Council of Life Insurers, Washington; the Association for Advanced Life Underwriting, Falls Church, Va.; and the American Benefits Council, Washington.
The groups have sent a joint letter to members of the House Ways & Means Committee.
The committee is holding hearings on proposals for economic recovery, job creation and investment protection efforts.
In the letter, the groups ask the Ways and Means Committee to introduce a bill that would roll back PPA fair market pension asset valuation provisions, by letting employers “smooth” unexpected pension plan investment losses over 48 months.
PPA rules now limit employers to smoothing losses over 24 months.
Sticking with the 24-month smoothing limit would force plan sponsors to use recent depressed market values in valuing assets, forcing them to make large cash infusions at a time of severe financial distress, the groups write in the PPA implementation letter.
“Given the current market situation, the use of fair market value is creating unexpectedly large funding obligations,” the groups write.
The groups also ask for a bill permitting sponsors to change pension plan funding methods without getting Internal Revenue Service approval, as currently required under the PPA.
In a separate comment, AALU Chief Executive David Stertzer says it is “critically important during these times of financial crisis to be working on ways we can help businesses and employees deal with circumstances no one anticipated.”
Failure to change PPA provisions raises the risk “that many pension plans could be terminated or frozen,” Stertzer warns. “No one could have foreseen the dramatic drop that has taken place in the value of pension plan assets and the heavy increased funding obligation for employers.”