Coalition Asks Ways And Means For Pension Relief

“The drop in the value of pension plan assets, coupled with the current credit crunch, has placed defined benefit plan sponsors in an untenable position,” the signers of the letter write. “At a time when companies desperately need cash to keep their businesses afloat, the new funding rules will also require huge, countercyclical contributions to their pension plans. Consequently, many companies will divert cash needed for current job retention, job creation, and needed business investments and instead contribute the cash to their pension plans to fund long-term obligations due many years after the current market conditions return to normal.”

The groups describe a company that would have to increase pension contributions 2,100%, and another that would have to increase contributions 6,000%.

“We are in no way advocating an overhaul of the PPA funding changes,” the groups write. “Rather, we urge Congress to consider making technical corrections to the PPA that we believe implement Congressional intent, and adopting temporary provisions that deal with the financial crisis facing us today.”

In addition to allowing for a longer smoothing period, the signers of the letter are asking for full “smoothing” of unexpected losses, removing restrictions on asset smoothing, and allowing for automatic Internal Revenue Service approval for certain funding elections to maintain plan viability.

The groups call for similar changes to be made to the rules governing multi-employer defined benefit plans.

The letter appears to be similar to a letter that a smaller coalition of insurance and benefits groups sent to Ways and Means leaders in October.