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Reid Jobs Bill Leaves Out Pension Provisions

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WASHINGTON BUREAU — The American Benefits Council is asking lawmakers to put pension funding flexibility provisions back in the Senate jobs bill.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, and Sen. Charles Grassley, R-Iowa, the highest ranking Republican on the committee, last week released a jobs bill draft, the Hiring Incentives to Restore Employment Act, that would have eased pension funding requirements.

Senate Majority Leader Harry Reid, D-Nev., then came up with a shorter version of the proposal that left out the pension provisions.

The American Benefits Council, Washington, a group that represents large employers, benefits vendors and benefit plan administrators, is displeased.

Elimination of the pension provisions “from the latest version of jobs legislation is particularly troubling,” James Klein, the president of the council, says in a statement. “We urge lawmakers to include pension funding relief as part of jobs legislation as soon as possible.”

The pension changes could save jobs at no cost to the federal government, Klein says.

Critics of the proposed changes contend that they could weaken the finances of pension plans.

The council argues that pension plan sponsors offer plans on a voluntary basis, and that they need relief to overcome paper losses caused by what will probably be a temporary drop in asset prices.

A “perfect storm” of depressed financial markets, low interest rates and new pension funding rules “has artificially inflated companies’ defined benefit pension obligations,” Klein says. “Millions of dollars that would normally go toward job creation and capital investment are being diverted into already-healthy pension funds.”

One organization has predicted that cash contributions to pension plans will be 400% higher in 2010 than in 2009, and another has found that unexpected expenditures on pension plans are leading to cuts in hiring and workforce training at 68% of the employers polled, Klein says.