With their bills coming due in April, employers are calling on Congress to enact temporary relief of their pension funding obligations. Two dates loom: on April 1, employers must certify their funding status, and April 15 is the deadline for them to make quarterly contributions into their defined benefit (DB) pension plans.
On Wednesday, Rep. Pat Tiberi (R-Ohio), who with Rep. Earl Pomeroy (D-North Dakota) has sponsored pension relief legislation, conducted a conference call with employers and pension fund experts to up the pressure on Congress to enact temporary relief. Passage would save and create jobs, the participants maintained.
According to the American Benefits Council, an advocate of employer-sponsored benefit programs, employer contributions for 2010 will be more than double 2008 levels. Employers and employees are girding themselves for the April cash drain and looking to such actions as cutting jobs and withholding investment in their companies, according to the council. Citing an Aon Consulting study, the organization said in a statement that 68% of DB plan sponsors indicated that unexpected cash needs arising from their pension plans would force them to reduce spending in areas such as hiring and workforce training.
Earlier this month, the Senate passed a tax and jobs bill that included pension contribution relief for corporate DB plans. The American Workers, State and Business Relief Act of 2010 would allow DB plans to extend amortization periods for investment losses for two of the years between 2008 and 2011, over either a nine-year period or a period of up to 15 years. Under current law, plans must amortize investment losses in seven years.