WASHINGTON BUREAU — A new Senate jobs bill would ease funding requirements for defined benefit pension plans and leave out a provision that could expand the U.S. Labor Department’s retirement plan fee disclosure authority.
Like the House bill, the Senate bill also omits any provision that would extend the 65% federal COBRA health benefits continuation subsidy through Dec. 31.
The Senate bill, which is, technically, Substitute Amendment 4301 to H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, was introduced Tuesday by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.
The Senate today debated amendments to S.A. 4301.
One, S.A. 4304, introduced by Sen. Benjamin Cardin, D-Md., would increase access to dependent coverage for children of enrollees in the Federal Employees Health Benefit Program to children up to age 26, from age 22. A motion to “waive all applicable budgetary discipline” in connection with that amendment failed by a 57-42 vote. Cardin needed 60 votes to win approval for the amendment.
DEFINED BENEFIT PLANS
The American Benefits Council, Washington, and other employer groups have been lobbying hard for pension funding rules changes , arguing that enforcing the rules now in place could force employers to shut down pension plans altogether.
The defined benefit plan provisions in the new Senate bill are comparable to the provisions in the bill passed May 28 by the House, but there are some technical differences, according to the benefits council.
Current law lets employers amortize funding shortfalls over a 7-year period.
Both the House and Senate versions would let single-employer plan sponsors to extend the amortization period to 9 years, with interest paid only in the first 2 years.
The plan sponsor also could choose a 15-year amortization period.
The plan’s funding obligation for a plan year would increase if the sponsor makes excessive employee or shareholder payments. The provision generally allows plan sponsors to elect relief for up to 2 plan years during the 4-plan-year period from 2008 to 2011.
RETIREMENT PLAN FEE DISCLOSURE
Drafters of the Senate bill outraged Rep. George Miller, Calif., D-Calif., chairman of the House Education and Labor Committee, by leaving out a provision present in the House bill that would the U.S. Labor Department the authority to regulate all fee disclosures at all retirement savings plans, including 403(b) plans and 457 plans, that provide employee-directed accounts.
If the provision is adopted as Miller wrote it, it would apply to plans years beginning after Dec. 31, 2011, and it would apply to existing contracts in effect Jan. 1, 2012.
Miller, the sponsor of the provision, called the decision to delete the provision from S.A. 4301 “unacceptable” and vowed to fight to get the authority expansion provisions into the final bill.
“At a time when America’s middle class has already lost their retirement savings because of the financial scandals, they shouldn’t also be losing out because of excessive or hidden fees,” Miller says in a statement.
The American Benefits Council and many financial services groups have criticized the retirement plan fee disclosure provisions, arguing that Congress should give the Labor Department more time to complete work on its own disclosure regulations.
Drafters of the Senate bill decided they did want to give the Labor Department more time to complete work on their regulations, according to officials at the National Association of Insurance and Financial Advisors, Falls Church, Va.
Miller says his fee disclosure provision would be stronger than a regulation.