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September 11, 2014 at 06:50 AM
Limiting the Pension Benefit Guaranty Corporation’s ability to levy charges against defined benefit plan sponsors that shut down certain operations would save employers $15 million over the next decade, according to the Congressional Budget Office.
An amendment of ERISA to do just that was passed by the Senate Committee on Health, Education, Labor and Pensions in July. While saving them money, the amendment also would mean sponsors couldn’t write off any extra dollars directed to a DB plan when they temporarily close or move a plant and, consequently, would raise federal government tax revenues by $14 million between 2015 and 2024, the CBO said.
The CBO also said the Joint Committee on Taxation estimated that enacting S. 2511 would reduce the federal deficit by $29 million over the same period. Under ERISA’s 4062(e), any money collected from sponsors is paid into the sponsors’ defined benefit plan, for the purpose of assuring a plan’s solvency.
After a concerted effort by plan sponsors calling for an examination of the burdens 4062(e) places on businesses, the PBGC earlier this year announced a moratorium on the enforcement of 4062(e) through the end of 2014.
The amendment, which passed on a bipartisan vote, clarifies the definition of “substantial cessation of operations.”
