Administration

Mercer Asks Congress for Pension Funding Reforms

May 21, 2012 (PLANSPONSOR.com) – Mercer is concerned about the significant increase in pension funding requirements driven by historically-low interest rates.

By Rebecca Moore editors@plansponsor.com | May 21, 2012

In a letter to Congress, Julio A. Portalatin, President and CEO at Mercer, thanked the U.S. Senate for approving “inputs”-based reforms to temporarily stabilize pension discount rates and considering “outputs”-based reforms that seek to stabilize minimum required contributions rather than discount rates.  

However, Portalatin said, to be effective, stabilization reforms must address both the increases in minimum required contributions and increases in contributions for sponsors funding to key Pension Protection Act (PPA) thresholds, such as the 80% threshold to avoid benefit restrictions, at-risk status and Pension Benefit Guaranty Corporation (PBGC) 4010 filings.  

“We therefore urge Congress to bear in mind that the issue is not whether stabilization reforms use inputs or outputs, but whether they stabilize minimum required contributions and appropriately address other PPA funding target thresholds that are crucial to employers,” Portalatin wrote.  

American Benefits Council (ABC) President James A. Klein also told lawmakers low interest rates are creating a skewed picture of pension deficits and urged a change to the calculation of pension liabilities (see“ABC Urges Change to Calculation of Pension Liabilities”). 

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