Pomeroy Continues Filling Out DB Funding Package Proposal

August 27, 2009 (PLANSPONSOR.com) - A long-in-the-making package of pension reform legislation from U.S. Representative Earl Pomeroy (D-North Dakota) continues to move toward formal introduction when Congress reconvenes in September.

Pomeroy on Thursday released the latest version of the bills collectively designed to help defined benefit pension plans continue to weather the funding issues arising out of the economic downturn, according to a news release from his office. Pomeroy included suggestions from various interested parties with whom he consulted after initially releasing the suggested bills in June 2009 (see Pomeroy Shares Pension Funding Reform Thoughts ).

The proposals cover both single-employer and Taft-Hartley plans.

One proposal would allow a DB sponsor to choose one of two alternative amortization schedules for the investment losses occurring at the end of 2008: a nine-year schedule with employers paying interest in the first two years and a 15-year amortization period that would "give employers a predictable and practical required funding stream that would not divert funding from other key business needs," according to Pomeroy.

"Last month, employers made an urgent plea for manageable and predictable pension funding rules as the nation works it way back to recovery.  I heard valuable suggestions from employers and from employee organizations in reaction to the earlier outline of this legislation, and they have been incorporated into the draft legislative language being released today," Pomeroy said in the statement. "Our country is showing some signs of financial recovery, but exceedingly large pension costs will hamper both job growth and capital investment that are needed to grow the economy.  Without help from Congress, many employers face pension costs that are double, or more, of those in 2008, and face stark choices as a result: freeze pensions or cut their workforce."

The bill drafts are available  here .