ABC Unveils 10-Point Reform Plan
A news release from the American Benefits Council (ABC) said elements of its plan help to preventunexpected and unintended pension funding mandates that would cost jobs and trigger massive benefit freezes, while encouraging future retirement saving.
Specifically, the group said its plan would:
- expand the group of middle income individuals eligible for the “Savers Credit;”
- protect retirees from mandatory, excessive distributions that deplete their retirement savings (See McCain, Obama Back Loosening RMD Rules );
- allow IRAs and sponsors of 401(k) plans to offer individuals a one-time opportunity to borrow up to $10,000 to pay for day-to-day expenses and delay the loan repayment start date (See Obama Wants Looser 401(k) Distribution Rules );
- permit pension plans to smooth out unexpected asset losses, as clearly intended by Congress in 2006;
- permit full asset smoothing to recognize the long-term nature of pension obligations (See PPA Change Bill Includes Smoothing Provision );
- provide a transition to the new funding rules;
- permit new funding elections for 2009 or 2010 to avoid mandatory benefit restrictions imposed on individuals and keep plans viable;
- provide relief from 2008 plan losses to reduce the likelihood of plan freezes;
- enhance financial education; and
- increase the start-up credit for small business plans
“Employees and retirees need the certainty of knowing that during this current turmoil, they can access retirement assets if they need to and won’t be compelled to withdraw from their plans if they don’t need to. Pensions are long-term obligations. Employers should not be forced to make unexpected contributions based on short-term unprecedented market volatility. If Congress fails to act, employers will be compelled by law to restrict benefits and compelled by circumstances to freeze pension plans to mitigate the impact of market conditions,” President James A. Klein said in a statement.
The ABC plan is available here .