>The Pension Protection Act, (HR 2830) co-authored by US Representative John Boehner (R-Ohio), won backing by the 27 Republicans on the House Education and Workforce Committee, according to a MarketWatch news report. Boehner is the panel’s chairman.
>However, charging that they had not been given enough time to consider the Boehner bill, the panel’s Democrats, led by US Representative George Miller (D-California), the ranking minority member, all voted “present”. “I don’t think we should be called upon to pass a bill where we don’t know the ramifications,” said Miller, according to the MarketWatch report.
>Boehner rejected the Democrats’ move as a smoke screen. “I’m a little bit disappointed at Democrats who have been calling for action … but couldn’t bring themselves to act,” responded Boehner. “It’s been a wide open process the whole way through.”
>From Boehner’s committee, the measure now moves to the House Ways and Means Committee, where influential chairman Representative Bill Thomas, (R-California). who co-authored the bill with Boehner, has said he wants to roll it into his Social Security reform plan.
>The Boehner committee earlier Thursday unanimously approved an amendment requiring multiemployer plans to pay a 5%-10% surcharge that would be set aside to safeguard against pension defaults. The surcharge would go into a fund that would be drawn upon instead of having the multiemployer plans insured as they are now by the Pension Benefit Guaranty Corporation (PBGC).
Fully Funded Within Five Years
>The measure’s key purpose is to force employers to sufficiently fund their pension plans so they are fully funded within five years (See Latest GOP Pension Reform Bill Includes Advice ). Employers would have seven years to erase shortfalls. Further, if a plan’s funding status falls below than 60%, the company would face immediate accelerated payments and be unable to pledge additional benefits under the bill.
>Also, the bill also would require that pension plan sponsors enhance disclosure requirements, resolve the legal standing of cash-balance pension plans, alter how companies measure pension liabilities, and phase in increases in the premiums employers must pay to meet pension obligations.
>Boeher’s measure hikes the flat-rate fee all companies that offer traditional private single-employer pension plans pay from $19 per person annually to $30 over three years for plans that are more than 80% underfunded. Companies with pension plans funded at greater than 80% would see their fees rise over five years. The administration has called for an immediate increase to $30 for these premiums.
>Funds raised by the additional charges would shore up the PBGC, the agency that insures the nation’s private-sector traditional pension plans. The agency is facing a $23 billion funding shortfall.
Cash Balance Clarity?
>The Republican plan tries to resolve ambiguity surrounding the extremely controversial cash-balance pension plans, which opponents have charged short change older workers.
>Under the measure, employers can convert traditional defined benefit plans to cash balance plans. The bill would establish an age discrimination standard for all defined benefit plans, according to the MarketWatch report. Older workers’ benefits would have to be greater or equal to benefits of younger individuals in comparable positions.The plan also prohibits companies from reducing benefits earned by workers if a plan is converted to a cash benefit account.
“Cash balance pension plans – a type of defined benefit plan that is employer-funded, insured by the PBGC, and portable from job to job – represent an important component of worker retirement security, and they account for more than 20% of the premium revenue paid by employers to the PBGC,” Boehner said in a late afternoon statement. “Cash balance pension plans are the future of the defined benefit system, and it’s critically important that Congress act to resolve the legal uncertainty that is jeopardizing generous pension benefits for workers across the country.”
>Representative Sam Johnson (R-Texas), chairman of the Employer-Employee Relations Subcommittee, insisted that there are many cash balance plan backers despite the controversy of the plan setup. “I have many constituents that are covered by this type of plan and are very happy with the retirement benefits they are earning.” Johnson said in the committee statement. “Legal harassment of these retirement plans needs to stop.”
>More information about the bill on the Boehner committee’s Web site is here .