US Secretary of Labor Elaine Chao’s statement came after the American Benefits Council (ABC) released a summary of its proposals to bring the pension system up to par that was sharply critical of many of the Administration’s ideas.
“It is disappointing that the report fails to recognize the reality that the pension funding rules are broken, causing workers and retirees harm and putting taxpayers at risk,” Chao said in her statement. “We must act now and adopt comprehensive reforms that give employers new tools to better fund their plans and provide workers, regulators and investors with better and more timely information about a plan’s financial status.”
Released Thursday, the ABC report charged that Bush’s plan changes would actually hurt a lot more than they would help (See ABC: Better DB Funding Status Disclosure Needed ).
The ABC report asserted that a series of problems with the Administration’s plan “would result in far fewer defined benefit plans, lower benefits, and far more pressures on troubled companies that jeopardize the companies’ ability to recover.”
As outlined by the ABC, the problems included:
- a “dramatic” cut in predictability for funding and plan premiums
- a “counterproductive and troubling” use of credit ratings
- a strong disincentive to prefund
- an increase in premiums at pension insurer the Pension Benefit Guaranty Corporation (PBGC)
- improperly forcing sponsors of terminating at-risk plans trying to determine their liabilities to assume that all employees would take lump-sum distributions and retire early.
>Chao outlined the administration’s plan in a recent speech (See Chao Releases Administration DB Reform Proposal .)
>More information about the administration’s proposal is here .