According to a Deloitte’s Human Capital I.Q. bulletin for August 2006, of concern were the provisions of the Act relating to treatment of credit balances when considering contributions due to defined benefit pension plans. Only companies that are above 80% funded will be able to count credit balances, or money paid into pension plans early, toward quarterly pension payments. The credit balance provision was also ranked as important or very important by 72% of sponsors surveyed.
Almost 90% of respondents said their Board of Directors has considered the impact of the pension legislation to some extent, the Deloitte bulletin says. Forty-two percent said their Board has reviewed the effects of the legislation on financial statements, 20% reported their Board has requested briefings on the potential effects, and 34% said their Boards considered the effects but decided to wait for the final bill to do an extensive study on the issue. Only 13% reported their Boards had not considered the effects of the legislation.
Almost half of sponsors surveyed (49%) said they believe the publicity surrounding pension protection and the pending legislation will make employees value their DB plans more. Less than one-fifth (17%) said it would cause employees to value their pension plans less and 34% said it would have no effect on employee thoughts about their pensions.
However, more than half of sponsors (53%) reported no change in the number of questions by employees about DB plans. Thirty-six percent have noticed employees asking more questions, and none of those surveyed said they are being asked less questions.
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