>A news release from the Washington, DC-based organization said its proposals fall into five categories:
- plan sponsors’ required pension contributions
- contributions that plan sponsors are permitted to make above the minimum required levels
- the solvency of the Pension Benefit Guaranty Corporation (PBGC)
- disclosure to participants
- the lawfulness of hybrid plan designs such as cash balance plans and of conversions to such plans.
>Much of the material the group released Tuesday focused on its contention that defined benefit plans have gotten a bad rap in recent years because of relatively contained problems. ERIC said that from its beginning in 1975 through the end of 2003, the PBGC has trusteed 3,277 plans. Over the same period, approximately 194,000 defined benefit plans either have concluded their business through standard (i.e., fully funded) terminations or are still operating, the group said.
“Few, if any, of today’s discussions about pension
policy provide a full and accurate picture of how defined
benefit plans today do – and tomorrow can – provide
substantial retirement income security to tens of millions
of current and former workers and their families,” Mark
Ugoretz, ERIC’s president, said in the news release.
“Instead they focus on worst possible scenarios or
scenarios that are industry specific.”
ERIC’s specific recommendations included that lawmakers:
- provide for more secure pension funding while not subjecting employers to “volatile and unpredictable cash calls”, especially during economic downturns
- preserve the ability of employers to prefund future pension obligations and allow an employer to put extra cash in its plans during favorable economic times
- protect the PBGC against rapid deterioration of a plan prior to a termination while seeking to preserve benefits for workers. Lawmakers should reject the Bush Administration’s proposed PBGC insurance premium increases (See Chao Releases Administration DB Reform Proposal ), the group asserted.
- provide participants with the same more timely information on the plan’s funded status that is provided to investors
- affirm the lawfulness of hybrid plan designs and of conversions to such plans.
“The Administration’s proposal will weaken the retirement security of future retirees just as the baby boom is reaching critical stages,” the group claimed. “If the proposals are enacted, millions of workers will enter retirement with less money. Actions such as those recommended by ERIC should be taken to improve the function and security of defined benefit plans while also protecting the PBGC against unreasonable losses.”
>The ERIC materials are here .
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