The letter to Charles B. Rangel, Chairman, and Jim McCrery, Ranking Member, Committee on Ways and Means, includes suggestions from a plan recently revealed by the American Benefits Council to help prevent unexpected and unintended pension funding mandates that would cost jobs and trigger massive benefit freezes, while encouraging future retirement saving (See ABC Unveils 10-Point Reform Plan ).
The letter includes suggested technical corrections to the Pension Protection Act to:
- permit smoothing of unexpected losses,
- remove restrictions on the extent of asset smoothing,
- allow sufficient transition to new funding rules,
- permit new funding election methods to keep plans viable,
- provide clarification for small plans of the date plan assets are valued for purposes of applying current year benefit restriction rules, and
- permit a fixed interest rate for Code Section 415 limits.
“The drop in the value of pension plan assets coupled with the current credit crunch has placed plan sponsors in an untenable position. At a time when companies need cash to keep their businesses afloat, they are also required to make unexpectedly large contributions to their plans in order to meet funding requirements. Consequently, many companies will have to consider whether to freeze or terminate their pension plans or reduce retirement benefit accruals in order to survive. We do not believe that in enacting the Pension Protection Act of 2006 (“PPA”), Congress intended companies to be forced to make this kind of decision,” the letter says.
The letter is here .