Compliance December 23, 2010
House Abandons Bill to Extend Relief from DB Funding Rule
December 23, 2010 (PLANSPONSOR.com) - The U.S. House adjourned Wednesday without action on a bill passed by the Senate that would have created a one-year extension for relief exempting underfunded pension plans from rules that require the plans to freeze benefit accruals, according to Business Insurance.
Reported by Rebecca Moore
The Pension Protection Act of 2006 prohibits additional benefit accruals for lump sum distributions or shutdown benefits from defined benefit plans funded at less than 60% (see What’s Inside the Pension Protection Act).
In late 2008, Congress modified that requirement for 2009 so employers could look at their January 1, 2008, funding levels to determine their funding status (see New U.S. Senate Legislation Would Help Pensions). Business Insurance noted that few plans’ funding levels as of January 1, 2008 — prior to the market downturn — were below 60%, so the measure assured continued benefit accruals for participants in underfunded plans.
Legislation approved this year extended the measure’s relief through the end of 2010.
Business Insurance said a new effort is expected to extend the relief during the next legislative session, which begins next month.