The Preserve Benefits and Jobs Act expands pension funding relief provided in the Worker, Retiree and Employer Recovery Act (WRERA) in 2008 and the Department of the Treasury regulatory guidance for 2009 reducing employer contributions. The Congressmen said the funding relief would continue worker and retirees’ protections against pension benefit accruals being frozen in 2009 and 2010, as enacted by WRERA, and would protect future retirees by prohibiting pension plans from being drained by lump sum ad hoc benefits to certain individuals.
The Act will provide struggling employers with the elective choices of an extended contribution schedule of nine years with payments during the first two years consisting of interest-only; or a fifteen year payment schedule. To take advantage of the longer payment schedules, employers would have to guarantee to offer ongoing retirement benefits and comply with certain conditions.
Multi-employer plans that meet a solvency test would also be eligible for relief. Two options would allow employers to repay recent losses over a 30-year period, and employers would be unable to increase plan benefits for two years. The bill would extend rehabilitation and funding improvement periods for the plans in endangered and critical status or facilitate mergers of funds and allows the Pension Benefit Guarantee Corporation (PBCG) to provide assistance when it can to lower long-term loss. The bill would also update PBGC benefit guarantees.
“This bill would encourage employers to keep pensions active so workers’ benefits would continue to grow,” the Congressmen said.
The American Benefits Council announced its support of the bill. “The pension funding relief measure introduced today by Representatives Earl Pomeroy (D-ND) and Pat Tiberi (R-OH) will preserve American jobs and aid our national economic recovery by allowing employer plan sponsors to better manage losses brought about by unprecedented market downturn,” said American Benefits Council President James A. Klein, in the Council’s announcement.