Of course, the pension fixes only ranked second-billing in the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act (H.R. 3962). More commonly known as the “doc-fix” bill, the legislation was designed to stave off a 21% pay cut for Medicare doctors until December, instead providing a 2.2% pay increase for doctors who treat Medicare patients. The Senate passed the measure unanimously last week (see Senate OKs Pension Funding Relief Provision).
That said, “Congress provided a boost of economic stimulus today, when it passed critical pension funding relief as part of the ‘doc fix’ legislation,” according to American Benefits Council President James A. Klein. “These relief provisions, included as a revenue offset for the Medicare elements, will help many large American employers manage artificially inflated pension obligations and reduce layoffs,” Klein said.
Not Perfect, But…
The ERISA Industry Committee (ERIC) also weighed in.” While this bill is not perfect, it is an important step in providing urgent relief to plan sponsors — many of whom continue to be strapped for cash and must choose between funding their plans or delay hiring and capital investments or even further cut back on jobs,” said ERIC President Mark Ugoretz in a press release.
“As we have said all along, pension plan sponsors were not asking for a taxpayer bailout; we were not asking that the government provide plan sponsors with money or to take on plan sponsors’ pension liabilities; nor were we asking that plan sponsors be excused from funding their plans; we were merely asking for more time to meet those obligations.”
The American Benefits Council said that the measure will help save jobs across the country by allowing companies “more time to repay the huge losses brought about by a “perfect storm” of economic factors, including depressed financial markets, low interest rates and the 2006 pension funding rules. “This legislation will allow employers to responsibly fund their retirement plans while also driving economic growth.” .
“We applaud the efforts of House and Senate lawmakers, particularly those who have worked on a bipartisan basis to champion this important relief throughout the legislative process. This kind of constructive, collaborative approach will be essential for addressing future retirement security challenges,” Klein said.
Ugoretz said “We look forward to the President signing this bill, providing much-needed relief and certainty to help companies meet their long-term pension obligations and transition out of the recession and into the economic recovery. ERIC will continue to be actively engaged in monitoring how effective the relief is and advise Congress if further relief is necessary.”
To that point, Klein cautioned that “Congress will soon have to address the volatility and unpredictability now inherent in funding traditional defined benefit retirement plans. The current funding regime should be improved to encourage employer sponsorship of retirement plans, ensuring long-term financial security for employers and employees,” Klein said. “Today’s enactment of funding relief is a step in the right direction.”