Compliance July 21, 2005

Poll: Pension Reform Not Focused on Long Term Plan Health

July 21, 2005 (PLANSPONSOR.com) - Financial executives managing pension plans believe proposed pension reform is focused too much on the solvency of the nation's private pension insurer and not enough on the long-term health of pension plans, according to a new poll.
Reported by

In a press release, SEI Investments, which conducted the poll of 54 financial executives, said more than 85% felt that the proposed pension reform focuses too strongly on the need for solvency for the Pension Benefit Guaranty Corporation (PBGC) and not enough on creating a pension system that balances the long-term nature of pension liabilities with the PBGC’s financial status.   Thirty five percent also believe that the proposed reform and related extra expenditures will increase the risk of future corporate bankruptcies, according to the news release.

New pension reform will require sufficient current funding by employers for pension plans, as well as additional funding to make up shortfalls over seven years (See  Latest GOP Pension Reform Bill Includes Advice ).

“While PBGC solvency is the primary driver for reform, the tradeoff cannot be to sacrifice the financial well-being of the companies who sponsor pension plans,” said Jim Morris, Senior Vice President, Retirement Solutions for SEI’s Institutional Solutions Group, in the announcement.

Fifty six percent of the poll’s respondents said they are identifying potential action plans before the reform is finalized.   “Many financial executives are using reform as an opportunity to reevaluate decisions regarding how their pension plans are managed, including changes around asset allocation and funding policies,” Morris said.

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