U.S. House Passes PPA Technical Corrections Bill

July 9, 2008 (PLANSPONSOR.com) - The U.S. House has passed legislation that clarifies lawmakers' intention that corporate pension plans can use 24-month smoothing when calculating pension liability.

Co-sponsored by Representatives Robert Andrews (D-New Jersey) and George Miller (D-California), H.R. 6382, the Pension Protection Technical Corrections Act also would eliminate a Pension Protection Act (PPA) provision requiring automatic termination of defined benefit plans for companies that file for Chapter 11 bankruptcy protection. Under the new bill, the plans would be terminated only if a U.S. Bankruptcy Court judge ruled such a move was necessary (See PPA Change Bill Includes Smoothing Provision ).

According to a statement released by Congressman Earl Pomeroy (D-North Dakota), if the asset smoothing provision were not addressed, it could lead to more frozen pension plans.

The House passed a previous version of a technical corrections bill (H.R. 3361) on March 12, 2008, but it did not include a provision clarifying the use of asset smoothing.