Corporate pension group wants temporary funding measures made permanent
By Hazel Bradford | November 30, 2012 4:15 pm
The American Benefits Council recommended making permanent pension funding stabilization measures passed in this year's federal highway bill as part of its six-point plan for stemming the reduction in defined benefit pension plans.
The plan also recommends delaying any premium increases for the Pension Benefit Guaranty Corp. until the agency's financial condition is scrutinized by Congress, using stabilized interest rates for pension accounting, clarifying 4062(e) rules enforced by the PBGC that require additional payments when businesses expand or contract, simplifying IRS non-discrimination testing rules and finalizing hybrid plan regulations.
The pension funding rules in the highway bill, known as MAP-21 and signed into law July 6, allows DB plans to use longer-term interest rates for calculating their pension funding obligations, which in turn would reduce tax-exempt contributions and boost federal tax revenues by an estimated $9 billion over 10 years. MAP-21 also raised another $9 billion in increased premiums for the PBGC. The interest rate relief diminishes annually until effectively ending in 2016.
While the list is ambitious, the unpredictability of fiscal-cliff negotiations and the need for additional revenue sources could provide an opening, said James Klein, ABC president, in an interview. “We're hopeful, but we don't underestimate the challenge.”
The American Benefits Council is a Washington-based group representing employers that offer benefit plans.
Making permanent the pension funding relief “would raise a very significant amount of revenue. There are very few revenue raisers that are widely supported by business and have labor support as well,” said Kent Mason, outside counsel for ABC with Washington law firm Davis & Harman, in an interview.
Members of Congress — including House Education and the Workforce Committee Chairman John Kline, R-Minn., and Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin, D-Iowa — who received the proposal declined to comment. Officials at the PBGC and IRS did not return calls at press time.
