The Senate Health, Education, Labor and Pensions Committee on Thursday approved a bill that would require pension plans to pay off all liabilities over 10 years, said a committee spokesman. The bill also would clarify that cash balance and other hybrid pension plans are legal, the spokesman said.
The latest proposal, the Defined Benefit Security Act, is modeled after the House Education and the Workforce Committee bill. It calls for plans to be fully funded based on assets averaged over no more than three years and liabilities measured against a yield curve that is smoothed over three years, according to the spokesman.
Companies would still be able to use credit balances - excess pension contributions that can be credited toward future contributions, allowing for more flexibility - under the Senate HELP bill. A company with a funding level below 60% would be considered an "at-risk liability" and would be required to assume all employees would retire at the earliest possible date, taking lump sums and early retirement subsidies, according to the summary.
The Senate HELP bill must be merged with the Senate Finance Committee's pension reform bill before it goes to the Senate floor for a vote, the spokesman said.