Pension lobbyists are optimistic that a bill providing relief from onerous pension contributions will be signed into law by President George W. Bush.
The administration has been stalwart in its opposition to pension funding relief, said Jason Hammersla, a spokesman for the American Benefits Council. Since the White House did not issue a statement of administration policy threatening a veto, were taking this as a very good sign.
The bill was approved unanimously by the Senate late Thursday. It is designed to ease the funding requirements of the Pension Protection Act of 2006 and to clarify that pension plans may smooth the value of pension assets over 24 months.
Pension lobbyists will seek additional relief next year. Under the PPA, smoothed asset values must be within 10% of the fair-market value of the assets, a factor that limits the relief offered by the smoothing. The industry wanted lawmakers to ease the 10% limitation, giving pension funds additional time to recover from market losses that have resulted in some funds losing more than 40% of their asset values this year.
What it means (the 10% limitation) is that in 2009, there is almost no impact with this technical correction, said Jonathan Waite, chief actuary, SEI Global Institutional Group, Oaks, Pa.
In addition, the industry had been urging lawmakers to ease a PPA requirement dictating what interest rates they must use to calculate pension liabilities. Under the PPA, pension executives have to decide whether to use either a spot or average interest rate, then use that method for a period of five years. Pension industry lobbyists wanted to be able to choose each year whether to use a spot or average rate.