The House Education and Labor Committee on Wednesday plans to vote on a new legislative package that would include providing modest funding relief to defined benefit plans, according to a committee news release.
The funding relief to be included in the 401(k) Fair Disclosure and Pension Security Act of 2009, is intended to ensure plans can weather the economic crisis without being forced to choose between cutting jobs or freezing plans, according to the news release.
Under the provisions, DB plans that use the spot yield curve to value pension liabilities this year can choose to use the smoothed yield curve to value liabilities in 2010 and beyond, according to a committee summary.
Also, the effective date of the funding provisions in the Pension Protection Act of 2006 would be postponed to plan years beginning after Dec. 31, 2009. Currently, the funding provisions could go into effect for plan years starting July 1.
Plans also can amortize investment expenses over seven years under the new bill, instead of funding investment expenses immediately, and DB plans that are underfunded by more than $50 million would be required to report actuarial and financial information to the PBGC. Under current law, plans have to report that information to the PBGC only if they are less than 80% funded, the committee summary said.
The new bill includes previous legislative provisions to enhance fee disclosure requirements for defined contribution plans and set new ground rules for providing investment advice, the news release said. Those provisions were approved last week as separate bills by the House Health, Employment, Pensions and Labor Subcommittee and will now be part of the broader DB-DC bill.
Also today, Rep. Earl Pomeroy, D-N.D., released a discussion draft of proposed legislation that would provide DB plans with far more funding relief than the House Education and Labor Committees bill, but in exchange for agreements not to freeze those plans or suspend matching 401(k) plan contributions, according to a news release from Mr. Pomeroys office.
After receiving comment on the draft provisions, Mr. Pomeroy intends to rewrite the bill as legislation, said Sandra Salstrom, the lawmakers spokeswoman.