Some employers would have to make additional contributions to their defined benefit plans to qualify for funding relief under a provision in a huge Senate tax and unemployment bill.
Lobbyists say the restrictions in the bill would make the relief — through longer amortization periods for investment losses — useless to employers, and they are working to water them down. The bill, the American Workers, State and Business Relief Act of 2010, is sponsored by Senate Finance Committee Chairman Max Baucus, D-Mont.
Among its provisions:
• Companies would have to make additional pension contributions equal to the aggregate amount of employee compensation above $1 million per year;
• Those that paid out extraordinary dividends to shareholders would have to make equivalent contributions to their pension funds; and
• Employers that redeemed in excess of 10% of the market capitalization of their stock would have to put into their pension funds an amount equal to the value of the stock exceeding the 10%.
The idea is to penalize employers that are rich enough to reward employees or shareholders with high payouts.