The Obama administration has endorsed legislative efforts to provide additional funding relief to defined benefit plan sponsors but only if the relief is targeted to companies that really need it, according to a letter to key lawmakers from Labor Secretary Hilda Solis, obtained by P&I Daily.
The administration also wants to ensure that funding relief is not available to companies in severe financial distress that are unlikely to meet future plan funding obligations, according to the letter. (Click here to read the letter.)
Copies of the letter were sent to House Education and Labor Committee Chairman George Miller, D-Calif., and House Ways and Means Committee Chairman Sander Levin, D-Mich.
Also according to the letter, the Obama administration wants to ensure that the cash saved by companies through funding relief is put into job creation and preservation — and that cash not needed for those purposes is put into the pension funds before being distributed to shareholders or plowed into pay raises for company executives.
“Finally, the legislation should not provide funding relief to companies that are unlikely to be able to meet their pension obligations in the future because of severe financial distress, such as firms in bankruptcy or those that have failed to make past required pension contributions,” Ms. Solis wrote in her letter. “Allowing these companies to reduce their pension contributions creates an unacceptable risk of loss to workers, retirees and the PBGC.”