The Senate on Friday unanimously approved legislation that includes funding relief for defined benefit pension plans.
The pension relief provisions, identical to provisions that the Senate previously approved in a tax and jobs bill last March, would allow DB plans to stretch out amortization periods for investments losses for two of the years between 2008 and 2011, either over a period of up to 15 years or over a nine-year period, at the option of the plan sponsor. Current law requires plans to amortize their investment losses over seven years.
A key provision will require employers that extend their amortization periods to make additional contributions to their pension funds if they pay employees in excess of $1 million a year, pay out extraordinary dividends to shareholders or redeem in excess of 10% of the market capitalization of their stock.
The provisions are in the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act. The bill now goes to the House.
