The House adjourned last week without action on a bill passed by the Senate that would have created a one-year extension for an expiring provision that effectively exempts underfunded pension plans from rules that require them to freeze benefit accruals.
Under a 2006 law, benefits are frozen and lump-sum distributions are not allowed when plans are funded below 60%.
In late 2008, Congress modified that requirement for 2009 so employers could look at their plans’ Jan. 1, 2008, funding levels to determine whether the plans were at least 60% funded. Legislation approved this year extended the 2008 relief through the end of 2010.
Few plans’ funding levels as of Jan. 1, 2008 — which was before the plunge in the equities markets that occurred later that year and decimated the value of plan assets — were below 60%, so the previous relief measures assured continued benefit accruals for participants in underfunded plans.
A new effort is expected to extend the relief during the next legislative session, which begins next month.
Jerry Geisel is editor-at-large at Business Insurance, a sister publication of Pensions & Investments.