The House of Representatives on Monday approved by a voice vote legislation that gives charities and rural cooperatives some pension funding flexibility. A similar measure was approved by the Senate in January. President Barack Obama is expected to sign a final version of the legislation.
The Cooperative and Small Employer Charity Pension Flexibility Act makes permanent a temporary exemption from the Pension Protection Act of 2006 that allowed charities and cooperative associations to form multiple employer pension plans known as CSEC plans. If that exemption had been allowed to expire, those plans would have have had to comply with PPA funding rules intended for large single-employer plans, which would have increased their required contributions as much as 50%.
The rural cooperative plans “have a completely different risk profile,” said Jo Ann Emerson, CEO of the National Rural Electric Cooperative Association, Arlington, Va., in a statement. “Both the House and Senate have now confirmed that cooperative and non-profit pension plans pose virtually no risk of default and deserve different treatment.” The NRECA plan has about $8 billion in assets with more than 880 participating employers in 47 states.
“Thousands of workers in Iowa and across our country are employed by charities and cooperatives, and, under current law, their pensions are at risk,” said Sen. Tom Harkin, D-Iowa, co-sponsor of the Senate bill that passed unanimously. Mr. Harkin, chairman of the Senate Health, Education, Labor, and Pensions Committee, said enactment “means that many cooperative and small employer charities … can continue to provide pension benefits without needing to reduce services to the public.”