The COVID-19 relief bill being debated in the Senate likely won't include cost-of-living-adjustment freezes for retirement plans.
The pandemic relief package was approved by the House along party lines Feb. 27. Its pension provisions were aimed at helping struggling multiemployer pension funds through federal grants administered by the Pension Benefit Guaranty Corp. It also contains some funding relief for single employer plans, through extended amortization periods and pension interest rate smoothing changes.
Until Thursday, the Senate bill included freezes on cost-of-living adjustments for overall contributions to defined contribution plans and for the maximum annual benefit of a defined benefit plan, beginning in 2031. After lobbying by the American Retirement Association, a substitute amendment removing the COLA freeze limit was offered by Senate Majority Leader Chuck Schumer, D-N.Y., making its outcome likely.
American Retirement Association CEO Brian Graff warned that the freeze would have reduced employers' incentive to offer qualified retirement plans and discouraged new plans. He cautioned that the issues will come up again in the future, since retirement plan limits are a common target when congressional negotiators need to balance budgets.
Once the Senate approves the bill, the House will have to vote on that version.