Corporate U.S. pension plan contribution deadlines should be extended and the beginning of the phasing-out of funding relief measures enacted as part of 2012 MAP-21 legislation should be deferred, said Martine A. Ferland, president and CEO of Mercer, in a letter to members of the Senate Finance Committee.
In the March 18 letter to committee chair Sen. Chuck Grassley and member Sen. Ron Wyden obtained by Pensions & Investments, Ms. Ferland said the firm is making the suggestions to let corporate plan sponsors "more effectively deploy cash to weather the immediate crisis" of the COVID-19 pandemic.
Among the immediate actions Mercer is suggesting are deferring the beginning of the scheduled phase-out of interest-rate-stabilization provisions enacted in the Moving Ahead for Progress in the 21st Century to 2026 from 2021 and increasing minimum stabilized interest rates, to 95% of a 25-year average of segment interest rates, from 90%.
The first two of actions would lower aggregate corporate pension obligations by about $180 billion as of Jan. 1, 2021 and $250 billion as of Jan. 1, 2022, Ms. Ferland said.
"Reducing the measured obligations will substantially lower the required amortization payment for these plans, freeing up a significant amount of cash for companies to invest in their businesses and support the long-term health of the economy," she said.
Ms. Ferland also suggested Congress take immediate action to extend the due date for all required pension contributions, including quarterly payments, until at least the end of the year, and extend the April 15 deadline for preparing PGBC4010 filings and the April 29 filing deadline for the annual funding notice to all plan participants.