<nobr>Jun 3, 2008</nobr>

Andrews and Miller Legislation Addresses Asset Smoothing, Retiree Benefits, and Other Changes

House Education and Labor Committee Chairman George Miller (D-CA) and Health, Employment, Labor, and Pensions Subcommittee Chairman Rob Andrews (D-NJ) just prior to Congress' Memorial Day recess introduced legislation (H.R. 6143) to make corrections and other modifications to the Pension Protection Act of 2006 (PPA).

The "Pension Protection Act ERISA Amendments of 2008" would make additional modifications beyond the technical corrections legislation in the areas of worker protection, prohibited transactions, and multiemployer, single employer and small employer plans. H.R. 6143 includes additional provisions that were not included in the House-passed technical corrections bill (H.R. 3361), including an asset-smoothing fix that is the same as the Senate-approved legislation (S. 1974). The Andrews/Miller bill also would limit the amount that a fiduciary may recover in pursuing subrogation rights under a plan, would adjust the phase-in of the funding target under Internal Revenue Code Section 430, and would align the accelerated distribution restriction with a plan's adjusted funding target attainment percentage (AFTAP) rate.

Legislation to make technical corrections to the PPA has been held up for some time over a dispute relating to asset smoothing, among other issues. House leaders apparently believed the asset-smoothing fix included by the Senate went beyond what is considered a "technical correction," and it appears that this new bill is a way to address the issue.

Retiree Health Benefit Proposal

H.R. 6143 also includes other substantive changes that ERIC strongly opposes, including a provision that would prohibit any group health plan from reducing benefits provided to retired participants or their beneficiaries if such reduction occurred after the date the participant retired and reduced benefits the participant was receiving. A prohibited reduction of benefits would include any action that cancels, decreases or limits benefits or options provided prior to the amendment, imposes or increases out-of-pocket costs a retired participant or their beneficiary must pay, or modifies the way medical services are delivered under the plan.

Andrews, Miller Also Introduce Bill to Exempt Disability Benefits Lawsuits from ERISA Preemption

Representatives Andrews and Miller also introduced separate legislation (H.R. 6142) that would exempt lawsuits for disability benefits from ERISA preemption. In the case of disability benefit plans, the bill would amend ERISA to provide an exemption from preemption for state tort actions to recover damages arising from the failure of the plan to timely provide benefits, thus allowing state law remedies for these actions.

H.R. 6143 has been referred to the Committees on Education and Labor and Ways and Means. At this point it is not clear when Congress will approve technical corrections or what will be included.

Questions or comments on the retirement portion of the legislation should be addressed to Rosemary Becchi (rbecchi@eric.org), and on the health portion to Edwina Rogers (erogers@eric.org).
Websites:

H.R. 6143

H.R. 6142

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