Jan 22, 2009

ERIC Urges Congress and Obama Administration to Approve Meaningful Pension Funding Relief

Washington, D.C. -- In a letter sent today to key Members of Congress and the Obama Administration, The ERISA Industry Committee (ERIC), a Washington, D.C.-based trade association representing America's major employers, expressed "grave concern" over the lack of pension funding relief in the economic stimulus legislation moving forward and urged lawmakers to provide relief that allows plan sponsors additional time to fully fund their pension plans.

"As Congress and the Administration consider plans to stimulate the economy, real relief for America's pension plans is an absolute necessity. Failure to provide meaningful relief will slow economic recovery, increase unemployment, and put retirement security at risk," ERIC President Mark Ugoretz wrote.

ERIC said that, while the recently enacted Worker, Retiree, and Employer Relief Act of 2008 corrected a number of technical errors in the Pension Protection Act of 2006 and clarified some issues, "[i]t did not adequately provide the substantive relief needed to avoid an unfortunate choice between funding pension plans versus retaining current employees, hiring new employees, and making the capital investments necessary to stimulate the economy."

ERIC has been actively engaged and in contact with staff from the Obama Administration and Capitol Hill to press the importance of relief to both pension plan sponsors and participants.

"Plan sponsors have spent the two-plus years since the Pension Protection Act was enacted preparing to meet the new law's funding requirements, but they, like Congress when the law was enacted, did not and could not anticipate the current financial crisis. Tighter funding laws and the current economic environment create a 'perfect storm' that requires relief," Ugoretz argued.

"Many major employers that have responsibly funded their pension plans are now facing required contributions in the coming year that exceed the previous year's contributions by magnitudes of thousands of percent. The sheer size of the contributions leaves employers in an untenable position: they must either cut jobs and delay hiring and investment, or allow their plans to go technically underfunded. As a result, restrictions will be triggered limiting the benefits that workers can claim as they retire," Ugoretz said.

To avoid these results, ERIC urges Congress and the Obama Administration to "provide real, temporary relief that allows plan sponsors additional time to fully fund their pension plans as part of any stimulus bill. Failure to do so will significantly diminish the economic impact of the bill."

ERIC's letter is below.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Text Files:

ERIC Pension Funding Letter

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