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<nobr>Feb 3, 2004</nobr>
ERIC Response to Administration's Legislation for Cash Balance Plans
For Immediate Release:
ERIC Response to Administration Legislation for Cash Balance Plans
Washington, DC, February 3, 2004 -The ERISA Industry Committee today responded to the Administration's cash balance legislative proposal in the Administration's FY 2005 Budget revenue proposal. The proposal would 1) require certain transaction rules for "older and longer service" workers in conversions of traditional plans to hybrid plans; 2) clarify the legal status of cash balance/hybrid plans under age discrimination rules; and 3) Override the "whipsaw" requirement of Notice 96-8.
In its initial analysis, ERIC supported provisions in the proposed legislation that affirm recognition that cash balance plans are not age discriminatory and that disavow the notion that two interest rates must be used to compute a cash balance benefit (i.e. the whipsaw theory). ERIC urges immediate passage of these provisions.
”Recognizing that new rules proposed regarding plan conversions are likely to be controversial, we urge all sides to seek workable rules for hybrid plans,” said Mark Ugoretz, president of The ERISA Industry Committee. “Further instability with regard to these plans may cause employers to terminate defined benefit arrangements and move to a 401(k) plan.”
To arrange an interview with Mark Ugoretz or Janice Gregory, Senior Vice President, Retirement Security, please contact Doug Baj at (202) 789-1400 or dbaj@eric.org.
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The ERISA Industry Committee (ERIC) is a non-profit association committed to the advancement of employee retirement, health, and welfare benefit plans of America's largest employers and represents exclusively the employee benefits interests of major employers. ERIC's members provide comprehensive retirement, health care coverage and other economic security benefits directly to some 25 million 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.
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