<nobr>Aug 4, 2006</nobr>

Passage of Pension Protection Act Virtually Completes Seven-Year Journey

The Senate’s passage of H.R. 4 virtually completes almost seven years of efforts to reform the nation’s defined benefit pension system and represents a mixed result for employers according to The ERISA Industry Committee (ERIC), a Washington, D.C.-based trade association.

“While the bill offers major encouragement to companies and employees who are looking to strengthen their 401(k) savings, the new bill requires significant new cash infusions from many defined benefit plan sponsors just as their plans have been recovering from the earlier recession,” said ERIC President Mark Ugoretz. “It remains to be seen how many of those companies, facing foreign and domestic competition from companies that do not face the same expenses and liabilities, will be able to continue their defined benefit pension plans.”

Congress also takes the position in the Pension Protection Act that cash balance and hybrid plans are not inherently age discriminatory which will be helpful in ensuring that these important plans may move forward. However, considerably more work needs to be done to restore employer confidence that they may create hybrid plans without running afoul of complex and often contradictory new rules.

ERIC thanks and congratulates Majority Leader John Boehner (R-OH) and other congressional leaders for their careful work in trying to maintain the difficult balance between encouraging companies to maintain pension plans and protecting employees. It is a difficult line to walk.

The defined benefit system provides retirement security to some 44 million Americans. Congress faced the difficult task of balancing the need to ensure adequate funding with the temptation to impose arduous requirements on plan sponsors that ultimately would have undermined the goals of the bill. As we continue to examine the language of the bill, ERIC will carefully weigh its provisions against the principles outlined in our previous statements.

“We anticipate that there will be several areas that will require technical corrections and implementing the bill will require for the next several years a major regulatory project in which ERIC will be deeply engaged,” said Ugoretz. “ERIC will work closely with the regulatory agencies to ensure that the implementing regulations maintain the intent of the legislation—securing the retirements of American workers without jeopardizing the ability of employers to offer such plans.”

###

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.


Press Contact
S. Michael Chittenden
Director, Communications
The ERISA Industry Committee
1400 L Street, N.W., Suite 350
Washington, DC 20005-3509
(202) 789-1400 Fax (202) 789-1120

Back to Previous Page