<nobr>Mar 20, 2006</nobr>

Senators and Representatives Dispatch Letters to Pension Conferees

Three key letters are making the rounds on Capitol Hill as Senators and Representatives press their concerns with pension conferees. The Voinovich-Levin letter first reported in the ERIC Executive Report last week has now garnered signatures from 25 members of the Senate. The letter urges conferees to drop language that would use corporate credit ratings to classify plans as at-risk and to provide for at least three years of averaging and smoothing, as in the House bill.

Meanwhile, five Democratic members of the House Ways and Means Committee sent March 15 a letter to House pension conferees urging them to consider several key provisions supported by ERIC. Reps. Levin (12th-MI), Pomeroy (ND), Becerra (31st-CA), Larson (1st-CT), and Lewis (5th-GA) cautioned conferees against adopting provisions that would harm the defined benefit pension system by pushing employers to freeze accruals and terminate plans.

The letter specifically recommended the House conferees to reject efforts to base funding status determinations on corporate credit ratings. The Representatives cited Congress’ own reservations about the methods used by credit rating companies and called the proposal an “unprecedented intrusion…amount[ing] to government ruling, through regulations, on the financial soundness of the company.” The letter also urges the conferees to insist on a 3-year period of smoothing for plan liabilities to provide a measure of predictability to employer pension obligations. In addition, conferees are urged to remove the House bill’s requirement that credit balances be backed out when determining the minimum required contribution for plans as inconsistent with encouraging companies to set aside additional “rainy day” funds during times of strong economic growth.

In addition, ERIC has learned that Sen. Bond (R-MO) and Sen. Jim Talent (R-MO) will send a joint letter to the conferees that will emphasize many of the same issues that were included in the Voinovich-Levin letter. The letter will also address the legality of existing hybrid plans and other issues. ERIC will post the letter to ERIC Online as soon as we obtain a copy.

Text Files:

Ways and Means Letter


Websites:

Voinovich-Levin Letter

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