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THE ERISA COMMITTEE

<nobr>Aug 4, 2006</nobr>

Pension Protection Act Passes Congress

At about 10:30 last evening, the Senate approved the massive pension reform bill (H.R.4) without amendment by a 93-5 vote. The bill, which was approved by the House of Representatives last week, now goes directly to the President for signature. The President is expected to sign the bill.

The five nay votes were: Sens. Boxer (D-CA), Burr (R-NC), Coburn (R-OK), Cornyn (R-TX), and Feingold (D-WI).

H.R. 4 includes:

  • Single employer defined benefit plan funding rules
  • Multiemployer plan funding rules
  • Temporary extension of the corporate bond interest rate
  • Amendments relative to the PBGC
  • Disclosure requirements
  • Investment advice, prohibited transaction rule changes, and modifications to the fiduciary rules
  • Hybrid plan provisions
  • Deduction limits
  • EGTRRA & Savers’ Credit permanence
  • Portability, distribution, and contribution rule changes
  • Retiree medical, long term care and other health and medical benefit amendments
  • Corporate owned life insurance
  • Diversification of employer stock holdings
  • Automatic enrollment
  • DB-401(k) plans
  • Faster vesting in DC plans
  • Phased retirement
  • Spousal pension protections
  • EPCRS and other administrative modifications
  • Tax court, charitable contribution, tariff, and certain other miscellaneous provisions
The positive vote on the pension bill followed closely on the heels of the failure of the Republican leadership of the Senate to provide for consideration a bill that combined estate tax relief, extension of expiring tax provisions such as the R&D credit, and a minimum wage increase (H.R.5970). Sixty votes were needed to limit debate on H.R.5970; the motion failed on a 56-42 vote.

Until last week, it had been expected that the expiring tax provisions would be included in the pension bill conference report, but then the leadership moved those provisions to a new bill (H.R.5970) in another effort to enact estate tax reform. This change provoked an acrimonous disagreement among Republican Senators that resulted in the breakdown of the long-running conference committee on the pension reform bill (then H.R.2830). A new bill (H.R.4) embodying the agreement reached by conference leaders on the pension provisions was introduced and approved by the House by 279-131 on Friday July 28, just before they departed for their August recess.

A new, 386-page summary of the bill by the Joint Committee on Taxation (JCX-38-06) is now available on their website: http://www.house.gov/jct/

ERIC staff is also preparing a comprehensive summary of the bill with a focus on issues affecting major employers. That summary will be sent to you in the next few days.

In addition, over the next few weeks ERIC will hold a series of conference calls focusing on different aspects of the bill so that members can begin to (1) identify technical corrections needed to the text of the bill and (2) both immediate and long-term regulatory issues that must be addressed in implementing the bill.

For questions or comments, contact:
Janice Gregory, Senior Vice President (jgregory@eric.org)
Vanessa Scott, Legislative Counsel (vscott@eric.org)


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