<nobr>Sep 8, 2005</nobr>
ERIC Submits Letter to Senators Urging Careful Consideration of Pending Pension Reform Legislation
Washington, D.C. – September 8, 2005 - The ERISA Industry Committee (ERIC) today urged the Senate Health, Education, Labor, and Pensions (HELP) Committee to avoid unfair retroactive mandates and “litigation carve-outs” while supporting many of the bill’s other provisions.
ERIC’s letter to committee members highlighted concerns with language in the current bill regarding hybrid pension plan provisions, specifically:
“Any legislation that fails to reduce litigation or the threat of litigation against hybrid plans or fails to ameliorate the uncertainties regarding such plans jeopardizes their future existence and, accordingly, the retirement security of millions of American workers,” ERIC said in the letter.
- Unfairly proposing new and retroactive requirements on employers relying on existing law who already have converted their traditional defined benefit plans to hybrid plans, putting companies at new risk of litigation for actions that were legal at the time they were taken; and
- By including a litigation “carve-out,” the proposed bill unfairly distinguishes between plans that may be otherwise identical except that a suit has been filed against one plan and not the other.
In the letter, ERIC also emphasized provisions in the bill we support, primarily:
“The ERISA Industry Committee has long supported adequate funding rules as well as reasonable protections for employees’ benefits,” stated ERIC in the letter. “We strongly urge the committee to take action to protect the vitality and availability of defined benefit pension plans in the future.”
- A provision that asset and liability calculations may be averaged over a period of up to three years;
- Ten year amortization of funding shortfalls;
- A gradual transition to new funding targets over the next ten years beginning in 2007;
- Including the value of lump sums in liability calculations allowing for steady funding of obligations while allowing companies to adopt the new rules over time;
- Not imposing an expanded liability on companies with below investment grade credit ratings;
- Increasing contributions sponsors can make on a tax-deductible basis so plans can fund up in good economic times to better weather downturns in the economy;
- Preserving the use of credit balances that make pre-funding of future contributions economically feasible; and
- Imposing limits on increases in premiums to the PBGC and appropriately retaining Congressional control of premium levels
Click the link below for a copy of the letter
ERIC is a non-profit association committed to and represents exclusively 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.
For additional information please contact:
Brendan LaCivita, Director of Communications
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