For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC), the Washington, D.C.-based trade association representing America’s major employers, urged Congress to pass as soon as possible real and significant temporary pension funding relief that allows plans sponsors additional time to fully fund their pension plans.
In a letter sent yesterday evening, ERIC told House members real relief for America’s pension plans is an absolute necessity and overdue as Congress and the Administration continue to focus on stimulating the economy. “Failure to provide meaningful relief will slow economic recovery, increase unemployment, and put retirement security at risk,” ERIC President Mark Ugoretz wrote.
ERIC has been actively engaged in pursing pension funding relief over the past year and a half, contacting staff from the Obama Administration and Capitol Hill to press the importance of relief to both pension plan sponsors and participants. Temporary pension funding relief legislation has been attached to H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, that the House and Senate are planning to consider next week.
ERIC’s letter supports expanding the current amortization period for pension plans from the current seven-year period to either the 2 +7 alternative (for which the first two years, plan sponsors would only owe interest on the payments) or a 15-year amortization option. ERIC also urged Congress not to impose onerous conditions upon companies who seek pension-funding relief, including maintenance-of-effort requirements or “active plan” requirements associated with funding relief.
“Many companies are under tremendous pressure to divert large amounts of cash from other corporate sources, including capital improvements, job retention, and benefit reductions. Without immediate relief, ERIC believes that the current economic conditions will continue to worsen and will slow economic recovery,” Ugoretz said.
“Pension plan sponsors are not asking for a taxpayer bailout;” Ugoretz said; “we are not asking that the government provide plan sponsors with money or to take on plan sponsors’ pension liabilities; nor are we asking that plan sponsors be excused from funding their plans. We are merely asking for more time to meet those obligations.”
Prior to the impact of the current recession, plan sponsors were well on their way toward meeting the increased obligations imposed by the Pension Protection Act of 2006, the letter said. But this law did not anticipate the combination of negative economic forces that occurred during the last quarter of 2008, creating the “perfect storm” that requires temporary relief.
“We urge you to provide real, temporary pension funding relief that allows plans sponsors additional time to fully fund their pension plans and help strengthen the economy by allowing companies to apply precious cash resources to core business objectives, job expansions, plant expansions, research and development and capital investments,” ERIC’s letter concludes.
A link to ERIC’s letter appears below.