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Compliance June 25, 2010
Obama Signs Pension Relief
President Obama has signed into law legislation providing pension funding relief for multi-employer and single employer defined benefit plans.
Reported by Rebecca Moore
An announcement from Congressman Earl Pomeroy (D-North Dakota), who co-authored the pension legislation with Congressman Patrick Tiberi (R-Ohio), said the measure would give relief to employers who are struggling to make payments to their pension plans in the wake of the 2008 economic collapse. According to the announcement, the legislation frees up $129 billion in money over the next seven years that can be used to preserve or create new jobs, and experts predict the legislation will save hundreds of thousands of jobs, while reducing the federal deficit by as much as $2 billion over the next decade.
The measure provides two alternative funding mandates – amortizing funding shortfalls over 15 years for any two plan years between 2008 and 2011 or paying interest on a funding shortfall for only two plan years that employers choose. However, employers adopting either alternative would have to contribute extra money if they paid “excess” employee compensation or “extraordinary” compensation.
The pension relief was included in the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act (H.R. 3962), designed to stave off a 21% pay cut for Medicare doctors until December, instead providing a 2.2% pay increase for doctors who treat Medicare patients. The House approved the bill on Thursday and the Senate approved it last week (see House Passes “Doc Fix” Bill With Pension Relief).