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Funding Relief for Traditional Pension Plans

On October 27, 2009 Representative Earl Pomeroy (D-ND) and Representative Pat Tiberi (R-OH) introduced the Preserve Benefits and Jobs Act of 2009 (H.R. 3936) [PDF]. This bill would give companies longer periods of time to make up for funding losses sustained during the economic downturn. Specifically, employers sponsoring single-employer pension plans could spread out their payments to the plans over a longer period of time than the seven years that is currently required by law.

Companies would be able to choose either to spread payments over 15 years or to only pay interest for two years and pay the remaining amounts over seven years. However, employers receiving funding relief would be required to take one of the following actions:

• Make a three percent contribution to the 401(k) account of any employee who isn’t currently earning benefits in a pension plan sponsored by the employer; or
• Freeze certain benefits for executives; or
• Permit employees to continue earning benefits under the plan for a minimum of two to eight years depending on the extent of the funding relief taken by the pension plan.

The bill contains several other provisions aimed at both single-employer and multiemployer plans as well as the Pension Benefit Guaranty Corporation and the current funding waiver program at the IRS.

Read the full text [PDF] of the bill.