US Pension Relief Could Be Limited To Active Plans
26 February 2009 - 8:21AM
Dow Jones News
Corporations seeking pension relief from the U.S. Congress could
be asked to abstain from freezing their retiree programs as a
condition of acceptance.
Any changes in pension funding requirements that benefit
employers should require companies to keep their pensions active
for five years following the funding relief, according to the
Pension Rights Center, an employee advocacy group. Corporations
that have already frozen their pensions shouldn't be granted the
relief at all, the group says.
"We support keeping defined benefit plans, so we support
granting some relief. But we want to make sure that workers are
protected, too," by mandating that companies not freeze their
pensions, said Pension Rights Center Spokeswoman Nancy Hwa.
The no-freeze proposal is one of several items currently being
considered by lawmakers who are drafting legislation on pension
relief, according to the office of Rep. Earl Pomeroy, D-N.D.
"The legislation is not final yet. There are still a lot of
things being discussed right now," said Pomeroy's spokeswoman,
Sandra Salstrom, who added that she couldn't predict when a final
draft would be ready.
Groups representing employers say that offering pension relief
only to organizations that promise to keep their pensions alive for
a set period of time is too restrictive in today's economic
environment, and could backfire.
"I would think that there would be the temptation to just freeze
the plan and not take the relief," said Mike Chittenden, director
of retirement legislation and regulations for the ERISA Industry
Committee, which represents corporations' on their employee benefit
issues.
The number of companies freezing their pension plans has risen
over the past 12 months as they grapple with two conflicting
issues: Falling pension assets have led to underfunded plans, just
as new funding requirements have taken effect. Among those
announcing plans to freeze pensions in recent months are Motorola
Inc. (MOT), newspaper publisher McClatchy Co. (MNI) and insurer Aon
Corp. (AOC).
Corporations last year sought - and received - some temporary
relief from the funding requirements set out in the Pension
Protection Act of 2006. But companies said the legislation signed
by President George Bush in late December doesn't do enough to help
them at a time when the economy and markets are punishing both
their revenue and their pensions' funding status
-By Lynn Cowan, Dow Jones Newswires; 301-270-0323;
lynn.cowan@dowjones.com