Congress Passes Pension Relief
Last night, the U.S. Senate passed H.R. 7327, The Worker, Retiree, and Employer Recovery Act, which would provide relief to hospitals that sponsor defined-benefit pension plans or contribute to multi-employer pension plans on behalf of their employees.
The measure is intended to ease the burden on pension sponsors, who have seen the value of their plans’ assets plummet with the financial crisis. Stringent funding requirements phased in this year require employers to substantially increase their contributions to the plans--in some cases, doubling or tripling those contributions.
The legislation eases several key provisions of the Pension Protection Act of 2006, including allowing the “smoothing out” of unexpected asset losses over a two-year period. Requirements that plans be funded at 92% of their expected liabilities in 2008 and 94% in 2009 were maintained; however, if a plan misses its funding target, it will not be penalized with an obligation to fund the plan at 100% next year. Multi-employer plans will be allowed to use a plan’s valuation on January 1, 2008 to determine whether it meets the 60% funding level, below which benefits are frozen.
The bill passed the House of Representatives on Wednesday and could be sent to the White House as early as today. HANYS and the American Hospital Association, along with a large coalition of employers, strongly supported the legislation. The President is expected to sign it. Contact: Wendy Darwell