BENEFITS BYTE

September 9, 2004
BB 04—92

PBGC Amendment Added to Labor-HHS Appropriations Bill

On September 8, the full House of Representatives approved an amendment to the Labor-Health and Human Services (HHS) appropriations bill that could result in the disclosure of a company's confidential financial information. The amendment, sponsored by House Education and the Workforce Committee Ranking Member George Miller (D-CA), would prohibit the use of appropriated funds to enforce the ERISA provision that prevents the public disclosure of confidential financial information filed with the Pension Benefit Guaranty Corporation (PBGC) by sponsors of underfunded pension plans.

Under current law, U.S. companies with pension underfunding of more than $50 million are required to file detailed reports — often with sensitive financial information — to the PBGC about their funding shortfalls. While the reports are confidential, the PBGC is currently allowed to release collective data to the public — but not information specific to particular companies.

While the Council certainly favors transparency and the importance of needed information being made public, we have gone on record as opposing this kind of disclosure requirement, noting that underfunding is not necessarily a danger sign for a pension plan. This is particularly the case when the requirement is based on a fixed dollar amount, which may be a very small percentage of plan assets. Forced disclosure of these reports would violate the confidential, sensitive nature of this information and could needlessly panic plan participants. From a legislative process perspective, the Council has also questioned the use of the appropriations process for addressing matters of this nature outside the scope of normal jurisdiction. Complex issues ought to be handled by committees with oversight and expertise, not as amendments to an agency funding bill.

For the Miller amendment to be enacted, it must also be approved during the Senate appropriations process. The Council has begun efforts to prevent the passage of a similar amendment in the Senate. Should it appear that the Senate will take up this amendment during its debate, the Council will send out an Action Alert urging Senators to reject such a measure and asking you to convey the same message. House Education and the Workforce Committee Chairman John Boehner (R-OH) has already expressed his intention to introduce legislation that will address defined benefit pension funding. For more information, contact Diann Howland, Council vice president, retirement policy, at (202) 289-6700.

Council Signs Letter to Senate Leaders Supporting Stock Option Bill

The Council has joined a number of other trade and business organizations in sending a letter to Senate Majority Leader Bill Frist (R-TN) and Minority Leader Tom Daschle (D-SD), urging their support for the Stock Option Accounting Reform Act (S. 1890).

S. 1890 is the Senate version of the Stock Option Accounting Reform Act (H. R. 3574), approved by the House of Representatives on July 21. The bill would require expensing for the top five executives of a company but not for stock options provided to other employees. The bill would also block a proposal by the Financial Accounting Standards Board (FASB) to require companies to expense all stock options and require a study of the economic impact of expensing.

The bill has faced considerable opposition in the Senate, including opposition from Richard Shelby (R-AL), Senate Banking, Housing and Urban Affairs Committee Chairman. Shelby's committee has jurisdiction over the issue in the Senate, and he has characterized the bill as an attempt to undermine the independence of FASB. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.