October 7, 2020
Pension Funding Relief Update: Council Continues Push in Senate
As the end of the calendar year grows nearer and the pandemic persists, the American Benefits Council is intensifying its call for defined benefit pension plan funding stabilization.
The U.S. House of Representatives has twice approved pandemic stimulus measures including a package of critical funding reforms: the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800), approved in May, and the revised Heroes Act, which passed the House on October 1. As originally proposed by the Council, both bills include single-employer defined benefit pension plan funding relief in the form of:
- Extended and enhanced interest rate smoothing, starting in 2020.
- Modified seven-year amortization to 15-year amortization, with a “fresh start” in 2020 (prior year funding shortfalls would be disregarded and the plan’s funding status would be recalculated in 2020, with any shortfall amortized over 15 years).
The House-passed legislation will not be taken up by the U.S. Senate before the end of the year and further negotiations on a compromise stimulus measure are increasingly murky as we move closer to Election Day. Nevertheless, we are continuing to work toward the possibility that legislation could pass after the election. Because pension funding relief could make a difference of hundreds of millions of dollars for struggling companies, the Council is vigorously pushing Congress to act before the end of the year.
On October 6, the Council continued this campaign with a letter to Senate leadership emphasizing that “time is of the essence. …These reforms are broadly supported by stakeholders, including policymakers, companies and participants because they would greatly enhance American companies’ ability to invest in their employees and their businesses in this critical time.”