September 17, 2014
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office 202-289-6700 / cell 202-422-4652
Council welcomes congressional examination of defined benefit pension plan issues
Improved regulatory environment crucial for employers
WASHINGTON, DC The American Benefits Council continues to urge congressional action to improve the regulatory atmosphere for defined benefit pension plans and commends the House Ways and Means Subcommittee on Select Revenue Measures for holding today’s hearing on the challenges facing the defined benefit system.
“The defined benefit pension system is under constant pressure,” said Council President James A. Klein. “Pensions deliver enormous value to participants. But sponsorship is discouraged by policies that fail to recognize the long-term nature of pension obligations.”
The Council has urged improvements in the regulatory environment for defined benefit plans, including:
- Simplified and administrable hybrid plan rules, such as those outlined in the USA Retirement Funds Act of 2014 (S. 1979).
- Protection of employers from inadvertent non-discrimination violations attributable to efforts to preserve pension benefits for existing employees, as would be provided under H.R. 5381.
- Protecting employees’ expectations and expanding phased retirement opportunities through reform of plan in-service distributions.
- Resolution of the conflict between funding and accounting rules by enhancing stability and predictability in both areas.
- Clarification of defined benefit plan “shutdown” rules under ERISA Section 4062(e), as would be achieved through enactment of S. 2511.
- Long-term stabilization of the multi-employer plan system.
In recent years, the Council has stressed the need to avoid continual Pension Benefit Guaranty Corporation (PBGC) premium increases. The Council commissioned an independent research report, Further PBGC Premium Increases Pose Greatest Threat to Pension System, which validated that “premium increases threaten the long-term viability of the defined benefit pension system and PBGC’s plan termination insurance program by driving away employers that present no risk to the system.”
Additionally, the Society of Actuaries is working on new mortality tables that will dramatically increase pension liabilities. Concerns about the process of the development of these tables – and the tables themselves – should be addressed.
The Council applauds Subcommittee Chairman Tiberi for recognizing the need for congressional action to improve the defined benefit pension system. “The challenges that threaten the defined benefit pension system also pose a risk to the retirement security of millions of Americans,” Klein said.
For more information on retirement savings plans, please contact Jason Hammersla, Council director of communications, at firstname.lastname@example.org or by phone at 202-289-6700 (office) or (202) 422-4652 (cell).
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.