It’s not clear whether the measure will be revived in another special session in December or will have to wait until a new Congress is seated in January.
Before the Senate adjourned, it passed a $5.7 billion extension of unemployment insurance. The measure provides seven more weeks of benefits for most workers and 13 additional weeks in high-unemployment states.
The House approved the unemployment extension this fall. President Bush has indicated that he will sign the bill.
The pension measure, which also included business tax breaks and pension rule relief for individuals, was put on a fast track for Senate passage but halted when at least one member anonymously objected. Even if the bill had made it through the Senate, it’s not clear when or if the House would have acted.
The bill, sponsored by the chairmen and ranking members of the Senate Finance Committee and Health, Education Labor and Pensions Committee, would have given companies some breathing room in implementing rules contained in the Pension Protection Act, a 2006 law that went into effect this year.
The first major pension reform since 1970s, it significantly tightened defined-benefit funding rules and required companies to meet 100 percent of their obligations within seven years. The measure was a response to a series of huge airline and steel company pension defaults that sent the government pension insurer’s deficit soaring.
But in a November 12 letter to congressional leaders, more than 300 companies and business groups pleaded for a reprieve from the new funding requirements. They argued that the payments soaked up money for future pension obligations that could otherwise be spent now on job creation and investments.
“We do not believe that, in enacting the Pension Protection Act of 2006, Congress intended companies to be forced to make this kind of decision,” the letter states. “Unless the funding rules are modified, they will increase U.S. unemployment and slow our economic recovery.”
A Milliman Inc. study of 100 of the nation’s largest defined-benefit pension plans showed that they lost $59 billion in October, dropping funding to 92.7 percent.
The Senate bill would allow some smoothing of pension gains and losses. Treasury Department regulations would have forced the use of a market average.
Plans that fall below funding levels set by the 2006 bill would be given more time to meet the goal. Their “at-risk” status for 2009 would be based on their 2008 funding levels. Multi-employer plans would have more latitude to avoid an “endangered” or “critical” classification.
The bill also would place a one-year moratorium on required minimum distributions from individual retirement accounts.
The American Benefits Council, which represents about 250 large businesses, took the lead on pushing for the changes to the pension law. It emphasized that it wasn’t seeking to rewrite the reforms, which gained bipartisan support in 2006, but rather to slow the transition to them.
The most recent Senate bill “wasn’t perfect,” said Jason Hammersla, director of communications for the council. “It didn’t fully address the problems, but it did help to alleviate some of the funding pressure.”
The council is not giving up on the bill, which would have decreased pension obligations by about one-third.
“There’s a possibility it will be brought up again if they come back in December,” Hammersla said. “If not, we’ll work on getting it done in 2009 as soon as we can.”
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