More than 200 employers and trade associations have signed a letter urging federal lawmakers to pass legislation that would allow pension plan sponsors to use higher interest rate assumption in valuing plan liabilities, cutting plan contributions by billions of dollars.
Without a change in law, "funding requirements in the near term will be far greater than necessary to meet long-term pension obligations, creating significant economic inefficiencies and forcing employers to divert important resources to fulfill an artificial obligation," according to the letter, which was sent May 15 to Capitol Hill.
Those "excessive" contributions will, among other things, result in employers delaying hiring and making capital expenditures, the letter said.
The letter was signed by such well-known employers as Alcoa Inc., BP America Inc., Caterpillar Inc., General Motors Co. and Lockheed Martin Corp., as well as by several benefits lobbying groups, including the American Benefits Council and the ERISA Industry Committee.
The letter comes as a congressional conference committee is trying to reach an agreement on a final highway funding bill, which could provide the funding relief employers are seeking.
The Senate version of the highway bill, S. 1813, through changes in the methodology in which interest rate assumptions are calculated, would increase the interest rate used to value benefits paid over the next five years by roughly 3 percentage points, with smaller, though still significant, percentage increases for benefits paid out beyond five years.
The House version of the bill, though, does not include pension interest rate provisions. Last week, lawmakers began to meet to try to reach an agreement on a final bill.