Yesterday, the Treasury Department released its legislative proposals regarding cash balance plans in response to a requirement Congress imposed in a recent Appropriations Act (which you can read about here.) The proposal is contained in the 2004 Blue Book entitled “General Explanations of the Administration’s Fiscal Year 2005 Revenue Proposals.” No actual statutory language has been published as yet.
You can read the Treasury Department‘s press release here. Remarks by Secretary John Snow: “This proposal will make sure that every company converting to a cash balance plan deals fairly with its older workers. Cash balance plans play an important role in achieving retirement security for millions of American workers and their families. But we must make sure that companies changing from a traditional pension to a cash balance pension include a fair transition for older workers. Cash balance plans can be a better option, particularly for today’s younger, more mobile workforce.”
By the way, Benefitslink has posted that portion of the Blue Book pertaining to the cash balance plan proposals entitled “Strengthening the Employer Based Pension System” here.
Response to the proposals:
The American Benefits Council: “Treasury’s hybrid pension plan proposal offers some good news, some cause for concern.”
The ERISA Industry Committee: “Administration Proposes Legislation for Hybrid / Cash Balance Plans.”
Towers Perrin in a press release: “Towers Perrin Says Treasury Department’s Proposed Legislation to Protect Defined Benefit Plans and Older Workers Reaffirms Legitimacy of Cash Balance Plans.”
Finally, a Summary of 2/2/04 Treasury Briefing on Bush Administration Legislative Recommendations Regarding Hybrid Pension Plans Prepared by the Benefits Group of Davis and Harman LLP from Benefitslink as well.
The Wall Street Journal has this article: “Pension Rules Proposed: Measure Aims to Protect Older Workers if Concerns Shift to Cash-Balance Plan.” The article reports: “The proposal, part of the Bush administration’s budget, is politically charged. Though intended to address concerns of both companies and their older workers, the plan has received only tepid support from employers, and also is drawing fire from employee advocates.”
The New York Times: “Treasury Dept. Plans New ‘Cash Balance’ Pension Regulations.”
Reuters via Forbes.com: “US Treasury offers new cash balance pension rules.”
The first Law Firm report on the proposal:
Faegre & Benson: “Treasury Proposes Legislation Approving Cash Balance Pension Plans Prospectively.”