From Reuters.com, “US Senate approves pension bill with airline aid.” Excerpt:
Legislation aimed at strengthening traditional corporate pensions and shoring up the deficit-ridden pension insurance agency was easily approved by the U.S. Senate on Wednesday with a generous exemption for struggling airlines.Senators gave distressed airlines up to 20 years to repair their underfunded pension plans, in addition to the seven years provided by the bill to all companies to fix pension shortfalls. . .
It passed 97-to-2 despite a White House warning of a veto if Congress does not produce a tougher version of the legislation that leaves out targeted relief for any industry.
The bill is S. 1783 – The Pension Security and Transparency Act of 2005. Text of the legislation is here and amendments are here.
CRS Summary:
Pension Security and Transparency Act of 2005 – Amends the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) to establish new minimum funding standards for single-employer and multiemployer defined benefit pension plans. Limits benefits under underfunded plans. Establishes additional funding rules for multiemployer plans in endangered or critical status. Requires measures to forestall insolvency.Revises deduction limits for such plans. Revises deduction rules for combinations of defined contribution plans and defined benefit plans. Sets forth interest rate assumptions for determining lump sum distributions and for applying benefit limitations to such distributions.
Increases certain premiums to be paid to the Pension Benefit Guaranty Corporation (PBGC). Provides for phasing-in increases of: (1) the annual flat-rate premium paid by all single-employer plans; and (2) the additional risk-based premium, which is to be paid by all underfunded plans. Limits PBGC guarantee of shutdown benefits and other unpredictable contingent event benefits under single employer plans. Revises requirements for defined benefit plan funding notices. Requires additional disclosures in annual reports and to plan participants and beneficiaries.
Provides that defined benefit pension plans, including hybrid plans such as cash balance plans, may be deemed nondiscriminatory as to age if they comply with certain requirements, in cases of reduction in accrued benefits because of attainment of any age.
Requires defined contribution plans to allow employees to divest employer stock and diversify their pension asset investments. Sets forth participant protections, including diversification rights, under defined contribution plans. Revises requirements relating to: (1) portability and distribution rules; (2) information, including investment advice and retirement planning, to assist pension plan participants; (3) spousal pension protection under ERISA and the Railroad Retirement Act of 1974; (4) employee plans compliance resolution systems; (5) governmental and tribal pension plans; (6) black lung disability trust funds; (7) treatment of death benefits from corporate-owned life insurance; and (8) compensation and pensions of Tax Court judges.
The American Benefits Council website reports:
It is also possible that the House of Representatives could act on the Pension Protection Act (H.R. 2830), the pension funding reform bill developed by the House Committee on Education and the Workforce and recently approved by the House Ways and Means committee. The House bill contains similar reforms for defined benefit pension plans, as well as a number of provisions addressing defined contribution plans and flexible spending account rollovers.