Business Groups Pushing for Relief From Pension Law
By Stephen Manning, Associated Press
Wednesday, November 12, 2008
With pension funds facing billions of dollars in shortfalls as
markets plunge, a range of companies from Ford to
Verizon are pushing Congress to suspend portions of a
two-year-old law they say could force them to cut jobs as they
shift scarce money into ailing retirement pools.
The lobbying effort aims to change a 2006 pension revision law
as part of any economic stimulus plan in a lame-duck session of
Congress that begins next week. Companies warn that the current
law could force them to tie up large sums of cash they
desperately need in the face of a global recession.
Roughly 300 companies and business groups plan to make the
request in a letter tomorrow to congressional committees.
The authors include some of the nation's biggest corporate names
from a variety of sectors, including
Pfizer and Verizon Communications.
"Unless the funding rules are modified, they will increase
unemployment and slow our economic recovery," the letter warns.
The Pension Protection Act of 2006 included provisions meant to
ensure that company pensions, also known as defined benefits,
have money to meet the promises made to workers and retirees.
While many companies have phased out such pools of money in
favor of 401(k) plans, which cost less, about three-quarters of
S&P 500 companies have traditional plans, analysts say.
Under the law, companies facing shortfalls must bring their
plans up to full funding over the next seven years. Those
that fall short will be forced to take steps such as freezing
the accrual of new benefits for current plan members.
The letter asks Congress for changes to the pension law, such as
giving companies more time to reach full funding. It also
seeks accounting changes that would allow companies to spread
losses to their plans over longer periods of time, a process
that would temper the effect of sudden drops in plan values.