Pension Relief Signed into Law â (June 25, 2010)
On June 25, President Obama signed into law temporary pension funding relief as part of a comprehensive package addressing medicare benefits. Following are the pension relief provisions included in the new law:
The law provides pension funding relief for single- and multi-employer defined benefit pension plans by giving them more time to absorb losses attributable to the market downturn and ensuing economic slow-down.
Single Employer Plans
Employers would be given two options to spread out their statutory pension funding obligations.
- The first option would allow employers to pay back their pension shortfall over 15 years (instead of seven) for any two plans years from 2008 to 2011.
- The second option would allow employers to make interest-only payments in the two years chosen with the shortfall amortized over the following seven years.
- Plans would be able to spread their 2008 investment losses over 30 years. Multi-employer plans would also be able to choose to smooth (i.e., average) their assets over 10 years (instead of five years). An analysis of the multi-employer provisions is available from the National Coordinating Committee for Multiemployer Plans.
The League joined a broad range of national nonprofit organizations calling for pension funding relief, urging Congress to enact legislation that would allow sponsors of defined benefit pension plans to recoup the shortfall for 2008 over a longer, more manageable period than allowed under the Pension Protection Act. The new funding relief provision is considered by most to be a step in the right direction, but not a complete resolution to the pension funding crisis.
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