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Pension Rights Center Asks House Ways and Means Committee to Provide Funding Relief for Companies that Continue Workers' Pensions

For Immediate ReleaseContact: Nancy Hwa, 202-296-3776
October 01, 2009www.pensionrights.org

WASHINGTON – Congress should make short-term emergency funding relief available for companies that continue their workers' pension plans, the Pension Rights Center told lawmakers today. Testifying on behalf of the Center before the House Ways and Means Committee, Professor Norman P. Stein recognized the economic hardships that companies are facing, but urged the panel to keep the interests of workers in mind when considering pension funding relief.

"The economic crisis has hit American workers and American companies hard," said Stein. "We need to support those companies that stood against the tide and maintained active defined benefit plans for their employees…[R]elief will allow these valuable plans to weather the economic crisis, benefiting employees and employers alike. Such relief, however, should be reserved for employers who agree to conditions to protect employees and the Pension Benefit Guaranty Corporation (PBGC). Funding relief should not be a free lunch."

In his testimony, Stein urged Congress to take the following actions:

  1. Make short-term emergency funding relief available only to companies that:
    a. Agree that workers' will continue to earn benefits under their traditional pension plans throughout the relief period;
    b. Amend their plans to provide that if the plan becomes overfunded and then terminates, workers and retirees will receive any "excess" plan money; and
    c. Get the consent of unions whose members are participants in the plan.
  2. Deny funding relief to companies with frozen plans except under specific circumstances, such as if the company unfreezes its plan.
  3. Repeal a provision of the Pension Protection Act of 2006 (PPA) that says that workers cannot earn new pension benefits if their plans' funding goes below a specified level.
  4. Repeal the PPA provision that designated the date a company enters bankruptcy as the plan termination date, rather than the date that the pension plan is actually terminated.
  5. Increase the benefit amounts guaranteed by the PBGC for workers in multiemployer plans.
  6. End the ability of employers to modify their workers' pension plans to create enhanced benefits for select executives.

"The economic meltdown of the last year has shown the tremendous value of defined benefit plans to employees and retirees," said Stein. "Congressional response to the economic crisis should be to help ensure the survival of existing defined benefit plans and to stand by those companies that stood by their defined benefit plans in an era when too many companies abandoned them."

Read the Pension Rights Center's testimony here.