Letter to Congressional Delegation on Pension Protection Act requirements
November 20, 2008
The Honorable Charles E. Schumer
Member of the United States Senate
313 Hart Senate Office Building
Washington, DC 20510
Dear Senator Schumer:
I write to request your support and active participation in moving legislation which would provide a level of interim relief to certain provisions of the Pension Protection Act of 2006 (PPA). The current financial crisis not only impacts workers today but also will likely have severe negative effects on the pension plans in which these workers participate.
The drop in the value of pension plan assets coupled with the current credit crunch has placed plan sponsors – including many of the more than 3,000 members of The Business Council of New York State -- in an untenable position.
Current provisions within the PPA may force companies to consider freezing or terminating their defined-benefit pension plans, as these provisions will require them to make unexpectedly large contributions to their plans in order to meet the statutory funding requirements. In these economic times, the cash needed to meet these pension funding requirements may make the difference between a company remaining viable or closing its doors.
It is my understanding that the Senate Finance and HELP Committees have reached an agreement on the parameters of a bill which would enable companies to "smooth out" the value of their pension plan's assets for accounting purposes, allowing them to factor in future earnings. The agreement would also eliminate a requirement under the 2006 law that companies fully fund their pension plans for a particular year if they don't meet that year's required funding target.
On behalf of The Business Council's members, I ask you support the bill, and for your active engagement in getting the bill passed this calendar year. Without action before the end of 2008, many companies will be required to comply with the current PPA provisions which will force them to make very tough decisions regarding the availability of a defined-benefit pension plan for their employees.
President and CEO