Congress has cleared pension legislation that would provide temporary relief for single-employer and multi-employer pension funds, as well as individual retirees, who have seen their funds decline because of the downturn in the financial markets.
Final congressional approval came Dec. 11 when the Senate passed the measure by unanimous consent. The House had approved the bill the previous day. Mark Ayers, president of the AFL-CIO's Building and Construction Trades Dept., said in a letter to state and local BCTD leaders that the legislation "would provide funding relief for the vast majority of building trades' multiemployer plans...which, like most pension plans, have been devastated by the decline in the stock markets."
Underfunded multiemployer plans fall into three categories, or zone sendangered, seriously endangered, or critical, and are required to carry out programs over a period of years to improve their financial health. The new bill gives such multi-employer plans 13 years, instead of the current 10, to carry out those needed improvement plans.
It also allows multi-employer plans to elect to freeze the zone that they are in, for one year. That would help plans that may have been healthy until this fall, when the markets dropped sharply.
"It's a great temporary fix and...it was very much needed," says Dana Thompson, the Sheet Metal and Air Conditioning Contractors National Association's assistant director for legislative affairs.
The legislation gives plans "a little more time to weather the economic storm," says Karen Lapsevic, Associated General Contractors' director for tax, fiscal affairs and infrastructure finance.
For individuals who are 70 and a half years of age or older, the legislation provides a one-year moratorium on required distributions from their retirement plans, at a time when those plans have dropped in value. Senate Finance Committee Chairman Max Baucus (D-Mont.) said it will let those retirees "avoid being saddled with a tax hit that wouldn't exist under normal market conditions."