House Republicans Introduce Comprehensive Pension Reform Bill

The Pension Protection Act (H.R. 2830) is intended to fix outdated worker pension laws and protect the interests of workers, retirees, and taxpayers.


Boehner has had preliminary discussions with Senate leaders on the issue, including his counterpart Senate HELP Committee Chairman Mike Enzi, and will continue to work with them and other colleagues to move comprehensive pension reform legislation and send President Bush a bill he can sign into law this year.

PENSION PROTECTION ACT (H.R. 2830) BILL SUMMARY

The Pension Protection Act (H.R. 2830) will fix outdated pension rules to help ensure employers properly and adequately fund their worker pension plans, provide meaningful new disclosure to workers about the status of their pension plan, and protect taxpayers from a possible multi-billion dollar taxpayer bailout. Following is a brief summary of the bill.

The Pension Protection Act will:

Provide a permanent interest rate based on a modified yield curve for employers to accurately measure current pension liabilities as they come due.

Require employers to make sufficient contributions for plans to meet a 100 percent funding target.

Require employers to make additional contributions to erase funding shortfalls over seven years.

Trigger accelerated contributions if a plan's funded status falls below 60 percent.

Reduce the smoothing of interest rates to protect plans against market and funding volatility.

Prohibit employers from using credit balances if their plans are funded at less than 80 percent.

Permit employers to make additional maximum deductible contributions of up to 150 percent of current liability.

Ensuring Employers and Unions Don't Make Promises to Workers They Know Cannot Be Kept

The Pension Protection Act will:

Prohibit employers and union leaders from increasing benefits or paying lump sum distributions if a plan is less than 80 percent funded.

Prohibit further benefit accruals for plans funded at less than 60 percent.

Restrict the use of deferred executive compensation arrangements for employers with severely underfunded plans.

Adjusting Premiums Paid by Employers to the PBGC

The Pension Protection Act will:

Raise premiums employers pay to the PBGC but phase the increase in over time. Raise the flat per-participant rate premium from the current $19 to $30 over three years for pension plans that are less than 80 percent funded.

Increase the flat rate premium to $30 for plans funded at more than 80 percent over five years. Index the flat-rate premium annually to worker wage growth thereafter. Index the variable-rate premium, currently $9 per participant per $1,000 of underfunding, annually to worker wage growth.

Ensuring that Cash Balance Pensions Remain a Viable Part of the Defined Benefit System

Boehner has pledged that the Pension Protection Act when passed through Committee will:

End the legal uncertainty surrounding cash balance pension plans and ensure they remain a viable retirement security option for workers and employers.

Staff is working to resolve details on this issue and expects to finalize it before subcommittee markup.

Reforming the Multiemployer Pension System on Behalf of Workers Contributing Employers

The Pension Protection Act will:

Identify underfunded multiemployer pension plans and provide quantifiable benchmarks for measuring a plan's funding improvement.

Change the amortization schedule for any plan benefit amendments from 30 years to 15 years.

Increase the maximum deductible limit to 140 percent of current liability, providing additional funding flexibility for plans each year.

Require plan trustees to improve the health of the plan by one-third within 10 years if a plan is less than 80 percent funded or will hit a funding deficiency within seven years.

Prohibit benefit increases if the increase causes the plan to fall below 65 percent funded status.

Establish new funding standards, possible benefit restrictions, and new notice requirements for multiemployer plans that are funded at less than 65 percent.

Providing Workers with Meaningful Disclosure About the Status of Their Pension Plan

The Pension Protection Act will:

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