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August 17, 2005
Pension Reform OK'd by House Committee
P>The House Committee on Education and the Workforce recently moved pension reform legislation one step closer to approval by the Pension Protection Act (H.R. 2830). The measure was approved in a 27-to-0 vote, with all committee Republicans voting in favor, and all committee Democrats merely voting "present."

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The Act includes new funding requirements to ensure that employers adequately and consistently fund their pension plans, and provides workers in single and multi-employer plans with better information about the financial status of their pension plans. It also protects taxpayers from a potential multibillion-dollar bailout of the Pension Benefit Guaranty Corporation (PBGC), according to Committee Chairman John Boehner (R-Ohio).

In addition, Boehner said the bill:

  • Requires employers to meet a 100 percent funding target,
  • Prohibits the use of credit balances for severely underfunded plans,
  • Phases in increases in employer premiums paid to the PBGC,
  • Allows employers to give rank-and-file employees access to high-quality investment advice, and
  • Includes numerous reforms to multi-employer pension plans governed by collective bargaining agreements to give trustees additional tools to fund their benefit promises.

The committee approved a substitute amendment offered by Boehner. For all defined benefit plans, the amendment establishes a simple age discrimination standard that clarifies current law regarding age discrimination requirements under ERISA on a prospective basis, he said.

Under the measure, employers are also prohibited from reducing or cutting any vested benefits that workers have earned during a conversion to a cash balance plan. The House's Ways and Means Committee was also reviewing the legislation at press time.

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