Congressmen Earl Pomeroy (D-ND) and Eric Cantor (R-VA) announced the introduction of legislation to delay implementation of the Pension Protection Act (PPA) funding rules for one year to give the Department of Treasury sufficient time to provide employers and employees with thorough guidance on the new funding rules.
"Pension plans are long-term commitments companies make to their employees. Allowing public comment on the rules that will be governing the retirement of millions of American workers is a critical step in the process," Congressman Pomeroy said. "To assure that these complex and important pension regulations deliver the Pension Protection Act's long term promise of greater security for the pensions of 20 million Americans, we must make sure that the most important stakeholders - workers and employers - have their say. Pushing back the effective date twelve months will allow adequate time for public comments."
"I am as supportive today of the Pension Protection Act as I was when we enacted it. The necessary reforms of the law were substantial, and asked much from both employers who sponsor defined benefit plans and our government agencies which oversee them. H.R. 3868 recognizes this burden, and provides the needed time for stakeholders to comment. By providing additional time for our agencies to issue guidance and for the pension community to provide meaningful comment on that guidance, we will further the overarching goal of the PPA--to ensure a solid foundation for workers who count on their pensions as part of planning for a secure retirement," said Congressman Cantor.
The Pension Protection Act was signed into law on August 17, 2006, and provided that the new funding rules it contained would become effective January 1, 2008 to give employers sufficient time to plan for the application of the new rules. It set an ambitious regulatory agenda for the Departments of Treasury and Labor. While the Treasury Department has issued guidance on numerous aspects of the new funding requirements, none of the regulations have been issued in final form.
If guidance were issued immediately on all of the new funding rules, companies would have just about two months to understand and implement those rules for their employees' pensions. Additionally, these complex rules have components that interact, so employers would have little time to evaluate how the rules would look as a whole. At this date, employers do not have time to incorporate the new funding costs into corporate budgets and to make the needed changes in computer and record-keeping systems.
The Pension Protection Act was the most significant change in funding of defined benefit retirement plans in thirty years. As such, it is important that the Treasury Department provide a public comment period for all of the PPA guidance as the regulations fill in the important details of the new pension law.
Pomeroy and Cantor's legislation, H.R. 3868, will delay the implementation of these new rules for one year, until January 1, 2009, in order to provide the Treasury Department with enough time to thoroughly and objectively provide guidance on these new rules, including allowing for a full public comment period, and disseminate that information to the public in a timely manner.