BAUCUS, GRASSLEY, KENNEDY, ENZI ANNOUNCE PENSION PROTECTION PLANS, PROPOSAL ALSO INCLUDES TAX HELP FOR FAMILIES AND BUSINESSES
Senate colleagues find middle ground, increase aid as economy falters
Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking
Member Chuck Grassley (R-Iowa) were joined today by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Edward Kennedy (D-Mass.) and Ranking Member Mike Enzi (R-Wyo.) in announcing legislation to help ease the financial strain on American families and businesses due to the lagging economy. The package includes important modifications to
pension distribution requirements for seniors and businesses, as well as provisions included in the Pension Protection Technical Correction Act of 2008, originally passed by the Senate in December 2007 and the House in March and July of this year. The bipartisan package also extends for one year business tax relief that was included in the first economic stimulus package,
and allows companies to write off a greater percentage of their investments in business assets to free up cash for payroll and other expenses.
"Americans need real help from Congress to make sure their retirement savings are safe and sound and available to them when they need it. The provisions we're offering here today are a viable effort to move the economy toward recovery," said Baucus. "We've included measures to make pension plan requirements as friendly as they can be for seniors and employers so that they avoid a tax hit that wouldn't otherwise burden them under normal market conditions. And we're making it possible for struggling businesses to keep their houses in order by allowing them a greater return on what they invest in their operations. "
"This bill contains important stop-gap measures to help protect pension holders given the great anxiety many face right now because of the economic downturn. It also contains tax relief measures to help employers weather the storm and continue to meet obligations to employees. These are common sense measures to help get through a difficult environment," Grassley said.
Kennedy said, "This bipartisan package addresses immediate pension needs arising from the financial crisis. It's an important first step, but there is much more to be done to protect families' retirement security. In these hard economic times, Americans have much to be concerned about, but they shouldn't have to lie awake at night worrying whether their hard-earned pensions will survive. I look forward to working with my colleagues to do all
we can to see that employees' pensions stay safe and sound."
"I'm pleased that we've been able to work together in a very short period of time and reach agreement on a balanced package that will help protect the retirement interests of individual retirees, workers, and pension plans," said Enzi. "This agreement not only recognizes the economic stress families are feeling with their retirement nest eggs, but also will put in place key provisions of the Pension Protection Technical Correction Act.
Together, these changes will help families and bring temporary relief to weather troubled markets that threaten the safety of the retirement savings millions are depending on."
Business tax incentives and pension provisions in the package include:
-A provision for companies to claim as an expense a greater portion of their property cost, as well as increase the total dollar amount of allowable asset depreciation for a period of one year.
- A measure to provide relief for seniors age 70 and 1/2 or older who are required to take distributions from their retirement plans. This allows savings to stay put and avoid a tax hit when the market is down.
-A provision allowing single-employer pension plans to account for expected and unexpected earnings in addition to contributions and distributions when determining the value of the plan's assets. In addition, for those plans that fall below the set target funding percentage for a particular year (e.g., 92 percent in 2008), these plans will only be required to fund up to the specified funding percentage for that year, instead of 100 percent.
-Other pension provisions address difficulties faced by multi-employer pension plans by allowing a freeze of their current funding status so that funds that have dropped in value due to the decline in the stock market can avoid being classified as "endangered" or "critical." For those multi-employer plans that have established a funding improvement or rehabilitation plan for 2008 and 2009, the funding improvement and rehabilitation period would be extended from ten years to thirteen years.
- A measure to allow pension plans, for purposes of applying certain restrictions on benefit accruals, to use their 2008 funding status in 2009.
- A Tribal pension provision would eliminate the distinction between different types of employees within Indian tribal government pension plans so that tribal plans receive the same tax treatment as state and local government plans.