The American Trucking Associations has hailed passage of comprehensive pension-reform legislation designed to improve the solvency of single, multiemployer and so-called hybrid pension plans.
“This particular bill has traveled a difficult road in reaching final passage,” says Bill Graves, ATA president and chief executive officer. “This represents a balanced approach toward multiemployer pension reform by protecting the pensions of millions of hard-working Americans without imposing a crushing financial burden on the contributing employers of multiemployer plans, including those in the trucking industry.”
The Pension Protection Act of 2006 was designed to revamp traditional pension plans and prevent a taxpayer bailout of the Pension Benefit Guaranty Corp. PBGC, the self-financed federal agency that insures pension plans for 44 million workers, reportedly has deficits of $22.8 billion. Single employer participants have dropped to less than 30,000 from 95,000 in 1980 as companies drop or replace defined-benefit plans.
The bill, which passed in a 93-5 vote and was sent to President Bush, provides needed relief for companies with traditional defined benefit plans as well as so-called “hybrid” or cash balance plans. A major portion of the bill involved reform of the multiemployer pension system.
The bill gives companies seven years to get 100 percent funded and eases near-term funding requirements. It also establishes a new system for identifying pension plans that are facing financial problems. Additional provisions provide a liability shield to encourage companies to automatically enroll employees in 401(k) plans. Companies with defined benefit plans also will be required to use a lower interest rate to calculate the return on their fund investments, forcing them to put more money into the plans.