<nobr>Mar 25, 2009</nobr>

ERIC Endorses Minority Leader Boehner's Pension and Savings Relief Legislation

Washington, D.C. -- The ERISA Industry Committee (ERIC), a Washington, D.C.-based trade association representing America's major employers, endorsed House Minority Leader John Boehner's (R-OH) "Savings Recovery Act" that would provide relief for pension plans, as well as other important retirement savings provisions, and encouraged Congress to approve the legislation.

"ERIC commends Minority Leader Boehner and his colleagues for recognizing the urgency facing pension plans following the devastating effect that the severe market downturn, coupled with the volatility of the recent changes in pension funding rules, has had on the funding status of pension plans across the country," said ERIC President Mark Ugoretz.

Pension plan sponsors have been battered by the current economic crisis as the sharp downturn in the markets have eroded their assets at the same time new funding rules and falling interest rates increased their funding requirements. The Pension Protection Act of 2006 shortened the timeframe over which plan sponsors could make-up funding shortfalls and required asset levels to more closely reflect spot valuations rather than long-term valuations that recognize the long-term nature of the liabilities.

"ERIC appreciates Minority Leader Boehner, who was a staunch supporter of the Pension Protection Act, for recognizing that pension plan sponsors, who voluntarily provide benefits, urgently need relief as a result of the economic crisis," Ugoretz said. "The proposed legislation provides critical breathing room for plan sponsors, many of whom are faced with contributions double, triple, or even quadruple those of last year—this at the same time revenues and profits are down due to the recession."

"We are not asking for a rollback of the PPA," Ugoretz explained, "rather we are merely asking for more time on a temporary basis to make up for the sudden and extraordinary funding requirements that came about as a result of the economic crisis and the accelerated funding required by the PPA. The funding targets remain the same; the time to meet those targets would merely be extended. Companies are experiencing significant cash flow problems. If we don't get funding relief, those problems will have to be solved by more job lay-offs and more companies cutting back on 401(k) matches."

"Representative Boehner's support regarding relief for defined benefit funding is a significant and positive development to protect both defined benefit plans, 401(k) plans and jobs," Ugoretz added.

"Those who claim that additional pension relief is not warranted are not living in the real world. Companies have real and significant cash flow issues. Without such relief, employers are left with unfortunate choices between freezing their plans, laying off workers, delaying capital investments, or pouring cash into their pension plans – those are the facts. Waiting until 2010 or later this year is unacceptable since companies have to act soon to protect their 2009 cash positions."

"ERIC calls on Congress to quickly approve this legislation, which includes, not only critically needed pension relief, but other important retirement savings provisions," Ugoretz said.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Text Files:

Summary of Savings Recovery Act

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