U.S. Senator Benjamin L. Cardin (D-MD) today praised Senate passage of an amendment he authored with Senator
Johnny Isakson (R-GA) that will encourage companies to continue their defined benefit pension programs by giving them greater flexibility in managing their pension obligations during this difficult economic downturn.
“Defined benefits plans are an important part of retirement planning and it is important to ensure the viability of the pension security system and to give retirees the benefits they have been promised,” said
Senator Cardin, a strong advocate of improving retiree benefits.
“This amendment provides temporary support for companies facing difficult economic challenges and it will ensure that workers will have the resources they need in retirement.”
Under the main provision of the amendment, employers would be allowed to choose from two options to spread out their pension obligations. Under the first option, employers would be able to repay their pension shortfall over seven years, but the seven-year amortization would start two years late. During the two-year delay period, the employer would only owe interest on the shortfall. Under the second option, employers would be able to pay back their pension shortfall over 15 years.
The amendment also removes a punitive provision that would impose an unfair burden on companies such as General Motors as they struggle to retain jobs during this economic downturn.
It also provides union-managed, multi-employer plans the flexibility they need to continue to fund benefits and ensure retirement security for their workers.