Congress’ primary responsibility in passing a pension reform bill should be to foster a legal and economic framework that encourages employers to maintain and increase the number of workers who have an opportunity to earn the retirement security of a defined benefit pension plan.

To Accomplish this Goal, Congress Should:

• Retain Predictability in Future Pension Costs:
  • In order to make multi-year business planning decisions and manage the long-term liability related to their voluntary pension programs, employers need to average interest rates and asset values when calculating contributions.
• Provide Reasonable Transition Timetables:
  • If employers are asked to make substantial additional contributions to their plans, they need adequate time to implement the new requirements.
• Confirm Legal Certainty of Pension Plans:
  • Comprehensive clarification of the basic age discrimination standard for defined benefit plans will provide legal certainty for all existing and future cash balance and other hybrid pension plans.
• Encourage Employers to Pre-Fund Their Plans:
  • Preserving the use of credit balances, especially those earned prior to any new law, will enable employers to pre-fund their plans with higher tax-deductible limits and give them meaningful access to pre-funded contributions.
• Strengthen Disclosure Rules:
  • Timely, consistent, workable and accurate information will give employees and retirees a better understanding of their plans.
• Recognize the unique structure of rural co-op "multiple-employer" plans:
  • Funding rules for rural co-op "multiple-employer" plans should recognize their unique nature and structure.

To Avoid Weakening the Defined Benefit System, Congress Should Not:

• Use a Company’s Credit Rating Status to determine plan funding or for any other purpose. The government should not impose new burdens that are due to temporary downturns in the business cycle.
• Excessively Increase PBGC Premiums (both flat and variable rate) to lower the federal budget deficit. The premium structure should weigh the overall health of the defined benefit system and not the status of the federal budget deficit.
• Link Design Clarification of Hybrid Plans to Burdensome New Mandates on how a company transitions from one type of defined benefit plan to another, nor to litigation carve-outs.