US - The chairman of the US Senate committee on finance has announced he is redrafting a pension reform Bill he introduced in January on the back of United Airline's US$6.6bn pension default.
Chuck Grassley said he was drafting new legislation in light of “recent developments” including UA’s termination of four of its employee pension plans and a Government Accountability Office report which found statutory reporting requirements for private pension plans lack “key information” that could better assist federal agencies in identifying and tracking at-risk plans.
“As the Finance Committee’s investigation of United Airlines’ pension default and the GAO’s recent report on the pension crisis have made painfully clear, we need completely new rules requiring accurate measurement of pension liabilities and full funding of all pension plans,” he said.
“The legislation I’m drafting will do just that - it’ll adopt the Administration’s yield curve proposal and eliminate the so-called ‘smoothing’ techniques that let companies hide massive pension losses from their employees and the public at large.”
The National Employee Savings and Trust Equity Guarantee (NESTEG) Act was introduced by Grassley and Senator Max Baucus at the end of January.
In its current format, the Bill requires companies to allow their employees to diversify out of company stock and adopts a permanent yield curve replacement for the 30-year Treasury rate used for pension funding purposes.
Last week House Republicans introduced the Pension Protection Act (H.R 2830), which requires employers to fund their pension promises and replaces the current corporate bond interest rate with a permanent interest rate for calculating employer’s pension funding promises to workers.
The Act raises flat-rate premiums paid to the Pension Benefit Guaranty Corporation from US$19 to US$30, phased in over three years and increases disclosure requirements for employers on the financial status of their pension plan.
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