US - Treasury Secretary Timothy Geithner showed support for pension funding relief at a House Ways and Means Committee hearing yesterday. The news comes as Mercer reports a 400% increase in company contributions for 2010.
Responding to a statement by congressman Earl Pomeroy urging the need to help companies deal with their pension deficits, Geithner said: "Congressman, I think you're right. We think there's a good case for targeted pension relief for just the reasons you said, and we'd like to work with you on doing that."
Pomeroy and congressman Pat Tiberi in October introduced the Preserve Benefits and Jobs Act, which if enacted, would allow single-employer pension funds up to 15 years, and multi-employer schemes up to 30 years to pay off current deficits. (Global Pensions; October 29, 2009)
Pomeroy said: "We have seen some promising signs that the economy is turning around, but a lot of businesses around the country are still struggling. We need to find every way possible to encourage them to create jobs, and we can do that by helping them deal with the huge losses they suffered when Wall Street crashed. This bill will help ease that burden on these businesses while giving employees assurances that their pensions are safe and will continue to grow."
Separately, research by Mercer actuaries showed that required cash contributions into pension plans will soar to US$5bn from $1bn in 2009. Mercer surveyed 874 private-sector plan sponsors with a combined $190bn in assets.
Mercer partner Craig Rosenthal said: "A significant portion of the increase in 2010 minimum required contributions is related to amortization of the funding shortfalls."
He added: "Even factoring in a proposed House bill that would give sponsors more time to amortize funding shortfalls, aggregate minimum required cash contribution amounts are still expected to increase dramatically for 2010 under either of two alternative amortization periods proposed."
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