WASHINGTON – The Senate approved and sent to the White House pension legislation to give millions of Americans a better chance of getting the retirement benefits they’ve earned while sparing taxpayers from possibly paying for failed pension plans.
The legislation, passed 93-5 late Thursday, also provides new incentives for young workers to enroll in 401(k) plans, reflecting the trend away from traditional employer-based pensions.
“There is little doubt this bill will be the foundation on which the future of our retirement system rests,” said Sen. Mike Enzi, R-Wyo., chairman of the Health, Education, Labor and Pensions Committee.
The vote was the last before the Senate leaves for a four-week summer break and gives lawmakers a major accomplishment to speak of when they meet their constituents back home.
The bill sets new funding rules for employers with defined-benefit pension plans and clamps down on companies that have fallen in arrears in meeting their funding obligations. In order to make a dent in underfunding now estimated at $450 billion, the bill requires plans to be 100 percent funded, up from the current 90 percent level, giving companies seven years to reach that goal.
Plans that are seriously underfunded face restrictions, such as a ban on increasing benefits, and must make accelerated catch-up contributions.
The White House had stressed that pension legislation would be acceptable only if it strengthened current funding requirements, and two chief House sponsors, Majority Leader John Boehner, R-Ohio, and Education and the Workforce Committee Chairman Howard “Buck” McKeon, R-Calif., said the bill met that condition.
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