Why Pension Funding Relief is a Catalyst for Economic Recovery

Congressman Earl Pomeroy (D-ND) Joins with Business & Labor Leaders Making Plea for Congressional Action on Overlooked Bipartisan Issue

WASHINGTON, Feb. 4 /PRNewswire-USNewswire/ -- On a telephonic press conference call this morning, an array of employers and retirement experts joined with Congressman Earl Pomeroy (D-ND) to call for temporary pension funding relief – an urgent, yet overlooked, issue that will act as a catalyst for our nation's economic recovery if Congress addresses the issue or that will become a huge obstacle to economic growth if it continues to be ignored.

Due to unprecedented economic turmoil and market volatility, pension plans are facing massive losses in their asset values.  As a result, billions of dollars that could be pumped into the economy today and help to save or create jobs are now scheduled to be diverted into pension plans unless Congress acts quickly.

"If left unaddressed, the issue of pension funding could throw a roadblock into our economic recovery," said Rep. Earl Pomeroy (D-ND), who along with Rep. Pat Tiberi (R-OH) is sponsor of congressional legislation on pension funding relief.  "Pension funding relief would provide employers more cash on hand to save and create jobs and to inject into the economy, while giving workers enhanced job security and strengthened pension plans over the long-term."

Pension relief legislation would provide a temporary extension to the period that employers have to fully fund their defined benefit pension plans -- leaving them with more cash on hand to save and create jobs, while helping to spur capital investment.

"Millions of dollars, normally earmarked for job creation and capital investment, must now be poured into healthy pension funds whose obligations to pay out benefits will stretch over several decades," American Benefits Council President James A. Klein told reporters on this morning's call.   "The resulting immediate job losses, if no action is taken, could severely hamper our tenuous economic recovery.  And unlike other stimulus legislation, pension funding relief saves jobs without spending any taxpayer money."

On this morning's call, an array of employers shared why pension funding relief is essential to their organizations.  

Katy Beh Neas, Vice President for Government Relations at Easter Seals, stated, "The current economic downturn has created unprecedented challenges for Easter Seals, the nation's largest non-profit service provider to people with disabilities.  Like many non-profit organizations, losses in investment income and decreased charitable gifts have forced Easter Seals to cut expenses, eliminate jobs and freeze unfilled positions.  Without pension relief, Easter Seals will seek a bank loan to meet its pension obligations."

Kathy Cloninger, CEO, Girl Scouts of America, stated, "Girl Scouts has provided a defined-benefit pension plan to our more than 10,000 mostly female employees for 35 years.  Due to the economic crisis and a decline in the value of our investments, the plan is experiencing significant shortfalls that are placing quite a strain on our councils. At the same time, implementation of the Pension Protection Act of 2006 is putting more stringent requirements on plan sponsors.  Congress must act to address this pension crisis by enacting legislation that provides adequate relief to defined-benefit pension plans."  

Barbara Crane, RN, President of the National Federation of Nurses, stated, "Without pension reform the 2,800 pension eligible nurses working in the city of New York will walk off their jobs, with only 4 weeks notice, compounding the already severe nursing shortage.  The impact of this mass exodus would cripple the ability of some of our city hospitals to deliver safe patient care."

Currently in Congress, the Pomeroy/Tiberi "Preserve Benefits and Jobs Act" offers a bipartisan approach to immediate pension funding relief.  Similar relief is included in separate measures introduced by House Education and Labor Committee Chairman George Miller (D-CA) and House Republican Leader John Boehner (R-OH).  

"Congress must enact pension funding relief immediately," said Klein.  "Legislative opportunities like this come along very rarely, in which numerous stakeholders along the ideological spectrum agree on the severity of a crisis and the clarity of the solution. Temporary relief legislation will preserve jobs, promote economic recovery and alleviate the deficit."  

For more information on pension relief legislation and to access a recording of today's telephonic call, please visit: http://www.americanbenefitscouncil.org/issues/dbfunding.cfm

SOURCE American Benefits Council