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Member, Beacon International Group, Ltd.
Several nonprofit trade associations on Thursday urged Congress to temporarily ease pension plan funding requirements, warning that they will have to lay off employees if legislators fail to act quickly.
Speaking at a news briefing sponsored by the American Benefits Council, Kathy Cloninger, New York-based CEO of Girl Scouts of the United States of America, said contributions to the council’s $400 million pension plan could skyrocket to 30% of payroll next year—up from 9% this year and 3.8% in 2009—unless legislators relax funding requirements that Congress tightened considerably in a 2006 law.
Without relief, cuts in staff would have to be made, Ms. Cloninger said.
Katy Beh Neas, vp-government relations in Washington for Chicago-based Easter Seals Inc., also said pension plan funding relief is needed to avert staff cutbacks, which would endanger the organization’s ability to provide services to families in need.
American Benefits Council President James Klein said the huge pension plan funding contributions facing employers is the result of a “perfect storm” in which low interest rates have driven up the value of plan liabilities, while the equities markets plunge has driven down the value of plan assets.
Rep. Earl Pomeroy, D-N.D., who also spoke at the briefing, predicted Congress will pass pension funding relief sometime next month.
Requiring employers to take money that could be used for operations that is far beyond what is needed to meet long-term funding needs “makes no sense to me,” Rep. Pomeroy said.
Benefit lobbyists have been urging legislators to include pension funding relief provisions in what has been described as a jobs bill that the Senate Democratic leadership is developing.