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Member, Beacon International Group, Ltd.
WASHINGTON—The Senate on Friday approved legislation that would give employers more time to fund pension obligations.
The pension funding relief provisions were incorporated into a broader bill, H.R. 3962, that would boost Medicare payment rates to doctors.
The pension provisions had been part of a tax bill. The tax bill, though, stalled Thursday when Senate Democrats on a 56-40 vote failed to stop debate on the bill.
But the pension funding relief legislation received new life late Thursday after top Senate Finance Committee Democrats and Republicans agreed to graft the provisions onto H.R. 3962, which the Senate passed Friday under a procedure known as unanimous consent.
Under current law, employers must fund pension obligations over seven years. The measure passed by the Senate would give employers two alternatives to the current funding requirement.
Under one alternative, employers could amortize funding shortfalls over 15 years for any two plan years between 2008 and 2011.
Under the other, employers would have to pay interest on a funding shortfall for only two plan years that they choose.
However, employers adopting either alternative would have to contribute extra money if they paid “excess” employee compensation or “extraordinary” dividends.
The measure still has to be considered by the House, which is likely to take it up next week.