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Retirement Policy Legislation. H.R. 2830, The Pension Protection Act of 2005 passed House on December 15, 2005S. 1783, The Pension Security and Transparency Act of 2005 passed the Senate on November 16, 2005Substantial differences in proposals. Retirement Policy Legislation. Reconciliation of Bill
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1. Retirement Legislation Update Lynn Dudley
Last Updated: February 17, 2006
2. Retirement Policy Legislation H.R. 2830, The Pension Protection Act of 2005 passed House on December 15, 2005
S. 1783, The Pension Security and Transparency Act of 2005 passed the Senate on November 16, 2005
Substantial differences in proposals
3. Retirement Policy Legislation Reconciliation of Bills
Conferees not yet named
Possible Senate Conferees - Grassley, Hatch, Lott, Gregg, Enzi, DeWine, (Kyl, Snowe, Frist)
Kennedy, Baucus, Rockefeller, Harkin, Dodd, Mikulski, Bingaman
Possible House Conferees - Thomas, Camp, Rangel, Boehner, Kline, Johnson, McKeon, Miller
Less Clear in the House due to the fact that Rep. John Boehner has vacated position as Chairman of the House Education and Workforce Committee for position as House Majority Leader – expected to be active in conference regardless
McKeon will take the place of Rep. Boehner as Chairman of the Committee
Timing of Conference Uncertain
Arguments for “sooner rather than later” less time later in the political calendar and less time for guidance to be issued before effective date
Conferees likely to be named after the recess for Presidents’ Day
4. Retirement Policy Legislation Three major components of pending legislation
Restructuring of the Funding Rules
Single and Multiemployer Plans
Hybrid Plan Clarity
Currently prospective only in both bills
House Committee Report Language provides the provision is intended as a clarification of the law
Substantially different approaches in bills
Oral Arguments in Cooper appeal
Defined Contribution Plan Reform
EGTRRA Permanence
Automatic Enrollment
Default Investments
Investment Advice
Diversification Requirements
5. Retirement Policy Legislation Administration Position
Continues pressure to move legislation closer to original proposal – included in 2007 Fiscal Year Budget, discussed in February 13 economic report
Use of Credit rating for at risk liability
No credit balances
Short transition
No averaging for liability and asset calculations
Maintains 5-year “hold harmless” period for plan conversions included in 2007 Fiscal Year Budget
Further increases in PBGC premiums – $16.7 billion included in 2007 Fiscal Year Budget – Flat rate premium of $30, indexed to wage inflation included in Deficit Reduction Act (H.R. 4241, S. 1932)
6. Retirement Policy Legislation Political Variables
Democrats
Concerns about healthy company plan freezes
Opposition to House hybrid provisions
Opposition to House investment advice provision
Airlines
Multiemployer Plans
Defined Contribution Provisions
Varying Hybrid Plan Positions
Is it better to have no provision or a prospective only provision?
Varying Funding Rule Priorities and Positions
7. Other Legislative Activity Continued Interest in Phased Retirement – introduction of S, 1826, Older Worker Opportunity Act by Sen. Herb Kohl (D-WI)
Tax credit up to 40% of first $6000 in wages paid to certain older workers
Must meet significant conditions including extension of health care on same basis as full-time workers
Increased Interest in Financial Literacy – hearing expected to be held by Senate Special Committee on Aging in March
8. Regulatory Initiatives Current Regulatory Initiatives
Financial Accounting Standards Board Project Applicable to Defined Benefit Pension Plans
Finalization of Nonqualified Deferred Compensation Guidance and Implementation of the New Rules – Council filed comments and Carl Lerner, Chairman of the Council this past year, testified before IRS/Treasury hearing – January 25th
SEC Compensation Disclosure Requirements
Roth 401(k)s – proposed rules generally effective January 2007 – some recordkeeping requirements in 2006 – Will be scheduling a Benefits Briefing shortly