Highlight Of Changes In Pensions

From AP, major changes in the new Pension Bill include:

• Requires employers with defined-benefit plans to make sufficient contributions to meet a 100% funding target and erase funding shortfalls over seven years.
• Forces employers with "at-risk'' plans to make accelerated contributions. Under one scenario, a plan is deemed at-risk if it falls below 70% funded status using assumptions that employees take the most expensive benefits and retire at the earliest possible date.
• Prohibits employers and unions from increasing benefits if a plan is less than 80% funded, unless the benefits are paid for immediately.
• Restricts the use of deferred executive compensation arrangements for employers with severely underfunded pension plans.
• Gives bankrupt airlines with a "hard freeze'' on their plans an additional 10 years to meet funding obligations. Airlines with a "soft freeze'' on their plans would get an extra three years.
• Establishes a simple age discrimination standard for all defined-benefit plans.
• Bars companies from forcing employees to invest any of their own retirement savings contributions in company stock.
• Permits qualified financial companies to offer face-to-face investment advice to help employees manage 401(k) and other retirement options.
• Makes permanent provisions in a 2001 tax cut law that raised annual contribution limits for IRAs.
• Gives taxpayers the option of depositing a portion of their federal tax refund directly into an IRA.
• Lets employers offer automatic enrollment in employer-sponsored defined contribution pension plans such as 401(k)s.
• Allows employers with defined benefit pension plans that are more than 120% funded to use assets to fund retiree health benefits.

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