Legislation was introduced in the U.S. Senate this week potentially offering pension-funding relief to some nonprofits and rural communities.
The Cooperative and Small Employer Charity Pension Flexibility Act would make permanent temporary legislation exempting these groups from the Pension Protection Act of 2006. Additionally, the bill would freeze Pension Benefit Guarantee Corp. premiums until further research on rate structures comes from that agency.
The charities and co-ops said PPA funding regulations aimed at preventing pension defaults are not an issue for their plans, hence their hope for a continued exemption. Subjecting them to PPA rules would require these organizations to shift funds from critical services and hurt their ability to provide pension benefits to their workers.
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The legislation was brought to the floor by Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin, D-Iowa, and Pat Roberts, R-Kansas. It was co-sponsored by Patty Murray, D-Wash.; Lisa Murkowski, R-Alaska; and Al Franken, D-Minn.
"The PPA was meant to protect employee pensions, but in the case of rural cooperatives and charities, it jeopardizes plans for employees," Roberts said from the Senate floor. "Our bill recognizes these unique plan structures by creating greater flexibility that enables employers to offer stable futures for their workers without passing the cost on to rural communities through increased costs for services."
The bill would impact charitable groups and rural cooperatives currently offering defined benefit, multiple-payer employee pension plans. Generally these small, community-focused plans are considered low risk for pension default due to multiple employers' contributions.
Without the legislation, the temporary exemptions will expire and many of these small employers would stop offering pensions to workers.
"Congress should be doing everything it can to make it easier for employers to offer a pension to their employees," said Sen. Harkin.
The bill received wide support from groups including the Girl Scouts of America, United Way Worldwide, the National Rural Electric Cooperation Association, Christian Schools International and the Jewish Federations of North America.
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