Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
WASHINGTON, March 25 -- Rep. Ron Kind, D-Wis. (3rd CD), issued the following news release:
The House of Representatives has passed bipartisan legislation introduced by U.S. Reps. Ron Kind (D-WI) and Susan Brooks (R-IN) that will help charities and small business cooperatives continue to offer high-quality pension plans, helping ensure that employees can count on their hard-earned pension benefits still being there when they retire. The bill, the Cooperative and Small Employer Charity Pension Flexibility Act (H.R. 4275), is now headed to the President for enactment.
"This commonsense fix to the pension system ensures that pension plans maintained by our charities and cooperatives will remain intact and robustly funded," said Rep. Kind. "It will help these organizations attract new workers and fulfill their pension obligations to current employees, and I look forward to President Obama signing it into law."
Charities and cooperatives are vital to our communities and neighborhoods, but the design of current pension funding laws, and artificially suppressed interest rates, began to jeopardize the continued impact these of entities in their communities. This reform bill offers a permanent exemption for these groups to ensure they are not required to fund their pension plans at levels often associated with high-risk plans, despite the fact that these plans have virtually no risk of default.
H.R. 4275 is the first stand-alone pension legislation that Congress has passed in six years. It has already gone directly to the President for his signature, as the Senate unanimously passed identical legislation in January. The Congressional Budget Office (CBO) estimates that the plan will raise $254 million over ten years.
The bill received broad bipartisan support in the House and Senate, and has been endorsed by Christian Schools International, the Jewish Federations of North America,United Way Worldwide, National Rural Electric Cooperative Association, Girl Scouts of the USA, National Council of Farmer Cooperatives, UJA-Federation of New York, Inc., Hawkeye Insurance Association, NTCA-The Rural Broadband Association, United Benefits Group, and the Lincoln Center for the Performing Arts.
Groups across Wisconsin welcomed the news of the bill's passage in Congress, and look forward to the positive effect it will have on their businesses and employees.
"Congressman Kind understands our unique business model and pension plan design and we thank him on behalf of the hundreds of Midwestern cooperative employees who will benefit from this effort," said William Berg, Dairyland Power Cooperative President and CEO. "His bill recognizes our plans pose virtually no risk of default, and should be treated that way permanently."
"Badgerland Council's pension expense for the current budget year is $177,000 and we expect the burden to go up to $248,000 in the next fiscal year," said Margaret L. Henderson, CEO, Girl Scouts of Wisconsin - Badgerland Council. "This legislation would save us up to $70,000 next year alone. Without legislative intervention, Badgerland Council may be forced to make difficult decisions to discontinue and limit services to girls. A reduction in programming means we will be unable to offer as many services and experiences that help Badgerland girls develop courage, confidence and character. The long-term consequences are dire as they diminish Badgerland's ability to serve all girls who may not be able to participate without financial assistance. While the percentage and total dollars may not seem high compared to the federal budget, it means a lot to a small organization like Girl Scouts of Wisconsin - Badgerland Council."
"As a participant in and a trust committee member of a multiple employer defined benefit pension plan representing rural communications cooperatives and small companies, we applaud Reps. Kind and Brooks for introducing legislation that passed the House today permanently extending the temporary exemption from the Pension Protection Act rules," said Christy Berger, General Manager/Executive VP of Nelson Telephone Cooperative in Durand, WI.
"This will allow our extremely secure pension plan to continue to provide retirement benefitsto our rural members without being subject to the rules that require funding at a level that would necessitate hundreds of millions of dollars in unwarranted increased pension costs and impede employers from being able to continue to offer this type of benefit."
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