The defined benefit pension plans changes includes “strengthening pension-funding rules by mandating that companies fully honor pension obligations within seven years, without shifting the financial burden to U.S. taxpayers” according to cfo.com.
Another interesting part of this bill that has received some opposition from lawmakers was “allowing airlines in bankruptcy court that have frozen their pension plans to claim they are financially sound despite large liabilities, giving them an additional ten years beyond the seven years allotted to most companies to fully fund their pensions” as reported on the University of Pittsburgh School of Law website. While I understand the hardships airlines have gone through in the years following 9/11 does that warrant preferential treatment?
The International Brotherhood of Teamsters was none to happy about the passage of the pension bill. According to a press release from the teamsters on yahoo finance, “This bad pension legislation allows vested benefits to be cut essentially undermining the sanctity of the nation's private pension system. Tens of thousands of Teamsters mobilized against the bill in an attempt to stop this attack on their retirement security.” The press release does not mention specific changes in the bill affecting vested pension benefits.
I will write another post about the life insurance related parts of this bill as well as some of the industry responses.
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