On June 25, President Obama signed into law H.R. 3962, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (the Act), a stand-alone measure to prevent a scheduled cut in Medicare reimbursements to physicians and to provide short-term funding relief to both single- and multi-employer pension plans. The Act contains several provisions to help multiemployer pension funds hit hard by 2008-2009 investment losses. However, it does not contain the preferred measures sought by AGC and its coalition partners and passed by the House earlier this year.
Key multiemployer pension funding adjustments permitted by H.R. 3962 include:
- Expanded 30-year amortization of net investment losses incurred in either or both of the first two plan years ending after August 31, 2008;
- Expanded 10-year smoothing of investment losses incurred in either or both of the first two plan years ending after August 31, 2008; and
- Expanded asset smoothing corridor to 130 percent for either or both of the first two plan years ending after August 31, 2008.
To qualify for the relief provisions, plans must meet a solvency test and agree to benefit restrictions. The solvency test requires that the plan's actuary certify that the plan is projected to have sufficient assets to pay all expected benefit payments and other expenditures over 30 years. The benefit restrictions prohibit plans electing the relief from adopting any benefit improvements within two years of a plan year to which the relief provisions apply, unless certain conditions are satisfied.
While the relief enacted is not the preferred solution, AGC and the coalition are seeking "technical corrections" legislation along with Congressional guidance to help ensure that regulatory agencies will interpret the Act in a manner consistent with the intended relief. AGC and the coalition are also continuing to work on additional, longer-term relief for more troubled multiemployer plans, including a "partitioning" proposal included in the pending bills H.R. 3936 and S. 3157. To support this effort by contacting your members of Congress through AGC's online Legislative Action Center, click
here.
To view an analysis of the Act issued by the National Coordinating Committee for Multiemployer Plans, the coalition coordinator, click
here. To view the Senate Finance Committee's summary of the Act or the complete legislative text, click
here. For more information, contact Karen Lapsevic, AGC's Director, Tax, Fiscal Affairs, and Infrastructure Finance, at 202-547-4733 or
lapsevick@agc.org.
