(June 25, 2010) — President Barack Obama has approved a bill that will see funding regulations for defined benefit pension plans loosened.
“The biggest piece of relief for asset owners is the fact that the bill allows for more time that plans can make up for market losses from 2008,” Jon Waite, director of investment management advice and chief actuary of SEI’s Institutional Group, told ai5000.
The bill — the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act — contains pension relief provisions identical to those previously approved in a Senate tax and jobs bill last March. Under the approved legislation, DB plans would be permitted to lengthen amortization periods for investment loses, either over a period of up to 15 years or over a nine-year period, at the option of the plan sponsor, Waite told ai5000. Current law requires plans to amortize investment losses over a period of seven years.
“Our clients our demanding to know the impact of this legislation pretty quickly,” said Waite. “It’s complicated. It’s not just pure relief. It’s relief with strings attached.” “This is positive news for asset owners because this bill allows them to fund their pension plans in a more managed manner, putting additional capital into their company to strengthen during these economic recovery times,” he added.
Separately, House and Senate representatives agreed late Thursday on compromises to a sweeping financial reform effort that would see a final bill put forward for a vote and signed by President Obama before the July 4 weekend.
Included in the compromise is the establishment of a regulatory structure for the $615 trillion over-the- counter derivatives market. After weeks of negotiation, lawmakers agreed to a partial ban on proprietary trading at banks; to increased oversight of derivatives transactions through transparent exchanges; to great capital cushions at banks; to the creation of a consumer-protection agency to oversee credit card and mortgage transactions, among others; and to the creation of a 10-person panel that would monitor threats to financial stability.
“This is going to be a very strong bill, and stronger than almost everybody predicted that it could be and that I, frankly, thought it would be,” House Financial Services Committee Chairman Barney Frank, D-Mass., told reporters June 23 as lawmakers prepared for the final round of talks, according to Bloomberg.
To contact the ai5000 editors of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a> and Paula Vasan at <a href=' mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>