NEWS RELEASE

October 7, 2008
PR-08/23
For additional information:
Jason Hammersla
202-289-6700

Council: employer-sponsored retirement system designed to weather economic challenges

“This successful system facilitates employer sponsorship of plans, encourages employee participation in pension programs, promotes prudent investing, insists on transparency, operates at reasonable cost and is subject to strict fiduciary obligations and sound regulatory oversight. This is a system that is built to serve the long-term retirement interests of workers and that is designed to weather changes in market, financial and economic conditions, even conditions as anxiety-provoking as the ones we are experiencing today,” the Council stated. The Council’s testimony specifically addresses:

• The long-term focus of defined benefit plans: there are certain steps Congress could take to address the challenges of defined benefit plan sponsorship, such as prompt enactment of two provisions relating to the funding requirements of the Pension Protection Act of 2006 (PPA). One of these provisions would clarify the permissibility of asset smoothing under PPA and the other would impose a more effective transition regime to the PPA funding rules.

• Recent enhancements to defined contribution plans: The Council pledges to work with Congress and regulators at the Department of Labor to ensure that changes to fee disclosure practices are implemented smoothly, in a coordinated fashion and with sufficient transition periods. It is imperative that the advantages of enhanced transparency are achieved without in any way deterring plan participation or plan sponsorship.

• The importance of financial literacy: While knowledge and understanding of financial principles cannot completely conquer the anxiety that many Americans are feeling today, it certainly can reduce such anxiety and can help prompt sound decision-making in challenging times such as these.

“The committee is wise to examine the economic downturn’s effect on retirement security,” Council president James A. Klein said. “We hope that lawmakers appreciate the broad value of these plans when considering legislative action. Any short-term reform should be balanced against the long-term nature of these arrangements.”

The Council’s full statement is available on the Council Web site. To arrange an interview with a Council staff member, please contact Jason Hammersla, Council director, communications, at jhammersla@abcstaff.org or by phone at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Councils member's represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.