Request a Proposal

Pension Funding Relief Proposal

The House of Representatives proposed the Emergency Pension Plan Relief Act of 2021 (EPPRA):

Funding Relief: 

The proposed Emergency Pension Plan Relief Act of 2021 (EPPRA) will preserve the stabilizing effects of smoothing on plan funding for single employer pension plans. It will apply to plan years beginning after December 31, 2019.

  • The current 10% interest rate corridor would be reduced to 5%, effective in 2020.
  • The phase‐out of the 5% corridor would be delayed until 2026, at which point the corridor would, as under current law, increase by 5% each year until it attains 30% in 2030, where it would stay.
  • A 5% floor would be put on the 25‐year interest rate averages. This floor would establish stability and predictability on a longer‐term basis, so that interest rate variations do not create excessive volatility

Note: The current discount interest rate smoothing is based on a 10% band around 25‐year interest rate average, phasing out in 2021. The benefit to plan sponsors has been to protect the pension plan funded status from extreme movements in liability discount interest rates.

Extension of Amortization:

This included:

  • All shortfall amortization bases for all plan years beginning before January 1, 2020 (and all shortfall amortization installments determined with respect to such bases) would be reduced to zero.
  • All shortfalls would be amortized over 15 years, rather than seven years.

*Source: House Ways and Means Committee.