By Steven Johnson | ECT Staff Writer
A bill that increases stability and reduces cost pressures for co-ops in the NRECA Retirement Security Plan is now law.
President Obama signed the Cooperative and Small Employer Charity Pension Flexibility Act into law on April 7.
The measure passed the House of Representatives by voice vote on March 24, after unanimously passing the Senate on Jan. 28.
The law provides a permanent exemption for not-for-profit sponsors of multiple-employer pension plans, like electric co-ops in the RS Plan, from volatile and costly provisions of the 2006 Pension Protection Act. The temporary exemption was set to expire in 2017.
“This finishes the job Congress started back in 2006,” said NRECA CEO Jo Ann Emerson. “This important legislation eases cost pressures and provides greater stability for co-op contributions by recognizing the unique structure of the RS Plan.”
The law also eliminates Deficit Reduction Contribution rules designed for riskier, single-employer pension plans. In contrast, the RS Plan presents virtually no risk of default to the government because it has more than 880 participating employers and 56,000 active participants spread across 47 states.
Application of the DRC and the Pension Protection Act could have led to volatile fluctuations in funding the RS Plan, increasing cost pressures on co-ops.
Emerson praised the work of co-ops and their employees in advocating for a stand-alone bill that’s one of the comparatively few enacted by the 113th Congress.
“It finally enacts strict rules that fit the RS Plan’s unique design and low-risk profile,” said Kirk Johnson, NRECA senior vice president of government relations. “It’s also the first bill that I am aware of in my 12 years at NRECA that passed as freestanding legislation that we put together.”