The Academy encourages the development of new funding rules that will help employers maintain their defined-benefit pension plans, increase the number of employees protected by the income guarantee provided by defined-benefit pension plans, improve pension plans' funding levels, and reduce the risks and costs to the PBGC and participants.
The USW beat back the potentially devastating effects of the cap on retirees by negotiating millions of dollars into a fund to cover retiree health care costs, and halted the company's drive for a two-tier system for new hires, who will remain on the same health care plan and participate in Alcoa's defined-benefit pension plan and not just a 401(k) plan.
As of December 2005, the company had held seven seminars throughout the country--each attended by hundreds of independent advisers--to help them understand that the retirement needs of baby boomers will be different due to their expected longevity and the decline of defined-benefit pension plans.
It elected to close out its defined-benefit pension plan, which it did in 2004, and roll out a new defined-contribution plan; that started with new employees, then 60-90 days later with the rest of the employee base.
REFLECTIONS: ERISA Section 204(h), as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001, provides that a defined-benefit pension plan may not be amended to provide a significant reduction in the rate of future benefit accrual, unless the plan administrator provides notice describing the reduction to each individual whose benefit is adversely affected and to each employee organization representing these individuals; the plan is subject to an excise tax under Sec.