Big Win on Pension Legislation for Co-ops!

The bill provides greater stability and predictability for ongoing employer contributions.

The Cooperative and Small Employer Charity (CSEC) Pension Flexibility Act of 2013 (the “Act”) passed the U.S. House of Representatives on March 24, 2014. The bill now heads to President Obama for his signature since the U.S. Senate also passed identical legislation on January 28.

For more than a year, NRECA spearheaded and led a coalition of other cooperative and charitable groups to achieve this goal. We consistently made the case that “multiple-employer” pension plans of not-for-profit co-ops like us and charities shouldn’t be subject to funding rules designed for other types of plans. These funding rules, currently applicable to single employer pension plans, require government selected assumptions and greatly accelerated contributions in certain situations. These stricter funding rules were implemented to reduce potential financial risks that single employer plans imposed on the government program insuring pension plans—risks far lower for multiple employer plans which in effect self-insure by cooperating as a group to fund the plan.

The Act ensures electric co-ops will continue to be able to provide quality pension benefits to their employees through the NRECA-sponsored Retirement Security (RS) Plan with funding rules that reflect the unique design of their plans.

This is a huge win for electric co-ops that participate in the RS Plan. Without this bill, NRECA’s actuaries estimate there could have been a 30% to 50% increase in required contributions starting in 2017. This would have been in addition to the $1.8 billion already contributed to the RS Plan by the prepayment program. The bill permanently exempts the RS Plan from both the deficit reduction contribution (DRC) requirements and costly provisions of the Pension Protection Act, thereby reducing the cost pressure on participating co-ops by preventing these dramatic cost increases and providing greater stability and predictability for ongoing employer contributions.

If you have questions about the bill or your co-op’s RS Plan benefit, contact your field representative. You also can contact the Member Contact Center at 1.866.673.2299 or contactcenter@nreca.coop.