Pension reform legislation enacted with GATT trade package affects funding requirements

Changes to pension law contained in last year's GATT trade legislation may have a substantial impact on employers with underfunded pension plans. Many employers will face an increase in their annual funding requirements. Some may wish to consider accelerating contributions to these plans to avoid paying increased premiums to the Pension Benefit Guaranty Corporation (PBGC) as well as to avoid the need to notify participants that their plan is underfunded. All employers with defined benefit plans will need to modify the method by which they calculate lump sum distributions, both in terms of the minimum amounts they are required to pay and the maximum amounts they may pay within the limits of Section 415 of the Internal Revenue Code.