Cooperatives and charities would be able to continue pooling resources to offer employee pensions under bipartisan legislation that recently cleared both houses of Congress.
Sens. Pat Roberts (R-Kan.) and Sen. Tom Harkin (D-Iowa) are coauthors of the Cooperative and Small Employer Charity Pension Flexibility Act. The measure would ensure that charities and cooperatives are not subjected to provisions of the Pension Protection Act that would divert funds from critical services and make it more difficult to provide pensions.
“I am glad the House and Senate have acted swiftly to pass this commonsense protection for rural cooperatives,” Roberts, a member of the Senate Health, Education, Labor and Pensions Committee, said. “I look forward to the president signing into law our bill, which recognizes these unique plan structures by creating greater flexibility that enables employers to offer stable futures for their workers without passing the cost on to rural communities through increased costs for services.”
Some charities and cooperatives use defined benefit multiple employer pension plans to provide employee pensions. Those plans allow smaller organizations to pool resources to achieve the economic scale of larger employers.
The Pension Protection Act, however, changed how pensions are funded to protect participants and the Pension Benefit Guaranty Corporation. Congress previously granted charities and cooperatives a temporary exemption.
“Thousands of workers in Iowa and across our country are employed by charities and cooperatives, and under current law, their pensions are at risk,” Harkin, the chairman of the Senate HELP Committee, said. “Bipartisan legislation now headed to the president’s desk will ensure that many cooperative and small employer charities – including dozens of Iowa co-ops, private schools and branches of nonprofits – can continue to provide pension benefits without needing to reduce services to the public.”