The financial meltdown has roiled public pension plans, as we noted last week, including the Colorado Public Employees' Retirement Association - which is why state lawmakers should be prepared to take new measures enhancing PERA's solvency.

But private pensions are in trouble, too, with The New York Times estimating these funds have lost $250 billion or more in value since the start of the year. And while private pensions also need shoring up, they face far more onerous regulations than their public counterparts.

One funding requirement, enacted in a 2006 pension reform law, will force employers starting next year to pump huge sums into their pension plans, even if satisfying that mandate means they must lay off workers or temporarily suspend operations until financial markets recover. The lame-duck Congress may consider legislation relaxing that requirement, and it's essential for the measure to pass.

The 2006 mandate requires private companies to immediately inject cash into their pensions when their funding levels fall below a threshold. Businesses must bring their pensions to 100 percent funding within seven years, starting with 92 percent funding at the end of 2008, 94 percent in 2009, and so on.

And here's the kicker: Pensions that fall below their funding standards at the end of a calendar year must be 100 percent funded immediately and permanently.

Nearly 300 businesses, unions and trade associations recently asked Congress to suspend that regulation temporarily, for good reason. Without a reprieve, in the next few months dozens of companies, including some of the nation's largest, may have trouble both making those cash payments and meeting payroll. Even those not in such a bind will take a serious hit to the bottom line.

The law was enacted in reaction to the high-tech meltdown, when major companies went bankrupt and pension plans that invested heavily in tech stocks collapsed.

Some flexibility for pension funding is needed, a safety valve to protect employers during deep financial downturns. Pensions aren't tanking because of poor management or unsound investment decisions. The entire economy is contracting, and diversified portfolios of every variety have taken a beating.

A bipartisan bill introduced Wednesday in the Senate Finance Committee would, among other things, delay the date pensions have to be 100 percent funded by three years.

It would also relieve companies that fall below their mandated funding target of the requirement to immediately fund their pensions 100 percent.

There's also a benefit for workers who've received lump-sum payments when their employers' pensions went bankrupt. They can roll those payments into Roth Individual Retirement Accounts and build new nest eggs without getting clipped by the tax man.

Lest you suspect hypocrisy on our part, favoring private over public employers, let's be clear: Even the slightly relaxed rules for private pensions would be far more rigorous than anything faced by public pensions such as PERA - and would make those private pensions solvent far sooner than PERA is likely to be. (And yes, the E.W. Scripps Co., owner of the Rocky, would be affected by any change in the pension laws.)

Some 20 million private-sector workers rely on pensions from their employers as at least part of their retirement income. Congress should make sure companies can keep their promise to employees without jeopardizing the financial stability of otherwise viable enterprises.

http://www.rockymountainnews.com/news/2008/nov/23/the-pension-crunch-and-what-to-do/