Companies with defined benefit pension plans may soon find themselves between a rock and a hard place: make payroll or pump money into their pension plans. Even with a cash infusion, many could still face having to freeze or even cut benefits because of new federal rules.

Market turbulence has eaten away at pension fund asset values. Funding levels could be low enough to trigger new benefit payment restrictions put in place by the Pension Protection Act (PPA) of 2006. The Principal Financial Group® is urging Congress to provide temporary relief from those rules when their session resumes November 17.

"The Pension Protection Act rules were designed to protect defined benefit plans during normal times. But these are not normal times and in this topsy-turvy environment the rules may have the opposite effect," said Daniel J. Houston, president of Retirement and Investor Services at The Principal®. "Because of unprecedented market swings, plans that have historically been well-funded may now come in under the thresholds established by the PPA. Companies may be forced to inject cash at the worst possible time. We appeal to Congress to protect those companies and the retirement security of millions of American workers by delaying those rules."

The Principal® has joined with industry trade organizations in asking Congress to:

* Permit pension plans to spread out current asset losses. Congress should allow plans to smooth out unexpected gains and losses in asset values over a 24-month period. Under current rules, required funding contributions are generally based on current market values even though benefits are paid over the long term.

* Slow the transition to the new Pension Protection Act funding rules. This would allow time for markets and assets values to recover.

"We believe these measures could help with cash funding and potentially reduce the number of defined benefit plans subject to benefit restrictions," said Houston.