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WASHINGTON (TheStreet) — After months of being overshadowed by health care reform rancor, proponents of legislative relief for underfunded pension plans may soon get some good news.

On Thursday, the Senate Finance Committee released a draft of the jobs bill. The proposed legislation earmarks $6 billion for pension plans, many of which are staggering from market volatility and the losses of 2008.

Concurrently, the Preserve Benefits and Jobs Act introduced by Reps. Earl Pomeroy, D-N.D., and Patrick Tiberi, R-Ohio, in October is also gaining traction. This measure would likely go further than the final jobs bill by providing a temporary extension to the mandated time period employers have to fully fund their pension plans.

Barry Young, consulting actuary for Principal Financial Group (PFG) - Get Free Report , has been spearheading its lobbying efforts for relief. He says the problem stems from funding rules that went into effect in 2008.

"One of the most significant aspects of the new funding rule is that it requires plan sponsors to fund unfunded liabilities more quickly than under the prior law," he says. "Unfortunately, just months after it became effective, we had the most significant market decline in 50 years. The timing could not have been less favorable. "

(PFG) - Get Free Report Total funding of U.S. pension plans fell by $303 billion in 2008. A study by the human resources consulting firm Watson Wyatt, now known as Towers Watson & Co (TW) - Get Free Report , found that past relief granted by legislation and regulations had lowered required contributions for corporate pension plans to $32 billion in 2009 from $38 billion in 2008. But without further action, employers' contributions would jump to more than $146 billion in 2011. The firm, surveying the 100 largest corporate pension plans, found they were underfunded by $217 billion at the end of 2008, meeting only 79% of estimated liabilities.

(PFG) - Get Free Report (TW) - Get Free Report The Pomeroy/Tiberi legislation makes the case that employers need more time to recover from losses than the mandated seven-year period. The bill would allow employers to spread their contributions over nine years, paying just interest for the first two years, or shift to a 15-year payment schedule.

Multi-employer plans that meet a "solvency test" would also be eligible for relief. One such option would allow employers to repay recent losses over a 30-year period and extend rehabilitation and funding improvement periods for plans in "endangered and critical" status.

(PFG) - Get Free Report (TW) - Get Free Report During a conference call on Feb. 4, Pomeroy and business leaders made their plea.

"Without pension reform, the 2,800 pension-eligible nurses working in the city of New York will walk off their jobs, with only four weeks' notice, compounding the already severe nursing shortage," Barbara Crane, president of the National Federation of Nurses says. "The impact of this mass exodus would cripple the ability of some of our city hospitals to deliver safe patient care."

(PFG) - Get Free Report (TW) - Get Free Report Kathy Cloninger, chief executive of the Girl Scouts of America, says its $400 million pension plan would eat up approximately 30% of their 2011 payroll, an untenable jump from the current 3.8% level.

Some people fear that without pension reform more companies may move from pensions to cheaper 401(k) plans.

(PFG) - Get Free Report (TW) - Get Free Report A survey late last year by Hewitt Associates (HEW) (Stock Quote: HEW) of 153 U.S. plan sponsors found that market turmoil has increased their willingness to consider closing and/or freezing their plans. Thirty-one percent of respondents said they're more likely to consider closing their plans, compared to 11% of companies in 2008. Similarly, 50% of U.S. respondents are now more likely to consider freezing their plans, up from 17% the previous year.

(PFG) - Get Free Report (TW) - Get Free Report (HEW) That could be bad news for employees and employers alike.

(PFG) - Get Free Report (TW) - Get Free Report (HEW) "Older employees closer to retirement can't accumulate enough benefits in a defined contribution plan like a 401(k) to make up for a loss in freezing a defined benefit plan," The Principal's Young says. "Companies that move from defined benefit to direct contribution plans are now seeing the downside of that. When you have a market decline like we had in 2008, a lot of employees who were planning on retiring will most likely defer doing so because they can't afford it and it disrupts the whole flow of employees into and through your workforce."

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