Companies sponsoring pension plans have won some sympathy from Congress on the difficulty in funding pension plans that have been ravaged by market turmoil.

Both houses of Congress have approved the Worker, Retiree, and Employer Recovery Act of 2008 to ease up on the two-year-old requirements of the Pension Protection Act of 2006 requiring companies to get pension plans more fully funded. A technical summary from the Joint Committee on Taxation provides a 44-page synopsis of the bill.

The PPA required companies to get plans fully funded by 2012. The new bill adjusts the funding levels that must be met over a five-year period to give companies more time to achieve full funding as required in the PPA by 2012. It also allows pension plans to smooth out unexpected asset losses over 24 months for purposes of determining how much they must contribute to reach required funding levels.

While the legislation allows plan sponsors to smooth losses for purposes of calculating funding requirements, it has no impact on the accounting required for financial reporting purposes, which is driven by the Financial Accounting Standards Board. “This is a matter of regulatory funding requirements,” said FASB representative Christine Klimek. The accounting requirements have taken a dim view of smoothing, and FASB is working on a long-term project to overhaul pension accounting to eliminate the smoothing concept.

More than 350 corporate supporters signed a letter to Congress asking for the relief, according to Peter Kravitz, director of Congressional and political affairs for the American Institute of Certified Public Accountants. Most frightening to companies, he said, was the requirement in the Pension Protection Act for companies to immediately contribute enough to become 100 percent funded if they fail to achieve the various funding plateaus established in the five-year plan. For 2008, companies were required to be 92 percent funded, he said.