Pension funding requirements promise to cripple companies whose defined benefit plans have been ravaged by market losses, prompting an urgent call on Congress to rethink the technical requirements of the 2-year-old Pension Protection Act.

More than 350 corporate supporters have appealed to Congress to ease up on some specific funding requirements given how badly pension assets have been hit by the global financial crisis. “This was a situation nobody foresaw, in terms of the severity of the issues,” said Peter Kravitz, director of Congressional and political affairs for the American Institute of Certified Public Accountants.

The PPA was enacted in 2006 to establish new thresholds for pension plan sponsors to meet to assure defined benefit plans were adequately funded. Under the new requirements, companies generally are expected to be 92 percent funded as defined in the law for 2008, said Kravitz. Companies that fail to meet that “cliff” in the funding requirements will face a new requirement to contribute whatever funds are necessary to become 100 percent funded, he said.

“In 2008, we’ve got a crippled stock market and a stagnant economy, and the problems are growing,” he said. “Because of the massive disruption in the market and the massive losses, defined benefit plans have lost huge amounts of value. It has put many, many defined benefit plans into significant deficits, both in being fully funded and in meeting the cliff levels they’re supposed to meet.”

Pension plan sponsors worry that the huge amounts of money they will have to pump into pension plans to make up the recent losses and meet funding requirements will result in operational problems and potentially job cuts if companies are forced to contribute it to pension plans instead.

In their letter to Congress, the 350-plus companies cite as an example a Florida company with four defined benefit plans that faces a 2,100 percent increase in funding—from $673,000 in 2008 to $15.2 million in 2009—to meet the requirements. The company likely will be forced to freeze the plans, the letter says.

Kravitz said the full scope of the problem will be more apparent when companies complete their 2008 financial statements. Advocates are hopeful Congress will address the issue when it convenes in mid-December to consider a bailout package for automotive companies.