On Friday, November 5, the Infrastructure Investment and Jobs Act (IIJA) passed the House of Representatives (HR 3684). It was signed into law by the president on November 15.

The 1039-page act includes about $1.2 trillion in spending, and impacts all areas of infrastructure, such as transportation, energy, broadband, and natural resources. Deep in the act lies Section 80602: Extension of interest rate stabilization for defined benefit pension plans (page 910), which includes more pension funding relief for all single employer pension plans.

What does this mean for plan sponsors?

This change represents a slight improvement over the significant relief provided by American Rescue Plan Act (ARPA) for how plan sponsors fund pension obligations. This will affect all single employer plans. Beginning in 2026, the corridor around the 25-year average will be maintained at 5%. From 2031-2035, it starts to move out to 30%. This change will provide sponsors additional protection against low rates (which increase liabilities), and may produce lower minimum funding requirements. See the table below for detailed changes.

Interest Rate Stabilization

What should plan sponsors do?

Plan sponsors should incorporate these lower contribution levels in their projections of minimum funding requirements. Given this additional extension of funding relief, they may also want to revisit their policies to ensure planned funding continues to be in line with plan sponsor objectives. With lower minimum required contribution levels, they may need additional funding to improve funded status.

Legal Note

Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company.

Investing involves risk including possible loss of principal. There can be no assurance goals will be met nor that risk can be managed successfully.

This material represents an assessment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only.