>By a vote of 336 to 9 the House approved the measure – H.R. 3108 – on the eve of its upcoming recess. The measure now heads to the U.S. Senate, where it must also be passed before it can go to President Bush for his signature.
>Under provisions of the measure, steel and airline companies will get targeted relief from their pension obligations through a deficit reduction contribution (DRC) holiday. For those companies, the DRC holiday means they could waive 80% of their DRC payments the first year and 60% the second year (See Details Emerge on DRC Provision of Senate Bill). The legislation also provides similar relief to a select group of multiemployer plans that will be allowed to defer the amortization of 80% of the plan’s 2002 net experience losses for two years.
Perhaps most important to the general populace of plan sponsors is the inclusion of a broader two-year provision changing the standard that employers must use to determine their pension liabilities. Instead of the 30-year Treasury bond interest rate, which has been the test, employers could use corporate-bond rates, which have a higher yield and therefore reduce the present value of their pension liabilities.
“I’m optimistic that today’s strong bipartisan vote will encourage the Senate to act quickly on this important measure so President Bush can sign it into law,” House Education & the Workforce Committee Chairman John Boehner (R – Ohio) said in a news release. “Not only is this short-term pension bill fair and responsible to all parties, but it good for the economy, for workers and employers, and for the overall health of the nation’s pension system.”