>The Senate Committee on Health, Education, Labor and Pensions (HELP) gave the Pension Stability Act sponsored by Chairman Judd Gregg (R-New Hampshire) its unanimous approval.
The Gregg bill (S 1550) calls for plans figuring their minimum-funding rate to use 105% of the corporate bond rate (defined as conservative, high-yield corporate bonds rated AAA or AA ) for 2004 and 2005 and 100% of the corporate rate for 2006 to 2008. The minimum funding rate reverts to 105% of the 30-year Treasury at the end of the period, according to Gregg’s bill (SeeGregg Out with Pension Calculation Bill ).
Gregg’s bill also provides for an independent commission: to review all outstanding issues, including smoothing, yield curve, mortality tables, and then to report to Congress one year before the temporary fix expires. Members of the commission, appointed by the President and chairmen and ranking members of the relevant committees in the House and Senate, will be drawn from government, business, labor, and pension rights groups.
“The plan adopted by the HELP Committee today provides a responsible, immediate solution to the pension-funding crisis facing our economy, while developing the glide path toward permanent solutions to major problems in the defined benefit system. Congress must act quickly to replace the 30-year Treasury Bond rate, or companies will be forced to divert billions of dollars from capital investment and job growth in order to satisfy arbitrary pension funding rules,” Gregg said after the vote.
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