Senate Bill Offers Pension Funding Relief

June 12, 2002 ( Senator Charles Grassley (R-Iowa) has introduced a new bill that attempts to give defined benefit plan sponsors a bit of extended relief.

Grassley, the ranking member on the Senate Finance Committee, has introduced S. 2563, a bill that would, among other things, extend the permissible range of funding assumptions for pension plans to last year’s calculations to compensate for low 30-year Treasury bond rates. 

“Back” Wards

Prior to 2002, employers were required to use a rate that was 90% to 105% of the four-year weighted average of the 30-year Treasury bond.  However, the Job Creation and Worker Assistance Act of 2002 expanded the range to 90% to 120%, offering pension plans some breathing room in the squeeze forced on them by Treasury’s decision to forgo future issuance of the long bond (see New and Improved? ).

The new bill, co-sponsored by Finance members John Kerry (D-Massachusetts) and Robert Torricelli (D-New Jersey), would extend those changes to the 2001 plan year as well, according to BNA.

Generally contributions are due eight and one-half months after the close of the plan year, making the change timely, according to Grassley.