Senate Fails to Pass Pension DRC Act

November 26, 2003 ( - The US Senate recessed for Thanksgiving on Tuesday after failing to pass a proposed legislation providing a break for business from the deficit reduction contribution (DRC) requirements.

Senators were attempting to pass the legislation to provide a two-year break on DRC – accelerated payments required of employers with substantially underfunded pension plans.  The proposal would have also allowed businesses over the next two years to use a rate based on investment-grade corporate bonds when making pension calculations, according to a Reuters report.

>Passage before the Thanksgiving break was important since the Senate’s version of DRC relief differed from the US House of Representative’s earlier approved DRC bill.   While the House bill would provide relief only to airlines (See House Approves Pension Relief Bill ) , the Senate’s version contains DRC proposals that are stricter than the House’s language and would be available to all businesses.

Republican aides speaking to Reuters said if the Senate had passed the proposal under discussion, the House could take up the bill in December, when it also is expected to return to work for a short period.   As it stands now, there is little time for Senators to hammer out a proposal when they return for an abbreviated session on December 9.  

However, even if a proposal had been passed and differences between the House and Senate version reconciled, the measure still required President Bush’s signature before it could be enacted; a prospect that looked grim.   The Bush administration had previously come out strongly against a moratorium on pension deficit-reduction contributions, saying it would only worsen the funding crunch companies eventually face and increase the risk that pension plans would collapse down the road (SeePBGC Board Cautions Senate on DRC Action).