The bill passed in the Senate, with a vote of 85 to 9, only a day after its approval by the US House of Representatives.
The pension interest rate provision included in Section 405 of the House package states that plan current liability valuations for funding purposes may use an expanded band of up to 120% of the four-year weighted average of 30-year Treasury bond rates for valuations performed in plan years beginning this year and in 2003.
Companies would also be able to use this band for 2001 liability valuations that determine whether quarterly contributions are due in 2002.
For the purposes of variable premium payments to the Pension Benefit Guaranty Corporation, companies would be allowed to make liability valuations based on 100% of the annual yield of long bond, rather than 85% as is currently required.
ABC Weighs In
James Klein, American Benefits Council President told PLANSPONSOR.com that although the ABC is pleased with the outcome of the Senate’s vote, the reforms fall short of what the council has been working towards.
“We commend Congress for passing this legislation. However, this legislation only covers plan sponsors in 2002 and 2003. We will continue our efforts to find relief for plan sponsors who are due to make their 2001 contributions in September this year,” Klein noted.
The bill, which, it is reported, will cost the US Treasury about $51 billion in 2002, would also provide businesses with tax breaks to spur investment.
Under the package, businesses will be allowed to write off 30% of the cost of computers and other equipment. It will also allow them to reduce tax payments for the previous five years by factoring in their current losses.
The new legislation also extends various corporate tax breaks that are set to expire.
In terms of relief for the unemployed, the bill will extend unemployment benefits for a further 13 weeks beyond the current 26 weeks. Further benefits will be granted in states where unemployment is higher than 4%.
The legislation now moves to the White House for the President’s signature.
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