March 4, 2004
House Appoints Conferees for Pension Interest Rate Bill
The House of Representatives has appointed representatives to a conference on the Pension Funding Equity Act (H.R. 3108), which would provide a two-year replacement of the 30-year Treasury bond rate used for calculating a defined benefit plans' funding liability with a rate based on conservatively invested long-term corporate bonds. H.R. 3108 was passed by the House on October 8, 2003, and by the Senate on January 28, 2004 both by significant margins. The Senate bill includes a two-year relief provision for multiemployer plans and companies affected by the deficit reduction contribution (DRC). The Council has made availablea one-page chart, prepared by the Benefits Group of Davis and Harman, illustrating the differences between the two bills.
The House conferees will be Education and the Workforce Committee Chairman John Boehner (R-OH) and ranking member George Miller (D-CA), Ways and Means Committee Chairman Bill Thomas (R-CA) and ranking member Charles Rangel (D-NY), and Representatives Sam Johnson (R-TX) Rob Andrews (D-NJ), Howard "Buck" McKeon (R-CA), Rob Portman (R-OH) and Patrick Tiberi (R-OH).
The Senate's conferees are Senate Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT), Senate Health, Education, Labor and Pensions Committee Chairman Judd Gregg (R-NH) and ranking member Edward Kennedy (D-MA), and Senate Majority Whip Mitch McConnell (R-KY).
The Council, along with other business groups, recently met with Vince Snowbarger, acting executive director of the Pension Benefit Guaranty Corporation, and other PBGC representatives to discuss the importance of completing work on H.R. 3108. These PBGC representatives reiterated the PBGC's support for temporary interest rate replacement and its opposition to the DRC and multiemployer relief provisions as included in the Senate bill. There have been indications that the conference negotiations may last into early April, leaving little time for the Treasury Department and the Internal Revenue Service to issue guidance before April 15 when funding contributions must be made.
Council members are urged to contact the conferees and encourage them to complete their work quickly.
|Charles Grassley (R-IA)||(202) 224-3744|
|Max Baucus (D-MT)||(202) 224-2651|
|Judd Gregg (R-NH)||(202) 224-3224|
|Edward Kennedy (D-MA)||(202) 224-4543|
|Mitch McConnell (R-KY)||(202) 224-2541|
|John Boehner (R-OH)||(202) 225-6205|
|George Miller (D-CA)||(202) 225-2095|
|Bill Thomas (R-CA)||(202) 225-2915|
|Charles Rangel (D-NY)||(202) 225-4365|
|Sam Johnson (R-TX)||(202) 225-4201|
|Rob Andrews (D-NJ)||(202) 225-6501|
|Howard McKeon (R-CA)||(202) 225-1956|
|Rob Portman (R-OH)||(202) 225-3164|
For more information, contact Diann Howland, Council vice president, retirement policy, at (202) 289-6700.
House Subcommittee Hears Testimony on Stock Option Expensing Bill
The Capital Markets, Insurance and Government Sponsored Enterprises subcommittee of the House Committee on Financial Services held a March 3 hearing on legislation to override the Financial Accounting Standards Board's (FASB) expected proposal to mandate expensing of all stock options. The Stock Option Accounting Reform Act (H.R. 3574) requires expensing for stock options provided to the top five executives (the Chief Executive Officer and next four most highly compensated employees) but not for stock options provided to rank-and-file employees. The bill was introduced by Subcommittee Chairman Richard Baker (R-LA).
A majority of the witnesses spoke in favor of the proposed legislation, which was also clearly supported by a number of lawmakers in attendance. Proponents argued that FASB's anticipated expensing regime would hurt industry, especially start-up companies. Only one witness at the hearing opposed the bill on the grounds it would distort accounting standards. He indicated the value of stock options used to compensate employees should be reflected on financial statements. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.