March 18, 2004
In this issue:
- Subcommittee Hears Testimony on Long-Term Defined Benefit Pension Reform
- Update on Pension Interest Rate Replacement Legislation
- Senate HELP Committee Holds Hearing on Health Quality Standards; Summary Available
Subcommittee Hears Testimony on Long-Term Defined Benefit Pension Reform;
Update on Pension Interest Rate Replacement Legislation
The House Education and the Workforce Subcommittee on Employer-Employee relations held a hearing on March 18 to discuss strategies for strengthening the defined benefit pension plan system. Much of the testimony centered on the status of multiemployer pension plans. Witnesses including trade groups representing multiemployer plan interests and the General Accounting Office (GAO) told the panel that the multiemployer pension system needs long-term reforms to sustain defined benefit plan sponsorship. The March 18 subcommittee hearing is the latest in a series of hearings by this Subcommittee on defined benefit pension reform. The full Education and the Workforce committee has already announced a forthcoming legislative package to address long-term retirement security issues.
The treatment of multiemployer plans has been a controversial element of the congressional conference debate on the Pension Stability Act (H.R. 3108), in which Senators and Representatives are attempting to reconcile the House and Senate versions of pension interest rate replacement legislation. Conference discussions are continuing, although the Senate is officially in recess. Reports from the conference suggest that the basis for computing the conservative corporate bond rate which will serve as the temporary replacement rate for calculating pension liability may reference the top three grades of corporate bonds and will be based on a publicly available methodology. For those plan sponsors wanting to make the maximum contribution possible to their defined benefit plans, the deduction rules would be clarified to still permit the use of 120 percent of the 30-year Treasury bond rate.
Meanwhile, the deficit reduction contribution (DRC) relief proposal has been discussed in broad terms, and a preliminary decision to permit DRC relief for airlines and the steel industry may have been made. Discussions are also ongoing regarding the DRC application process; Senate staff has suggested ways to change the application process rather than drop it, but the House conferees have not been receptive so far to this idea.
House staff are also still considering the Senate request to extend the amortization of multiemployer plan investment experience losses. However, no decisions or commitments have been made to include any language for multiemployer plans at this point. The next meeting of the conference is set for March 22. For more information, contact Diann Howland, Council vice president, retirement policy, at (202) 289-6700.
Senate HELP Committee Holds Hearing on Health Quality Standards; Summary Available
On March 18, the House Ways and Means Subcommittee on Health held a hearing to explore public and private initiatives focused on improving health care quality. The first panel presented information on current activities by the Department of Health and Human Services and recommendations to improve quality within the Medicare system. The second panel focused on private plans, hospitals, and nursing home initiatives.
Council staff have prepared a comprehensive report on the hearing, detailing the issues and testimony presented by the witnesses. For more information, contact Susan Relland, Council health policy legal counsel, 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.