March 26, 2004
In this issue:
- Pension Bill Conference Stalled
- CLARIFICATION: Recent PBGC Extension of Higher Interest Rate for Reporting Purposes
Pension Bill Conference Stalled
Conferees for the Pension Funding Equity Act (H.R. 3108) have temporarily broken off conference agreement negotiations, after expressing optimism that they might reach a deal on March 25. Negotiators are expected to temporarily step away from the conference table until March 30 at the earliest, while staff members attempt to resolve the few remaining differences.
The House and Senate versions of H.R. 3108 both contain a two-year replacement of the defunct 30-year Treasury bond rate with a composite rate based on long-term corporate bonds for purposes of calculating plan liabilities and any Pension Benefit Guaranty Corporation variable rate premiums. Conferees have reportedly come to an agreement on many of the differing provisions such as deficit reduction contribution (DRC) relief. (See the March 25 Benefits Byte for details.) The point of contention, however, is the development of a threshold for determining which multiemployer plans would be eligible for a funding waiver. The White House has reemphasized its opposition to expansive multiemployer relief.
The Council is continuing its role as a resource to conferees and their staffs during the conference. We will keep you informed as developments unfold. For more information, contact Lynn Dudley, Council vice president and senior counsel, at 202-289-6700.
CLARIFICATION: Recent PBGC Extension of Higher Interest Rate for Reporting Purposes
The Council has received additional clarification from the PBGC on its Technical Update 04-2, issued on March 19. The interim extension of the interest rate used by defined benefit pension plan sponsors allowing use of 100 percent of the annual yield on 30-year Treasury bonds until May 31, 2004 in valuing vested pension benefits is for purposes of satisfying reporting requirements tied to the variable rate premium status of the plan only. According to PBGC representatives, 85 percent of the Treasury rate continues to apply to the calculation of PBGC premiums for plan years beginning in 2004, unless, of course, Congress acts on interest rate replacement legislation. For more information, contact Diann Howland, Council vice president, 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.