NU Online News Service, Oct. 8, 2003, 5:20 p.m. EST – The U.S. House voted 397-2 today to approve H.R. 3108, a bill that seeks to save sponsors of defined benefit plans billions of dollars by replacing the old benchmark interest rate used in pension calculations with a temporary benchmark based on a blend of corporate bond index rates.
The Senate is still debating H.R. 1776, a bill that would provide a permanent replacement for the old pension benchmark rate, the 30-year Treasury bond rate.
James Klein, president of the American Benefits Council, Washington, put out a statement welcoming House passage of the temporary replacement bill and calling for Congress to come up with a permanent benchmark replacement based on a corporate bond rate blend.
“The council has consistently recommended the use of a corporate bond rate blend as the ideal solution,” Klein says in the statement.
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But, in the short run, Klein says, “H.R. 3108 requires no further changes to the defined benefit regulatory system and provides a highly accurate and transparent method of funding these plans for the next two or three years.”
The United States began using the 30-year Treasury bond rate as a benchmark back when huge budget deficits forced the government to issue huge quantities of 30-year bonds every year.