NU Online News Service, Oct. 14, 2003, 5:25 p.m. EDT – Representatives for employers, think tanks, the Pension Benefit Guaranty Corp. and the U.S. Treasury trekked to Capitol Hill today for another hearing on the funding problems plaguing U.S. defined benefit pension plans.
The U.S. Senate Special Committee on Aging organized the hearing and titled it “America’s Pensions: The Next Savings and Loan Crisis?”.
One immediate challenge facing the pension industry is finding a replacement for the 30-year Treasury bond rate in pension calculations. Because 30-year bonds are popular and the federal government stopped issuing them two years ago, yields on 30-year bonds are even lower than rates on other types of notes and bonds.
Reductions in the pension benchmark interest rate cost employers dearly, by forcing employers to contribute more to make up for the drop in projected earnings on contributions.