Members of the Senate voted 97-2 Wednesday to approve S. 1783, a major pension reform bill, even though President Bush has threatened to veto the bill.[@@]

The Senate pension reform bill would increase premiums for the ailing Pension Benefit Guaranty Corp. pension benefit insurance program; phase in use of a “yield curve” method for building interest rate assumptions into pension forecasts; and change the methods companies would use for calculating shortfalls.

The yield curve approach would require employers to use a bundle of interest rates reflecting pension obligations for employees with different levels of seniority, rather than using a single interest rate estimate for all pension plan members.

The bill also includes a provision that would limit employers’ ability to deduct corporate-owned life insurance policy death benefits stemming from the deaths of insureds who once were low-level or mid-level employees at the corporation and now have no connection with the corporation. The bill would let employers deduct only the amounts of premiums and other payments they made to keep the policy in force.

Another provision would require employers to keep records on their COLI programs.

The Bush administration has criticized the bill, arguing that provisions dealing with troubled airlines, which would give the airlines 20 years to make up shortfalls, are unacceptable.

The administration also contends that many other sections of the bill would weaken or delay the effect of proposals it made for strengthening the solvency of employers’ defined benefit pension plans.

Links to the text of the bill and other information about the bill are on the Web at http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.01783: