<nobr>Apr 2, 2004</nobr>

ERIC Hails Passage of Pension Funding Bill in House, Urges Senate to Follow Suit

Washington, DC, April 2, 2004 --The ERISA Industry Committee (ERIC) today lauded the House of Representatives for its strong bipartisan endorsement of H.R. 3108 to replace the defunct 30-year Treasury bond with a high-quality long-term corporate rate for purposes of regulating pension contributions.

“The 336-69 House vote today to approve the conference report to the pension rate replacement bill is enormously welcomed. High praise is due to the Members of Congress and Administration officials who have worked for many months to get to this point,” said Mark Ugoretz, president of ERIC. “It is our urgent hope that today’s success will be renewed by a bipartisan majority next week in the Senate so that the President can sign the bill before April 15.”

On April 15, many companies must make the first of several additional payments to their pension plans triggered by the low interest rate required by current law. Pension plans are required to use 30-year Treasury bond rates (discontinued by the government on October 31, 2001) to calculate their pension liabilities. H.R.3108 would replace the Treasury rate with a high quality, corporate bond rate that would provide a realistic measure of actual liabilities. On average, the changeover will reduce a company’s calculated liabilities by about 12%.

“If the changeover is not made, an estimated $80 billion will unnecessarily be siphoned away from jobs and investment in the form of extraneous pension contributions in 2004 and 2005,” said Ugoretz. “ERIC first proposed changing to a high-quality, long-term corporate rate in August of 2002. The basics of that idea are contained in H.R.3108, and the switchover to the corporate rate has been endorsed by business, labor and consumer groups.”

Recent negotiations have focused on disagreements over additional provisions in the bill that provide funding relief for certain pension plans. “It is time for any remaining disagreements to be put aside,” said Ugoretz. “We urgently call on Senators to approve the conference agreement to H.R.3108 before April 15.”

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