|
<nobr>Oct 29, 2003</nobr>
ERIC Strongly Endorses Gregg Kennedy Pension Funding Bill
The ERISA Industry Committee (ERIC) today strongly endorsed legislation proposed by Senate Health, Education, Labor and Pensions Committee Chairman Judd Gregg (R-NH) and Ranking Democrat Ted Kennedy (D-MA) that calls for a three-year replacement of the defunct 30-year Treasury bond rate with a corporate rate and would establish a commission to develop long-term defined benefit pension plan reform over the next two years.
“We urge every Senator to support the Gregg-Kennedy pension funding bill so employers will not be saddled with excessive and irrational contributions to their pension plans in the spring of 2004 and instead can contribute to the economic recovery by investing in jobs, product development and other business activities,” said Mark Ugoretz, president of ERIC. “The continued absence of a permanent and appropriate discount rate in the law is tremendously damaging to the employer sponsors of defined benefit plans and to their stockholders and employees.”
ERIC applauds the leadership of Sens. Gregg and Kennedy who have worked hard to build a stable platform for pension funding so that employers can continue to provide these important vehicles for retirement security.
A recent survey conducted by Aon Consulting found that more than 20 percent of surveyed plan sponsors froze plan benefits or will do so because of the amount and volatility of pension plan contributions, the impact of pension plans on corporate expenses and the inability to accurately predict future contribution requirements. Aon reviewed more than 1,000 private sector defined benefit plans throughout the U.S. The quick enactment of the Gregg-Kennedy Bill is required if this trend is to be reversed.
With the Treasury Department’s 2001 decision to no longer issue 30-year Treasury bonds, interest rates on 30-year notes have fallen to artificially low rates of return. As a result, liabilities are artificially inflated and employers are required to pay hundreds of millions of dollars in unnecessary contributions to their pension plans.
###
The ERISA Industry Committee (ERIC) is a non-profit association committed to the advancement of employee retirement, health, and welfare benefit plans of America's largest employers and represents exclusively the employee benefits interests of major employers. ERIC's members provide comprehensive retirement, health care coverage and other economic security benefits directly to some 25 million active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.
Media Contact: Doug Baj, Director, Communications, ERISA Industry Committee, (202) 789-1400,dbaj@eric.org.
Back to Previous Page
|
