<nobr>Apr 27, 2005</nobr>

ERIC: Update on Boehner Pension Bill

Conversations with key Congressional staff indicate that House Education and Workforce Chairman John Boehner (R-OH) is still on track to introduce a pension funding & hybrid plan bill in the coming weeks. While timing of introduction is dependent on progress on the Congressional budget resolution as well as policy negotiations under way with the chairman of the House Ways and Means Committee Bill Thomas (R-CA), current expectations are that the bill will be introduced in 4-5 weeks.

In broad outline, the bill is likely to include:

• a modified version of the long-term ERISA funding rules
  
• some averaging of the short-term funding interest rate as well as smoothing of assets
  
• a "modified" yield curve
  
• restrictions on uses of credit balances
  
• a higher liability calculation for chronically underperforming companies (using a "proxy" for credit ratings)
  
• restrictions on benefit increases and payouts under certain circumstances
  
• increases in PBGC premiums
  
• a new disclosure notice
  
• validation of hybrid plan designs as well as a provision related to conversions

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