Chamber urges Senators to pass the conference report for H.R. 3108
April 6, 2004
TO THE MEMBERS OF THE UNITED STATES SENATE:
The U.S. Chamber of Commerce, the world's largest business federation representing over three million businesses, urges Senators to pass the conference report for H.R. 3108, the Pension Funding Equity Act, this week. On April 2, 2004, the House passed the conference report by a bipartisan vote of 336 to 69. The Senate must act quickly and approve this measure that is so important to America's workers and employers.
H.R. 3108 replaces the defunct 30-year Treasury rate used for calculating pension liabilities with a rate based on a blend of high quality corporate bonds. As you know, the temporary fix for the 30-year Treasury rate expired on December 31, 2003, and since January 1st, employers have been faced with extraordinary pension liabilities based upon an obsolete rate. The uncertainty surrounding this issue has already had an adverse impact on the defined benefit system. Two separate consulting firms have found that 20 to 39% of employers have either frozen or are planning to freeze their defined benefit plans.
Even if the plan is not frozen or terminated, employers and workers are still negatively impacted by the failure to pass a fix because companies must set aside substantial amounts of money—nnecessarily—to meet their pension obligations using the obsolete 30-year Treasury rate. The PBGC estimates that the use of the defunct 30-year Treasury rate will create an additional $80 billion in liabilities over the next two years. This is capital that could be used for investment, wage increases, job creation or other business enhancements once H.R. 3108 is enacted.
H.R. 3108 includes other provisions which provide very narrowly targeted relief to certain single and multiemployer plans. This targeted relief allows these plans limited time to recover from unexpected market events which will help protect the ability of these plans to continue providing benefits to millions of workers.
H.R. 3108 also contains a provision which will address a needed change in the procedural rules for withdrawal liability. The Chamber supports this provision as another positive step in providing fairness to the multiemployer plan system.
The Chamber also supports a provision in the conference report that will repeal section 809 of the Internal Revenue Code, which provides for the reduction in certain deductions of mutual life insurance companies. This broadly supported provision will repeal a long outdated section of the Code that has hindered the competitiveness of mutual life insurance companies in the global financial services marketplace.
The Senate must act this week to support workers' retirement security. Because of the importance of this issue to the business community, we will use votes on or related to the conference report for H.R. 3108 in the Chamber's annual "How They Voted" publication.
R. Bruce Josten