Boehner, Johnson Call on Congress to Complete Action on Pension Reform This Year, Oppose Extending Corporate Bond Interest Rate Fix

 WASHINGTON, D.C. – Education & the Workforce Committee Chairman John Boehner (R-OH) and Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX) today called on Congress to complete action on a comprehensive overhaul of the nation’s outdated pension laws this year, saying they would oppose extending the temporary corporate bond interest rate fix that expires at the end of the year.  The Committee recently approved comprehensive pension reforms; the bill is now awaiting action by the Ways & Means Committee, where it is expected to be included as part of a broad retirement security package.

“The status quo on pension reform is unacceptable, and therefore I’m opposed to extending the corporate bond interest rate fix beyond the end of this year,” said Boehner, who noted his support for the efforts of Ways & Means Committee Chairman Bill Thomas (R-CA) to craft a broad retirement security bill.  “It’s critical that Congress act now to protect workers, retirees, and taxpayers around the country.  Another Band-Aid won’t solve the problems of America’s broken pension system, and temporary solutions shouldn’t stand in the way of comprehensive reform.”

In April 2004, Congress enacted a short-term pension interest rate fix as part of the Pension Funding Equity Act while it considered long-term solutions to fix outdated worker pension laws.  It replaced the interest rate employers use to calculate their pension liabilities – the 30-year Treasury bond interest rate – with a corporate bond rates for two years through December 31, 2005.  The interest rate will revert back to the artificially-low 30-year Treasury rate if comprehensive reform is not completed by the end of December.

“The temporary interest rate fix we enacted last year was designed to give Congress the time to carefully consider long-term efforts to reform and strengthen the defined benefit pension system in a comprehensive manner,” Boehner said.  “We have a responsibility to protect the interests of workers, retirees, and taxpayers, and it’s critical that Congress keep its word and act on comprehensive pension reform this year.”

“I do not support extending the temporary interest rate that is in current pension law.  The more we learned about how outdated our pension laws have become, the more convinced I am of the need for overhaul,” said Johnson.  “I am glad that the Senate Finance Committee is moving forward with a bill and I look forward to continuing to work in the Ways and Means Committee to get this bill through the House.”

The Pension Protection Act (H.R. 2830) – which was approved by the House Education & the Workforce Committee on June 30 – includes a permanent interest rated based on a modified yield curve that will ensure employers more accurately measure and fund their short-term and long-term pension promises. 

The bill also includes tough new funding requirements to ensure employers adequately and consistently fund their pension plans, provides workers with meaningful disclosure about the financial status of their benefits, and protects taxpayers from a possible multi-billion dollar bailout of the Pension Benefit Guaranty Corporation should the agency’s financial condition continue to deteriorate.

For additional information on the Pension Protection Act, including a summary of the bill, visit the Education & the Workforce Committee website at http://edworkforce.house.gov/issues/109th/workforce/pension/pension.htm.

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