Pension Break Could Come from Congress

By: 23 Newsroom
By: 23 Newsroom

Companies struggling to meet their pension obligations could be getting immediate help from Congress. The Senate is debating a measure that would temporarily reduce companies' contributions to their retirement plans.

Since 1987, companies with underfunded pension plans have been required to invest in their plans based on the rate of return they could expect from 30-year Treasury bonds, but when the government stopped issuing new 30-year bonds in 2001, companies had to contribute more money as interest rates dropped to around two to three percent.

The fix would allow the companies to assume that money in their pension funds is earning about six percent interest, which is based on a corporate bond index, instead.

The $26 billion break is supported by business and labor and some critics would like to make it permanent.

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