[Congressional Record Volume 149, Number 146 (Friday, October 17, 2003)]
[Extensions of Remarks]
[Page E2070]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   PENSION FUNDING EQUITY ACT OF 2003

                                 ______
                                 

                               speech of

                         HON. ROBERT E. ANDREWS

                             of new jersey

                    in the house of representatives

                       Wednesday, October 8, 2003

  Mr. ANDREWS. Mr. Speaker, I rise today to express my support for H.R. 
3108, the Pension Funding Equity Act of 2003, a bill that passed this 
body last week, but also to express my dismay that a non-controversial, 
bipartisan provision was stripped from that bill before this House had 
an opportunity to vote for it. It is my hope that this provision, which 
would stabilize small business defined benefit pension plans, can be 
included in any conference report that this House may be asked to 
consider this year.
  The provision, known as Section 415, would have replaced the 30-year 
Treasury bond rate with a fixed interest rate of 5.5 percent for 
purposes of the maximum cap on benefits under Internal Revenue Code 
section 415. In the case of a small business defined benefit plan, the 
maximum cap on benefits can have an enormous impact on funding, due to 
the small number of participants. The 30-year Treasury bond rate that 
business must currently use to calculate funding is extremely volatile, 
leading to unpredictable funding requirements. For example, just last 
year between March and September (only 6 months), the 30-year rate 
fluctuated by almost a full percentage point--96 basis points--
resulting in funding obligations for a benefit that varied by as much 
as $140,000. That may not be much to a large company, but it is 
significant to a small business.
  The cost of this unpredictability is choking off capital investments, 
new hires, higher wages, or better health care. The requirement to use 
an obsolete standard is depriving our economy of desperately needed 
capital at a time when our businesses and our workers need it most.
  The small business provision has bipartisan support both in the House 
and Senate, it has no impact on current rules for calculating lump sums 
for rank-and-file participants, and there does not appear to be any 
substantive objections to its inclusion. So I am dismayed that it would 
have been taken out of the larger, two year pension fix.
  I trust that as this process moves forward--in conference if there is 
an opportunity--we will be able to reattach this important small 
business provision to the bill.

                          ____________________