U.S. Senate Passes Pension Funding Relief in Highway Bill

By Hazel Bradford

Mar. 16, 2012

The U.S. Senate on March 14 approved allowing corporate defined benefit pension plans to base their contribution calculations on interest rates over a 25-year average rather than current interest rates, which have sent contribution payments soaring.

The bipartisan pension funding interest-rate reform provision was attached to a highway funding bill that the Senate approved 74-22.

If the House approves a similar measure, the change would allow companies beginning in 2012 to use a segment discount rate within 10 percent of a 25-year average of prior segment rates.

The relief diminishes somewhat in subsequent years, with the 10 percent corridor increasing 5 percentage points per year until it hits a permanent rate of 30 percent in 2016.

“It smoothes out a company’s funding obligation so it is less sensitive to abnormally high or low interest rates that distort a plan’s financial condition either too positively or too negatively,” said James Klein, American Benefits Council president, in a written statement.

“It will be helpful for employers, particular in the short term, but this provision is more temporary in nature,” said council spokesman Jason Hammersla. “We’re very happy but we’re going to push for further reform” to make interest-rate stability permanent.

Hazel Bradford writes for Pensions & Investments, a sister publication of Workforce Management. To comment, email

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.


blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog


Minimum Wage by State in 2022 – All You Need to Know

Summary The federal minimum wage rate is $7.25, but the rate is higher in 30 states, along with Washing...

federal law, minimum wage, pay rates, state law, wage law compliance

workforce blog


California’s push for a 32-hour workweek explained, and how to prepare

Summary: California is considering a 32-hour workweek bill for businesses with over 500 staff 4 day wee...

32 hour workweek, 4 day workweek, california, legislature, overtime

workforce blog


A business owner’s guide to restaurant tipping law

Business owners in the restaurant industry are in a unique position when it comes to employee tips. As ...

restaurants, tip laws, tipping