CONGRESS ADJOURNS WITHOUT TAKING FINAL ACTION ON PENSION FIX.

Congress adjourned the week of Dec. 8 without taking final action to replace the current 30-year Treasury bond interest rate as the rate employers must use to calculate employee pension plan liabilities.

The House, by a vote of 397 to 2, approved a blend of corporate bond index rates to be used for the next two years until Congress takes permanent action on what the rate should be.

The Senate, however, failed to act before it adjourned.

When the Clinton administration stopped issuing the 30-year note in 2001, interest rates dropped substantially, and Congress reacted by adopting the first temporary two-year rate - 120 percent of the 30-year Treasury bond rate.

That rate, however, expires at the end of 2003, so the 30-year bond rate will go back in effect.

Without the temporary rate, companies will have to contribute about $26 million more to defined-benefit plans in the next two years than they would have been required to contribute otherwise.

"Congress' failure to resolve this issue before departing threatens the ability of companies to plan for future pension contributions with any certainty, and will be one more factor driving employers away from the defined-benefit pension system," said Randel Johnson, vice president of labor, immigration and employee benefits for the U.S. Chamber of Commerce.