Just based on the sunsetting of the pension rate relief law enacted after Treasury decided to dump the 30-year bond, there is no doubt that Congress needs to do something this year about pension plan funding. But a little relief is not what the Bush proposal is about; it is a purported fix for a struggling defined benefit (DB) plan system and its regulator, the Pension Benefit Guaranty Corp. (PBGC), which will end up, according to plan sponsors, encouraging more companies to shut down plans entirely, close plans to new entrants or push plan sponsors to shift more assets into fixed income investments. The latter may end up being a good thing for the long-term health of what's left of the pension system, although there is a certain irony in the Bush administration's efforts to push corporate pension plans out of equities at the same time it is trying to push Social Security assets into that investment arena. One wonders if the uneven track record of savvy pension plan administrators could serve as a cautionary tale for those who would leave Social Security assets in the hands of far less experienced investors. But the immediate question is whether a stressed corporate pension system can handle significantly higher premiums to the PBGC and whether companies will maintain DB plans under the far more rigorous funding standards of the Bush proposal. This is not to say that the government doesn't need to address these questions. And not all is off the mark with the Bush plan: The idea of letting companies contribute more in flush years is long overdue and should be preserved in the final legislation. The trend among DB plans toward eventual extinction seems relatively clear. The question is whether we should be hurrying that process along before we spend the time to consider whether we have or need a viable replacement.

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