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Tuesday, April 6th 2004

United States Senate
Washington, DC 20510

Dear Senator:

On behalf of the American Hospital Association (AHA) and its nearly 5,000 member hospitals, health systems, networks and other providers of health care, I am writing to offer our support for the conference report of the Pension Funding Equity Act of 2004, H.R.3108 (H.Rept.108-457).  We urge you to vote in favor of this important legislation.

Current law requires that hospitals and other employers annually or quarterly invest cash in their employees' defined benefit pension plans based on the 30-year Treasury bond.  But the yield on 30-year Treasury bonds has been unrealistically low since the Treasury Department stopped issuing the bonds in October 2001, forcing hospitals with defined benefit plans to assume artificially low rates of return - below 5 percent - on their pension obligations and divert millions of dollars more than necessary into their plans.

H.R.3108 provides for the temporary replacement of the 30-year Treasury rate with rates of interest on amounts conservatively invested in long-term corporate bonds, with those indices to be determined by the Treasury Secretary.  This change would be effective for plan years beginning in 2004 and 2005, when Congress would legislate a permanent solution to this problem.

To relieve hospitals of unrealistic and unnecessary obligations to their pension plans, the AHA supports the proposed replacement benchmark for the 30-year Treasury rate in H.R.3108, and calls for enactment of the change well before April 15, the deadline for required contributions.

Again, we ask you to vote for the conference report of the Pension Funding Equity Act of 2004 (H.R.3108) and provide urgently needed pension relief for our member hospitals.


Rick Pollack
Executive Vice President

The following letter was sent to all members of the Senate

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