In just the few weeks since mid-June, the bond market has accomplished virtually all that employers have been asking lawmakers to do - cut them a break on pension fund contributions.
The interest rate on the 30-year Treasury bond climbed to 5.22% as of Sept. 5, up more than 100 basis points from the 4.14% rate on June 14, and 4.78% at the end of 2002.
The increase relieves some of the pressure on employers to funnel money into pension funds, since higher interest rates mean lower pension liabilities.
At the same time, the stock market is up 17% for the year as of Sept. 5, with the S&P 500 at 1028, up from 879 at the end of 2002.
Therefore, said Howard Silverblatt, an analyst at Standard & Poor's, New York, "the market increase in interest rates has done almost as much to reduce required funding as the legislation would do."
The full House of Representatives is expected to vote later this month on comprehensive pension reform legislation that would let companies use higher interest rates on corporate bonds - instead of the 30-year Treasury - to measure liabilities.