A Senate panel has approved a measure meant to let businesses pay less into their workers' retirement plans.

The bill, which would create a three-year interest rate adjustment, is Congress' answer to companies complaining of skyrocketing pension costs.

The bill was endorsed by the Senate Health, Education, Labor and Pensions Committee, but only after a compromise was brokered between committee Chairman Judd Gregg, a Republican from New Hampshire, and the panel's top Democrat, Sen. Edward M. Kennedy of Massachusetts. The bill still requires final approval by the Senate.

The House passed a similar plan three weeks ago, but it provides only a two-year change in interest rates. And unlike the House bill, the Senate plan would create a commission to review pension funding issues and report recommendations to Congress by December 2005. It requires Congress to act within 120 days of the report.

The Associated Press reports that traditional pension plans have been hurt by a combination of low interest rates, the poor economy, stock market losses, and an increase in retirees. Supporters of changing the rates fear that companies will stop offering the benefit if relief is not granted, putting labor unions on the rare same side as corporations.

Congress is facing a year-end deadline to enact a new measure for future pension plan obligations. The 30-year Treasury bond used to serve as the basis for calculating obligations. But the government stopped issuing new 30-year bonds in 2001. A temporary replacement will expire at year's end.

"Congress must act quickly to replace the 30-year Treasury Bond rate, or companies will be forced to divert billions of dollars from capital investment and job growth in order to satisfy arbitrary pension funding rules," Gregg said.

Source: Associated Press, via Yahoo!