Still, the combination of higher funding targets, less-valuable credit balances, and more volatility in asset and liability calculations will make the plans pricier to maintain. "Even some plans that are well funded will go from enjoying a contribution holiday to having to make payments," says Ethan Kra, a chief actuary at Mercer Human Resource Consulting.

While the Boehner bill is likely to be modified and ultimately incorporated into an expected proposal on Social Security, it may well prove to be more attractive than offerings from the Senate. Grassley, head of the Senate Finance Committee, said in June that he would support the President's efforts to eliminate asset smoothing.

As Congress hammers out the details, corporations are already concerned that the revisions will come too quickly. "The proposed legislation fundamentally changes the current funding regime," said Lynn Franzoi, senior vice president of benefits for Fox Entertainment Group Inc., in her June testimony before the House.

Without an adequate transition period for companies to meet the new costs, she warned, "there could be massive disruptions to [their] capital spending and long-term business plans."

Some experts expect more companies to abandon their pension plans altogether. "You're going to end up driving many [companies] out of the system," says Judy Schub, managing director for the Committee on the Investment of Employee Benefit Assets. Already in 2004, 11 percent of the Fortune 1,000 plan sponsors had frozen or terminated their plans, up from 7 percent in 2003, according to Watson Wyatt.

— Alix Nyberg Stuart

States to the Rescue?

As employers and employees struggle to afford consistently rising health-care premiums, the number of uninsured workers across the country is increasing. With no end in sight, some states are stepping up to provide assistance.

States are considering a variety of methods to help employers offer affordable coverage, says Sharon Silow-Carroll, a vice president at the Economic and Social Research Institute, including premium assistance, reinsurance, and direct subsidies.

"As fewer workers can afford health care, enrollment drops and the states end up footing the bill," says Jeff Munn, a consultant at Hewitt Associates. States are also concerned that the burden of providing expensive health coverage could harm the economic prospects of the states' employers.

In New York, employers with 50 or fewer employees, and with at least 30 percent earning less than $34,000 a year, are eligible for Healthy NY. The program pays for 90 percent of claims between $5,000 and $75,000. During the past few years, enrollment in the program has increased to more than 90,000 participants. Similar programs are now being developed in Maine and New Mexico. Connecticut and West Virginia are implementing plans to bargain with coverage providers on behalf of employers.

Some states are taking a more heavy-handed approach, says Munn. In California, legislators are trying to pass "pay or play" laws, which would require employers to either provide health care or pay into a state fund that goes toward the cost of services for the uninsured. And the Maryland legislature is considering requiring companies to report the number of uninsured individuals they employ. "It's more a matter of shifting costs from the states to the employers," says Munn, "than helping employers reduce costs."

— Laura DeMars

Not in My Backyard

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