- Aug 20, 2002
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ReutersUPDATE - U.S. Senate fails to agree on pension funding
Tuesday November 25, 7:29 pm ET
WASHINGTON, Nov 25 (Reuters) - The U.S. Senate recessed for the Thanksgiving holiday on Tuesday after failing to agree on a proposal for easing pension funding requirements for airlines and other beleaguered industries.
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Republican aides, speaking on the condition of anonymity, said earlier in the day that supporters of the plan had hoped to bring up the measure for a voice vote on Tuesday before leaving town until Dec. 9, when they return for an abbreviated session.
But this would have required unanimous agreement, which apparently was not forthcoming.
"We will continue to work to finish that bill when we return," Senate Republican Whip Mitch McConnell, a Kentucky Republican, said of the pension legislation.
The bill would grant a two-year moratorium on catch-up contributions -- called deficit reduction payments -- to companies with extra-large pension shortfalls, such as bankrupt UAL Corp.'s (OTC BB:UALAQ.OB - News) United Airlines.
It would also allow all companies to assume a more generous rate of return on their pension funds for two years, thereby reducing their pension liabilities.
The Bush administration has come out strongly against a moratorium on pension deficit-reduction contributions, saying it would only worsen the funding crunch companies eventually face and increase the risk that pension plans would collapse down the road.
The U.S. House of Representatives approved a similar two-year moratorium last week, although just for airlines. The differences between the bills would have to be reconciled and signed by President George W. Bush before the measure could become law.
Aides said that if the Senate passed the proposal under discussion, the House could take up the bill in December, when it also is expected to return to work for a short period.
Under the Senate plan, if companies chose to accept the moratorium, they would have to pay the greater of two things: either 20 percent of the deficit-reduction contributions they owe, or the plan's expected current liability for the year, Senate aides said.
The bill would also let companies assume a higher rate of return, based on high-grade corporate bonds, on pension contributions -- instead of using an interest rate based on 120 percent of the 30-year Treasury bond rate.
