Congressional negotiators start work on pension bill - Wed Mar 8, 2006 8:41 PM ET
Congressional negotiators began work late on Wednesday on compromise legislation to reform the way corporate pensions are funded and protect financially weak retirement plans covering millions of people.
"I am counting on my colleagues to work through the issues swiftly," said Sen. Mike Enzi, the Wyoming Republican named to chair the panel comprised of House and Senate members. "We can finish the conference if we work across party lines."
Enzi said he wanted deliberations completed by the end of March and a final bill ready for votes by April 7, which is just prior to the April congressional recess.
Any compromise plan must be presented to both chambers for final votes.
The House and Senate approved competing bills late last year to shore up funding rules and ensure the solvency of the Pension Benefit Guaranty Corp., the deficit-ridden federal program that insures plans for 44 million people.
However, there are key differences, and the Bush administration wants legislation with more teeth. The White House has raised the possibility of a veto if a final version does not meet its expectations.
Pension reform was largely driven by huge plan terminations in the steel and airline industries. In recent years, United Airlines (UAUA.O: Quote, Profile, Research) and US Airways (LCC.N: Quote, Profile, Research) turned billions of dollars in pension liabilities over to the government, which pays out less to retirees than the companies' had pledged.
FOCUS ON TRADITIONAL PENSIONS
Two other big bankrupt carriers, Delta Air Lines (DALRQ.PK: Quote, Profile, Research) and Northwest Airlines (NWACO.PK: Quote, Profile, Research) are also considering plan terminations to reduce costs and restructure unless Congress gives them significantly more time to reduce underfunding -- the gap between between assets and promised benefits.
The focus is on traditional pensions, also known as defined benefit plans. These accounts pay a fixed monthly amount during retirement and many companies have been promising more in benefits than they can deliver.
The defined benefit system in the United States is underfunded by $450 billion and some big companies have opted to freeze their plans, meaning they stop accruing new benefits.
Both bills would strengthen traditional pension funding rules and address red ink at the PBGC, which was $23 billion at the end of last year.
Only the Senate bill includes help for airlines, and the House bill does not favor the use of corporate credit ratings in assessing pension plan health.
House Majority Leader John Boehner, a co-sponsor of the House bill, said the measure approved in that chamber "strikes a very responsible balance" by tightening funding rules but not too much to hurt financially struggling companies. Lawmakers are especially concerned about huge pension underfunding at big U.S. auto companies.
Enzi said the goal of compromise legislation should be to get more money into pension plans, preserve plans that are active and not force new bankruptcies. He also said a taxpayer bailout of the PBGC is "not an option."
Rep. George Miller of California, the ranking Democrat on the House Education and Workforce Committee, said he did not think the pending bills respond adequately to the problems or protect workers.
Congressional negotiators began work late on Wednesday on compromise legislation to reform the way corporate pensions are funded and protect financially weak retirement plans covering millions of people.
"I am counting on my colleagues to work through the issues swiftly," said Sen. Mike Enzi, the Wyoming Republican named to chair the panel comprised of House and Senate members. "We can finish the conference if we work across party lines."
Enzi said he wanted deliberations completed by the end of March and a final bill ready for votes by April 7, which is just prior to the April congressional recess.
Any compromise plan must be presented to both chambers for final votes.
The House and Senate approved competing bills late last year to shore up funding rules and ensure the solvency of the Pension Benefit Guaranty Corp., the deficit-ridden federal program that insures plans for 44 million people.
However, there are key differences, and the Bush administration wants legislation with more teeth. The White House has raised the possibility of a veto if a final version does not meet its expectations.
Pension reform was largely driven by huge plan terminations in the steel and airline industries. In recent years, United Airlines (UAUA.O: Quote, Profile, Research) and US Airways (LCC.N: Quote, Profile, Research) turned billions of dollars in pension liabilities over to the government, which pays out less to retirees than the companies' had pledged.
FOCUS ON TRADITIONAL PENSIONS
Two other big bankrupt carriers, Delta Air Lines (DALRQ.PK: Quote, Profile, Research) and Northwest Airlines (NWACO.PK: Quote, Profile, Research) are also considering plan terminations to reduce costs and restructure unless Congress gives them significantly more time to reduce underfunding -- the gap between between assets and promised benefits.
The focus is on traditional pensions, also known as defined benefit plans. These accounts pay a fixed monthly amount during retirement and many companies have been promising more in benefits than they can deliver.
The defined benefit system in the United States is underfunded by $450 billion and some big companies have opted to freeze their plans, meaning they stop accruing new benefits.
Both bills would strengthen traditional pension funding rules and address red ink at the PBGC, which was $23 billion at the end of last year.
Only the Senate bill includes help for airlines, and the House bill does not favor the use of corporate credit ratings in assessing pension plan health.
House Majority Leader John Boehner, a co-sponsor of the House bill, said the measure approved in that chamber "strikes a very responsible balance" by tightening funding rules but not too much to hurt financially struggling companies. Lawmakers are especially concerned about huge pension underfunding at big U.S. auto companies.
Enzi said the goal of compromise legislation should be to get more money into pension plans, preserve plans that are active and not force new bankruptcies. He also said a taxpayer bailout of the PBGC is "not an option."
Rep. George Miller of California, the ranking Democrat on the House Education and Workforce Committee, said he did not think the pending bills respond adequately to the problems or protect workers.
