Houses OKs Pension Overhaul

The House approved a new, temporary pension contribution formula that would save employers billions of dollars in payments while lawmakers restructure the system. But the bill faces a tough fight in the Senate.

The House voted 336-69 to replace an outdated formula that companies use to make pension contributions. The new calculation is considered a better estimate of how much money pensions need to pay future retirement benefits. The firms would save an estimated $80 billion over two years.

"While everyone didn't get everything they wanted in this bill, I can assure you we'll all be back again a year from now when we are discussing long-term proposals to reform and strengthen the defined benefit system," said Rep. John Boehner, R-Ohio.

Senate Democrats have complained the legislation does not do enough to save multiemployer plans, a smaller group of funds run jointly by unions and management, from being forced to make massive and crippling payments.

Rep. Robert Andrews, D-N.J., said the bill helps large corporations while punishing smaller businesses with union affiliations.

"We won't throw the life preservers for union plans and union workers," he said. "That is wrong."

Republicans countered that most multiemployer plans won't face serious pension problems until five or six years from now and don't need immediate help. A Democratic effort to make the bill more favorable to multiemployer plans was turned back on a 217-195 vote.

A compromise struck this week helps the neediest multiemployer plans.

The White House had opposed relief to such plans and had threatened to veto the bill if it contains such a provision. The administration argued that the multiemployer plans don't need as much financial help and lawmakers shouldn't encourage those pensions to lower their contributions.

The White House dropped its objections after the conference report and now supports the measure, spokeswoman Claire Buchan said Friday.

The legislation also would help financially struggling airlines and steel companies with underfunded pensions by letting them cut back on the amount they are required to pay into "catch-up" funds.

Sen. Max Baucus, D-Mont., warned that the bill's future in the Senate wasn't bright. "I doubt if there are enough votes in the Senate," he said.

Thousands of single-employer pension providers must make quarterly payments by April 15. Without congressional action, those providers will have to pay more, based on a now-outdated interest rate formula.

Many lawmakers worry about increasing the potential financial exposure of the Pension Benefit Guaranty Corp., a government agency that insures pension plans of some 44 million workers, including 9 million in multiemployer plans.

The agency has been designated a "high risk" federal program, primarily because of problems among single-employer plans. Through the end of 2003, it compiled a record $11.2 billion deficit from covering failing plans.

Companies and unions fretted that the discord could mean more delays.

"This campaign season has seen no shortage of politicians waxing eloquent about their desire to improve the lot of working men and women," said Dorothy Coleman, vice president for tax policy at the National Association of Manufacturers, a trade group. "Well, here's their big chance to end the partisan rhetoric and do the right thing."