Bill lets govt agency negotiate pension payments
By Susan Cornwell
WASHINGTON, Sept 8 – The federal agency that insures
private pensions would be able to cut deals with individual
companies granting more time to pay pension liabilities under a
bill approved by a Senate panel on Thursday.
The negotiation provision, part of a pension overhaul bill,
is aimed at keeping companies from terminating their pension
plans in bankruptcy court as has happened with UAL Corp.’s
United Airlines, said an aide to Massachusetts Democrat Sen.
Edward Kennedy, a co-sponsor of the bill.
The measure also attempts to eliminate the legal limbo
around “cash balance” plans, a portable type of pension. These
plans have faced legal uncertainty since a federal court ruled
in 2003 against the plan of IBM, saying it discriminated
against older workers.
The pension bill, the third such measure to be offered in
Congress this year, was approved on a vote of 18-2 by the
Senate Health, Education, Labor and Pensions Committee.
Like the other bills, it seeks to fix underfunding of
corporate pensions and avoid a taxpayer bailout of the agency
that insures them, the Pension Benefit Guaranty Corp. (PBGC).
The newest measure is a bipartisan compromise between the
committee’s chairman, Sen. Mike Enzi, a Wyoming Republican, and
Kennedy, the panel’s ranking Democrat. But it drew criticism
from the Bush administration, which said in a letter to
senators that the net result was to weaken current law.
Enzi said he will move quickly to merge the bill with the
version approved by the Senate Finance Committee so one bill
can move to the floor. The U.S. House of Representatives also
has a pension bill.
Flight attendants, pilots and other workers complained
bitterly as United used bankruptcy court to terminate its
pension plans and hand them over to the PBGC. The agency
insures the plans, but only up to certain limits.
The Enzi-Kennedy bill would seek to avoid these
terminations “by giving PBGC the ability to work out payment
programs for troubled pension plans,” said a bill summary
provided by the committee’s Democratic staff.
“This program will prevent pension failures and the
incredible suffering they cause for workers and retirees,”
Kennedy said of the provision. At the same time, he said, it
would help protect the solvency of the pension system.
Under current law, the PBGC is not authorized to work out
alternative pension funding plans with companies, a PBGC
spokesman said. Companies are supposed to stick to pension
funding rules that are written by Congress.
Those companies wanting major exceptions from the pension
funding rules must ask Congress for them under current law, as
the airlines have done recently. The bill would give the PBGC
the flexibility to negotiate these changes instead.
The bill also includes a break for airlines struggling now,
giving them 14 years to stretch out their pension
Other companies would have 10 years to fully fund their
pension plans. The Enzi-Kennedy bill also would raise the
insurance premiums companies pay to the PBGC.
Iowa Democrat Sen. Tom Harkin, who voted against the
measure, said it would undermine the rights of older U.S.
workers by retroactively legalizing some cash balance plans
while setting standards for them going forward.
“What this bill does is say, we’re going to override the
Cooper-IBM case,” Harkin said. He will seek to amend the bill
on the Senate floor to add protections for older workers.