House Passes Bill To Shore Up Pensions

Differences Remain With Senate Version

The House yesterday approved a bill to strengthen the nation's private pension system, toughening funding requirements on employers who operate the plans and boosting payments that companies must make to the government's pension insurance agency.

Proponents said new rules are needed both to ensure that companies keep the promises they make to workers with their pension plans, and to protect taxpayers, who may be asked to cover the shortfall if poorly funded pensions fail.

Critics -- mostly Democrats but also some business groups -- said the bill would make traditional pensions more expensive and their cash demands unpredictable, causing more companies to drop them in favor of 401(k) and similar plans.

Rep. John A. Boehner (R-Ohio), chairman of the Education and Workforce Committee and a key sponsor of the legislation, acknowledged those criticisms on the House floor but called the bill "a finely tuned balance" between the need for adequate funding and giving employers the flexibility they need to keep their pensions.

The 294 to 132 vote followed a largely partisan and at times bitter debate triggered by the House Republican leadership's decision to bring the measure to the floor under a rule forbidding amendments.

Rep. Joe Wilson (R-S.C.) accused the Democrats of "just-say-no obstructionism," which Rep. Sander M. Levin (D-Mich.) called "so hypocritical," given the prohibition on amendments that the Democrats wanted to offer.

However, several Democrats said they would vote for the bill in hopes that improvements can be made when House and Senate members meet to work out differences between the House bill and one passed last month by the Senate.

Particularly, the Senate measure would give relief from the funding requirements for airlines, many of which are struggling financially. The House measure has no such provision, and Rep. David Scott (D-Ga.), whose district contains many Delta Airlines workers, was among those who expressed hope that it can be added in a House-Senate conference.

With only a few days remaining in the congressional session, a conference is unlikely until next year, members and aides said.

The Bush administration has attacked both bills as doing too little to protect the government's Pension Benefit Guaranty Corp., which pays some or all of workers' pensions when employers cannot.

Both bills "in their current form might actually result in a weakening of pension plan funding and the pension guaranty system," Randal K. Quarles, Treasury under secretary for domestic finance, said in a speech this week.

"The administration does not consider any bill that fails to improve upon current law as an acceptable legislative outcome," Quarles said.

The House and Senate bills are similar but contain a number of technical differences that are important to employers

Both would update how pension plans calculate liabilities, a change that would generally benefit companies, and make it easier for firms to put money into their plans in good times.

But the bills also would boost premiums that companies pay to the PBGC, and restrict benefit increases in underfunded plans. They would require assets in plans to equal their liabilities, and would give underfunded companies seven years (21 years for airlines under the Senate bill) to bring them up to that level.

The bills would also specify that in the future, hybrid "cash-balance" plans do not violate federal age-discrimination laws, though employers complain the language does not protect plans already in existence.

The House bill went to the floor after a last-minute deal to relax some of its restrictions -- including those on benefit increases in underfunded plans and those on the payment of "shutdown" benefits when a factory or plant closes -- brought an endorsement from the United Auto Workers union.