House Adopts Pension Guarantee Fee Increase

WASHINGTON (AP) -- Companies that declare bankruptcy and dump their pension plans onto the federal government would face a $3,750 fee per covered worker under a budget plan passed by the House early Monday.

The vote to pass the $39.7 billion federal budget bill was 212-206, and the Senate planned a vote later in the day.

The new fee, broken down in three yearly installments of $1,250 per covered employee, would be paid to the Pension Benefit Guaranty Corp., the federal agency that guarantees workers' pension benefits.

Business groups generally oppose the idea, saying it would be too burdensome for financially troubled companies, making it much more difficult for them to emerge from bankruptcy.

But backers of the idea say it would make it harder for companies to abandon their responsibilities to the employees and pensioners.

The measure also includes an increase in the per-employee premium companies pay to the financially troubled PBGC, which has an operating deficit of about $23 billion as it takes over payments of abandoned plans, particularly in the airlines and steel industries. The fees would rise from $19 to $30 per employee.

Lawmakers say that without these steps, taxpayers will be on the hook for the government's responsibility to backstop pension plans.

Fees for multi-employer pension plans, which cover workers who frequently switch companies such as construction workers and truck drivers, would rise to $8 from $2.60 per participant.

Separate legislation to tighten pension funding rules and make other reforms to the system has passed both House and Senate and a compromise may come to a final vote next year.

AP-ES-12-19-05 1328EST