Deal Is Near on Pension Proposal

Aid to Airlines Still Unresolved

Congressional negotiators said yesterday that they had agreed on legislation to restore health to the nation's employer-based pension system and protect the retirement benefits of tens of millions of people.

"I think everything's resolved, pending getting the exact wording," said Sen. Mike Enzi (R-Wyo.), chairman of the Health, Education, Labor and Pensions Committee.

Aides familiar with the negotiations cautioned that lawmakers still had not reached agreement on all aspects of the bill but said that should occur this week. One outstanding issue was the Senate's proposal to give special relief to financially troubled airlines.

The tentative deal, a product of months of slow-moving talks between the Senate and House, would impose stricter funding rules on companies that fall behind in contributions to defined-benefit pension plans, a key source of retirement income for 44 million Americans.

The challenge has been how to bring more discipline into a single-employer pension system now underfunded by an estimated $450 billion, without driving companies to declare bankruptcy and dump their obligations on the Pension Benefit Guaranty Corp., the government arm that insures such plans.

Lawmakers negotiating the bill released few details, saying they would meet again today to ensure there were no discrepancies in their oral agreement.

The legislation was expected to give specific relief to airlines that are on the verge of defaulting and unloading their plans onto the PBGC, which is already running a $22.8 billion deficit. These airlines would be given more time to put their pension plans on a sound footing.

Talks on the bill, passed in different versions by the House and Senate late last year, were slowed by its intricacies.

The White House issued veto threats, saying President Bush would not accept any bill that weakened the long-term financial status of the retirement plans. Negotiators gave assurances that they had answered the administration's concerns.

Among the issues were how to determine when a company is at risk of underfunding its pension plan, triggering a process in which the company must increase its contributions until the plan is fully funded.

Other topics included how to give legal status to cash-balance plans, hybrids of defined-benefit and 401(k)-type plans that have been challenged in court over age discrimination issues, and how to strengthen multi-employer plans sponsored by companies and labor unions.