A Dec. 7 Business article on the House's decision to postpone a vote on pension legislation gave an incorrect first name for the spokesman for Rep. George Miller (D-Calif.). He is Tom Kiley, not George Kiley. (Published 12/10/2005)
The House will not act this year on a controversial bill that would overhaul the nation's private pension system, a key Republican leader said yesterday.
Acting Majority Leader Roy Blunt of Missouri told reporters there is "really no likelihood" that the measure, which would toughen funding rules for employers and boost premiums they must pay to the government's pension-insurance agency, could be enacted before the legislative session ends this year.
Congress has been working on pension legislation for two years, and a Senate version was approved easily last month. The House also had been expected to complete work on the bill by year-end when a temporary measure that eases funding requirements expires.
Business groups said, however, that many employers were troubled by provisions of both Senate and House bills.
In particular, they objected to the bills' failure to provide legal protections for hybrid "cash-balance" pension plans. In a cash-balance plan, each worker has an "account" to which the employer credits a percentage of pay and interest each year. It thus resembles a 401(k) but is funded entirely by the employer. Workers who have felt short-changed when their companies switched to such plans have sued, and in one case, involving International Business Machines Corp., a federal judge ruled that cash-balance plans violate federal age-discrimination laws.
In addition, some companies argue that the funding rules would make their plans more volatile, potentially subjecting employers to unanticipated cash demands when the market fluctuates.
"The bills are just not helpful. They substantially increase volatility and unpredictability, and they [would be] creating a scenario that is going to be very unattractive for both employers and employees," said Mark Ugoretz of the ERISA Industry Committee, a large-employer group.
People on all sides agreed that action is likely by spring. Companies do not have to make contributions based on the older rules until April 15. That, several people said, is the real deadline for action.
"I view this as a nothing more than a bump along the road to something the parties will have to get to," said James A. Klein, of the American Benefits Council, another employer group.
Blunt blamed Democrats for the chamber's inaction, saying, "We would need some Democrats to come forward and say, 'We want to be part of the solution,' " and that "hasn't happened yet."
Democrats countered that the bill would make many of the pension system's problems worse.
"The first rule is do no harm," and Republicans "brought forward a bill that was fundamentally flawed," said George Kiley, spokesman for Rep. George Miller of California, the senior Democrat on the Committee on Education and the Workforce.
The panel's chairman, John A. Boehner (R-Ohio), who has made the measure a legislative priority, remains "ready to debate and pass this bill whenever the leadership decides to schedule a vote," spokesman Kevin Smith said. "Congress has a responsibility to address this pension crisis, and Chairman Boehner remains committed to working with all parties to enact comprehensive reform as soon as possible."
Attention has been focused on the nation's pension system over the past five years as a series of economic factors combined to push a number of big companies into bankruptcy protection and their pension plans into the arms of the government's insurer, the Pension Benefit Guaranty Corp. That in turn pushed the PBGC heavily into deficit, although it has sufficient resources pay benefits for some years to come.
Compounding the alarm, the big decline in the stock market after 1999 reduced asset values of many pension plans while declining interest rates caused calculations of plans' liabilities to soar.