Pension bill is sent to president

Senate approves measure, which supporters say will save employers $80 billion

April 09, 2004|By COX NEWS SERVICE

WASHINGTON - The Senate voted 78-19 yesterday to send President Bush pension legislation that supporters say will save businesses $80 billion in excess fund payments over the next two years.

Bush is expected to sign the bill before next Thursday, the deadline on which many businesses offering traditional pensions - called defined-benefit plans - would have been required to start making unnecessary extra payments under an obsolete funding formula.

The old formula was based on 30-year Treasury bonds, which no longer are issued. The new formula will be based on the interest rates of high-quality corporate bonds.

"It will have a very significant chilling effect on the economy generally if we do not make this change," said Sen. Judd Gregg, a New Hampshire Republican who is chairman of the Committee on Health, Education, Labor and Pensions. He said the extra payments would have been "taking money away from investments, which create jobs, pay for new plants, new equipment, new activities or simply pay their people more."

The bill also provides extra leniency on payments due over the next two years from Greyhound Lines Inc. and some troubled airline and steel companies. The primary airline beneficiaries will be Delta Air Lines Inc., Continental Airlines Inc., UAL Corp., AMR Corp. and Northwest Airlines Corp., and the steel beneficiaries will be Inland Steel, AK Steel Holding Corp. and iron-ore miner Cleveland-Cliffs Inc., according to Dow Jones Newswires.

The House approved the Senate-House compromise last week by a vote of 336-69. It extends relief to 31,000 defined-benefit plans that are sponsored by a single employer. Those plans cover about 35 million workers and retirees.

But it helps very few of the 1,600 multi-employer defined-benefit plans, in which several businesses contribute to a joint fund. Sen. Mary L. Landrieu, a Louisiana Democrat, said those plans cover about 9.7 million workers and retirees, many of whom belong to unions. Most are in the construction, transportation, entertainment or hotel industries, where workers frequently shift from one employer to another.

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