WASHINGTON – The House on Friday stood firmly behind a bill that would relieve companies from paying billions into their pension plans during the next two years.
The bill reworks an outdated equation that companies use to calculate pension contributions (search). Government pension experts determined that companies using the new formula can expect to save $80 billion over the two years.
Businesses and unions support the change.
"It's more accurate because it's more realistically reflecting their obligations," said Lynn Dudley, vice president and senior counsel at the American Benefits Council.
Struggling airlines and steel companies, along with Greyhound Lines (search) buses, also get some temporary relief from payments that they would have to make to replenish underfunded pension plans.
House Republicans said they hoped the decisive 336-69 vote gives the bill enough momentum to pass the Senate next week. Companies want Congress to finish before April 15, when their next quarterly pension payments are due.
"I'm optimistic that today's strong bipartisan vote will encourage the Senate to act quickly on this important measure so President Bush can sign it into law," said House Education and the Workforce Committee Chairman John Boehner, R-Ohio.
Some Senate Democrats oppose the bill, saying it punishes multiemployer plans run jointly by unions and management in such fields as trucking and construction, that need extra relief.
"It's grossly unfair to ignore the thousands of small businesses and millions of workers whose pension plans are at serious risk because of the troubled economy," said Sen. Edward Kennedy, D-Mass.
A compromise hammered out by House and Senate Republicans helps 4 percent of the neediest multiemployer plans — far less than the 20 percent that Democrats wanted to help.
Some observers said they hoped union and corporate pressure would change the Senate's mind.
"I hope against all hope that they reject any idea of trying to hold up the bill," Dudley said.
Without congressional action, companies worry they will have to make inflated payments based on a now outdated formula. Businesses said they would prefer to invest that money in their current operations.
"Dedicating available corporate funds to the economic recovery underway, instead of excess pension contributions, is a win-win for workers and the economy," said Bruce Josten, vice president of the U.S. Chamber of Commerce (search).
The prospect that large pensions might fail worries lawmakers uneasy about the potential financial exposure of the Pension Benefit Guaranty Corp., (search) a government agency that insures pension plans of some 44 million workers.
Federal officials designated the program "high risk" primarily because of problems facing corporate pension plans. It compiled a record $11.2 billion deficit from covering failing plans through the end of 2003.