Congress Committed to Pension System Overhaul

A senior Republican predicted Tuesday that Congress will pass legislation this year to overhaul the nation's pensions system and suggested that the idea of linking pensions to the politically unpopular drive for Social Security reform may have to be shelved.

Rep. John Boehner (search), R-Ohio, chairman of the House Education and the Workforce Committee, said the House would probably act before the end of October on legislation to better protect the retirement benefits of millions of Americans and ensure that failed pension funds don't result in a massive taxpayer bailout.

Senate negotiators, meanwhile, reached an agreement to combine two competing bills, and pensions reform could be one of the first issues on the floor after the Senate vote on Supreme Court chief justice nominee John Roberts (search), said Senate Finance Committee Chairman Charles Grassley, R-Iowa.

"Now more than ever, workers deserve the support of Congress to preserve their hard-earned pensions. This bipartisan legislation will do just that," said Sen. Edward Kennedy, D-Mass., who negotiated the deal with Grassley, Health, Education, Labor and Pensions Committee Chairman Michael Enzi, R-Wyo., and Sen. Max Baucus, D-Mont.

Boehner said he fully supports efforts to make the Social Security system solvent in the future, and deferred to Ways and Means Committee Chairman Bill Thomas, R-Calif., on how that will happen. Thomas has advocated a retirement package combining pensions, Social Security and incentives for personal savings.

But he said there was little political appetite now for changing Social Security, a top priority of the Bush administration. "It's like asking Congress to eat a bowl of cold green peas," Boehner said in an address to a pensions forum sponsored by the National Journal. "They don't want to do it."

House and Senate pension bills, while differing in the details, seek to ensure the financial viability of the Pension Benefit Guaranty Corporation (search), the government agency that insures worker pension plans, while holding employers with defined-benefit pension plans to stricter rules to avoid underfunding and the termination of plans.

The Senate bills, unlike the House version, also provide relief for the airlines industry. Bankruptcies and financial troubles in the industry have been a major source of problems for the PBGC, which went from a $7.8 billion surplus in 2001 to a $23.3 billion deficit last year.

In recent years it has taken over the pension claims of several troubled steel and airlines companies, including Bethlehem Steel, National Steel and United Airlines.

The PBGC, financed solely by premiums from companies with pension plans and interest from assets, guarantees pension benefits for about 44 million workers and retirees in more than 31,000 private-sector defined benefit plans.

The Boehner plan, like the Senate bill, raises the premium from the current $19 to $30 a year per participant. It requires employers to make additional contributions to erase funding shortfalls, changes the interest rate by which employers determine their pension liabilities and requires greater transparency so employees can better understand the status of their plans.

Boehner acknowledged that "we're walking down a very fine line" in trying to make the PBGC financially stronger without adding a burden to companies that might force them to terminate their pension plans.