WASHINGTON – Revamping the nation's troubled pension system is a priority for the Bush administration, Labor Secretary Elaine Chao said Monday.
Chao, speaking to editorial writers and journalists in a conference call, called on Congress to complete action swiftly on such an overhaul.
Lawmakers in the House and Senate passed their own versions of pension bills, but the two chambers still must iron out differences to produce a final package.
The bills are aimed at shoring up traditional, employer-based defined benefit pension plans, which give retirees a fixed amount based on salary and years of service. Millions of Americans are counting on such a pension plan to fund their retirement, Chao said.
"Now is not the time for delays and capitulation," she said.
The White House has welcomed the legislative action in Congress but has said it wants to see a final bill strengthened with respect to the level of required plan contributions and premiums needed to keep the Pension Benefit Guaranty Corporation solvent and avoid a taxpayer bailout.
Chao said she hoped that congressional negotiators "will be able to advance a proposal that meets the president's goals."
PBGC's operations are financed by insurance premiums paid by companies that sponsor traditional pension plans. It also earns money from investments and receives funds from pension plans it takes over. The agency is not funded through tax revenues.
Analysts and others, however, fear that if Congress doesn't take steps to put the agency on better financial footing, there could be the risk of a future taxpayer-financed bailout.
Defined-benefits plans are now underfunded by an estimated $450 billion. To fix this, legislation would tighten pension-funding rules for companies. The bills also aim to financially shore up the PBGC.
The PBGC, which insures those defined-benefit plans, has reported a deficit of $22.8 billion. Bankrupt steel and airline companies that have transferred pension responsibilities to the PBGC have been a major factor in the agency's swollen debt.