WASHINGTON – Congressional negotiators say they have reached agreement on legislation to restore health to an enfeebled employer-based pension system and ensure the retirement benefits of tens of millions of people.
"I think everything's resolved, pending getting the exact wording," Sen. Michael Enzi, R-Wyo., chairman of the Health, Education, Labor and Pensions Committee, said Wednesday.
However, aides familiar with the negotiations cautioned that they still hadn't reached agreement on all aspects of the bill, although they should be able to nail down a deal this week. One still-hanging issue was the Senate-backed proposal to give special relief to financially troubled airlines.
The tentative deal, a product of months of slow-moving talks between the two chambers, would impose stricter funding rules on companies that fall behind in contributions to defined-benefit pension plans, a key source of retirement income for 44 million Americans.
The challenge has been how to bring more discipline into a single-employer pension system now underfunded by an estimated $450 billion, without driving companies to declare bankruptcy and dump their future obligations on the Pension Benefit Guaranty Corp.that insures such plans.
Lawmakers negotiating the bill released few details, saying they would meet again Thursday to ensure there were no discrepancies in their oral agreement.
But it was expected to give specific relief to airline companies that are on the verge of defaulting and unloading their plans on the PBGC, which is already running a $22.8 billion deficit. These airlines would be given more time to put their pension plans on a sound footing.
The chief executives of Northwest Airlines Corp. and Delta Air Lines Inc. earlier Wednesday urged Congress to pass the long-stalled legislation, warning that they could be forced to terminate their pension plans without congressional action.
"A further delay is a functional equivalent of no," Douglas Steenland, president and CEO of Northwest, said at a Capitol Hill news conference.
Talks on the bill, passed in different versions by the House and Senate late last year, were slowed by the intricacies of probably the most complex bill Congress will consider this year.
The White House issued veto threats, saying President Bush would not accept any bill that weakened the long-term financial status of the retirement plans. Negotiators gave assurances that they had answered the administration's concerns.
Among the issues were how to determine when a company is "at risk" of underfunding its pension plan, triggering a process where the company must increase its contributions until the plan is fully funded.
Other topics included how to give legal status to cash balance plans, hybrids of defined-benefit and 401(K)-type plans that have been challenged in court over age discrimination issues, and how to strengthen multiemployer plans sponsored by companies and labor unions.
The legislation, which House and Senate leaders hope to take up before leaving for the August recess, also would establish a permanent interest rate that would more accurately determine a company's liabilities to its pension fund.
It would restrict the practices of companies giving deferred-compensation payouts to executives of financially troubled companies with at-risk pension plans.
In addition, it would put limits on the use of credit balances, where employers replace contributions with credit balances accrued in past years but which, because of stock market fluctuations, may have fallen in value.
The agreement was also expected to carry a package extending some expired tax breaks, including a corporate research and development credit. Lawmakers also planned to use the bill to keep some of the president's temporary tax incentives for retirement savings, first passed in 2001.