- The Washington Times - Friday, January 23, 2004

ASSOCIATED PRESS

Three Cabinet secretaries said they would urge President Bush to veto a widely backed bill to ease pension burdens if it contains provisions giving special relief to airlines and other companies that have fallen behind in their pension payments.

Labor Secretary Elaine L. Chao, Treasury Secretary John Snow and Commerce Secretary Donald L. Evans said in a letter to Senate Majority Leader Bill Frist that it would be “irresponsible” to enact legislation that “would significantly further exacerbate systemic pension plan underfunding.”

The three make up the board of the Pension Benefit Guaranty Corp., which insures the defined pension benefits of 44 million Americans. The letter was made public yesterday.

The Senate next week is expected to vote on legislation providing a two-year fix in the formula that determines how much employers must pay into their pension funds. The current formula, based on now-defunct 30-year Treasury bond rates, has resulted in huge payment increases at a time when many companies are struggling with the weak economy.

Randy Clerihue, director of communications at the PBGC, said employers would save some $80 billion over the two-year period. Lawmakers say this is crucial for companies threatening to freeze or terminate pension plans because of the high cost.

The Senate bill also provides two years of relief for companies, primarily airlines and steel companies, that have underfunded their pension plans because of bankruptcy or financial difficulties and are required to make catch-up payments called deficit reduction contributions.

It is this part of the bill that the administration objects to; it also has raised some objections in Congress. “Companies that habitually underfund plans should not be bailed out at the expense of others,” said Sen. Jon Kyl, Arizona Republican.

The measure would waive 80 percent of the catch-up pay in the first year, and 60 percent the second year. Mr. Clerihue said it would save eligible companies $16 billion over two years.

Supporters of the provision say it will help companies avoid going bankrupt and adding to the financial burdens of the PBGC, which recently reported a record employer pension program deficit of $11.2 billion through the end of 2003.

The corporation last year became trustee of 152 pension plans covering 206,000 people.

The House last year approved two versions of pension relief, one including a break for companies making deficit reduction contributions. The two chambers would have to reconcile their differences before sending a bill to Mr. Bush, who has yet to use his presidential veto powers.it would save eligible companies $16 billion over two years.

Supporters of the provision say it will help companies avoid going bankrupt and adding to the financial burdens of the PBGC, which recently reported a record employer pension program deficit of $11.2 billion through the end of 2003.

The corporation last year became trustee of 152 pension plans covering 206,000 people.

The House last year approved two versions of pension relief, one including a break for companies making deficit reduction contributions. The two chambers would have to reconcile their differences before sending a bill to Mr. Bush, who has yet to use his presidential veto powers.it would save eligible companies $16 billion over two years.

Supporters of the provision say it will help companies avoid going bankrupt and adding to the financial burdens of the PBGC, which recently reported a record employer pension program deficit of $11.2 billion through the end of 2003.

The corporation last year became trustee of 152 pension plans covering 206,000 people.

The House last year approved two versions of pension relief, one including a break for companies making deficit reduction contributions. The two chambers would have to reconcile their differences before sending a bill to Mr. Bush, who has yet to use his presidential veto powers.


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