- The Washington Times - Friday, March 26, 2004

ASSOCIATED PRESS

House and Senate negotiators yesterday hit an angry impasse over legislation that could save employers billions of dollars, with just days left before companies must begin making their quarterly pension payments.

There were no immediate plans to revive negotiations on the bill, which would provide employers two years of relief on payments they make into their pension plans. During that interval, Congress would work on long-term legislation to ensure viability of the pension system and retirement incomes of American workers.

Rep. John A. Boehner, Ohio Republican and chairman of the House Education and the Workforce Committee, said Democrats had rejected a compromise offer that “was as far as we could go.”

Democrats, led by Sen. Edward M. Kennedy, of Massachusetts, put the blame on the White House.

Mr. Kennedy said the Bush administration leaned on Republicans to resist help for union-based multiemployer pension plans, which he said “reflects an ideological viewpoint.”

The deadlock complicates efforts to pass a compromise bill next week, before Congress leaves for its spring recess, and dims hopes that companies sponsoring single-employer plans will have new guidelines before April 15, when many have to make quarterly contributions.

The two sides are in general agreement on single-employer plans, which face the most serious financial problems and are the main focus of the bill.

The bill would determine a new corporate bond-based interest rate that would be used for the next two years to replace a formula, based on a very low interest rate, that has caused contributions to soar.

The Pension Benefit Guaranty Corp. (PBGC), a government agency that insures the pensions of about 44 million American workers, estimated the new rate would save companies $80 billion, which could be used for new hiring and economic expansion and could save some plans from bankruptcy.

Without the fix, companies “are going to have to divert money that they could otherwise put back in their business,” said Dorothy Coleman, vice president for tax policy at the National Association of Manufacturers. “This is a critical issue to our economy.”

Asghar Alam, U.S. retirement practice leader at Mercer Human Resource Consulting, wrote the negotiators this week that, without quick action, companies may not be able to meet the contribution deadline. That, Mr. Alam wrote, would pose a risk to companies that they would contribute cash that would not be deductible or that they would face tax penalties or federal action by failing to contribute enough.

“We urge you to begin that effort without allowing any more blows to be dealt to the traditional plans that have weathered so much in the past few years,” Mr. Alam said.

The main stumbling block is Senate language that would allow the nation’s 1,700 multiemployer plans to defer losses over the next two years. The administration objected, saying that would encourage underfunding of plans, and threatened to veto the bill unless that provision was eliminated.

Mr. Boehner said Republicans offered a compromise yesterday that would help multiemployer plans with the greatest financial need, which Republican aides said would be accessible to significantly fewer than 20 percent of all plans.

Rep. Robert E. Andrews, New Jersey Democrat, said that would help fewer than 10 percent of plans, and “that was not acceptable.”

Mr. Kennedy attributed the deadlock to intransigence, arbitrary interference and “punitive, antilabor provisions” from the White House.

Multiemployer plans, which cover about 9 million of the 44 million workers covered by the PBGC, are usually operated jointly by labor and management in such fields as construction and trucking.

The General Accounting Office, the investigative wing of Congress, released a report yesterday that said multiemployer plans, after two decades of relative stability, “have suffered recent and significant funding losses” because of stock market declines and poor economic conditions. Multiemployer plans are now underfunded by $100 billion, up from $21 billion in 2000.

In addition to general accord on single-employer plans, the negotiators were close on the third part of the legislation; those would reduce for two years what airlines and steelmakers with underfunded pension plans must pay into a required catch-up fund.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide