The House sought to reassure millions of baby boomers about retirement benefits by passing legislation yesterday that supporters said would revitalize employer-based pension plans.
“Our nation’s pension laws are outdated and broken, placing at risk the retirement security of millions,” said Rep. John A. Boehner, Ohio Republican. He was a chief sponsor of the bill that tightens pension funding rules and helps the federal agency that insures pension plans.
“Today we have an opportunity to change this by voting for the most comprehensive reforms to worker pension laws in more than a generation,” said Mr. Boehner, chairman of the House Education and the Workforce Committee.
The legislation, backed by an array of corporate groups and unions, passed 294-132. Ahead are negotiations, probably early next year, with the Senate, which last month passed a similar version.
The goal is to give some peace of mind to the millions of people in traditional defined-benefit plans, which give retirees a fixed amount based on salary and years of service.
Such plans are now in decline as older manufacturing industries try to reduce pension costs and many companies move toward 401(k) and other defined-contribution plans.
Defined-benefit plans are now underfunded by an estimated $450 billion. The Pension Benefit Guaranty Corp., the self-financed federal agency that insures such plans, recently reported a deficit of $22.8 billion as it takes over payments of abandoned plans, particularly in the airlines and steel industries.
Most Democrats opposed the House bill, arguing it would prompt more companies to freeze or eliminate plans.
Rep. Charles B. Rangel of New York, top Democrat on the House Ways and Means Committee, said the measure tightens rules on companies with pension liabilities “without simultaneously eliminating loopholes that would allow these companies to easily dispose of their pension obligations in bankruptcy.”
The White House expressed support but also said yesterday that it wanted the final bill to require bigger plan contributions and premiums to keep the pension agency solvent and avoid a taxpayer bailout.
If the final bill weakens funding requirements, the White House said the president will be advised to veto it.
The bill would:
Require companies, over a seven-year period, to meet a 100 percent funding target.
Bar the funding of executive compensation plans when worker pension plans are severely underfunded.
Raise from $19 to $30 per participant the annual premium that companies pay the financially faltering agency.
The Senate bill makes exceptions for financially troubled airlines, giving them a longer period to fill underfunded plans.