Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Administration officials made back-to-back appearances in Congress this week to sell President Bush’s pension reform. But they received a mixed response in both chambers. The White House’s reform proposal, announced in January, includes three key elements: Reforming the funding rules, which govern how much money an employer must put in a pension plan; reforming the premium system; and increasing disclosure to workers, investors and regulators to ensure greater transparency and accountability. Defined-benefit plans, also known as corporate pensions, are single-employer, private-sector plans that cover about 20 percent of the U.S. work force, or about 34 million workers. The deficit at the Pension Benefit Guaranty Corp. more than doubled in 2004 from a record $11.2 billion shortfall in 2003 as more bankrupt companies dumped their pension liabilities onto the agency. The quasigovernmental PBGC guarantees basic payment for corporate pension plans. In a hearing Wednesday before the House Education and the Workforce Committee, chairman John Boehner, R-Ohio, said Bush’s proposal is a good start. “Not that I agree with every part of it,” he added. But the day before, in front of the Senate Finance Committee, Alan Reuther, legislative director of the United Auto Workers union, proclaimed, “The administration’s proposals would result in more bankruptcies.” The more controversial aspects of Bush’s proposal include increasing the premiums companies pay to the PBGC and removing premium adjusting authority from Congress. That would be given to the PBGC, which is funded solely by premium payments from companies and assets from underfunded pension plans it takes over. Under the proposal, the mandatory premiums for companies participating in defined-benefit plans would rise from $19 per worker to $30 per worker. There hasn’t been a premium increase since 1991. Companies with troubled plans would pay even higher premiums based on the extent that their obligations are underfunded. Lawmakers worried about the nearly 60 percent premium increase. Bradley D. Belt, PBGC executive director, testified that this increase is inconsequential to the amount of pensions for which companies are responsible. For example, he said, bankrupt UAL Corp. wants to turn over about $6 billion in pension claims to the PBGC. Yet the United Air Lines Inc. parent pays about $2 million in premiums. Senate Finance Chairman Chuck Grassley, R-Iowa, has introduced a pension proposal that would change pension funding calculation rules and simplify pension laws and regulation. But it does not address the $23.3 billion PBGC deficit. Grassley says a broader pension reform bill would do that. In the House, meanwhile, Boehner is readying his own bill. “The legislation we’ll be introducing in the upcoming weeks and months will not just tinker around the edges of the defined benefit system and leave the most difficult decisions to future generations,” Boehner said. “It will be comprehensive in nature.” Copyright �2005 TDD, LLC. All rights reserved.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.