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House lawmakers introduced pension reform legislation Thursday that is not likely to alleviate the corporate pension crisis immediately. The legislation’s potential success at saving the Pension Benefit Guaranty Corp., the bankruptcy-prone airlines industry and other distressed companies with burdensome pension obligations has been complicated by lawmakers’ intention to fold pension reform into a broader retirement security legislative package. Such a package also would include the already contentious Social Security reform and private savings legislation. “By putting them together, instead of having three highly charged partisan fights, we will only have one,” House Ways and Means Chairman Bill Thomas, R-Calif., said Thursday at a briefing to detail the legislation. Many corporate pension plans are currently underfunded, and when they are terminated — most often through a bankruptcy filing — it falls to the PBGC, which is the agency that insures corporate pension plans, to pay worker’s pensions. However, the PBGC is currently running a record deficit of $23 billion. Lawmakers said they intend for pension reform legislation to go through the House Education and the Workforce Committee by the end of June, and then it will be forwarded to the House Ways and Means Committee, where it will likely become part of an overall retirement security legislative package. Even as a standalone piece of legislation, however, the pension bill has its detractors. “We’re not saying people are jumping up and down and applauding what we have here,” said Rep. John A. Boehner, R-Ohio, chairman of the House Education and the Workforce, who noted no Democrats were present for the unveiling of the legislation. He added that lawmakers would continue to work with companies and labor groups. House leaders were adamant Thursday that the pension bill is not a bailout for any one distressed industry. On Tuesday in the Senate, three CEOs of embattled airlines asked lawmakers for a legislative solution that includes giving them more time to meet existing funding commitments. Pensions plans at United Air Lines Inc., Northwest Airlines Corp. and Delta Air Lines Inc. are underfunded by a combined $19 billion. United recently defaulted on several of its pension plans, turning about $6.6 billion in liabilities over to the PBGC. The House bill has “no industry-specific relief for anyone, and we would prefer to keep it that way,” Boehner said. “I don’t believe it should be part of this bill at this time.” Meanwhile, Rep. John Kline, R-Minn., said lawmakers will “continue to discuss if [a separate remedy] becomes necessary for the airlines.” While the general consensus among some of the lawmakers was that the airlines industry could be addressed separately, Thomas was clear in his disagreement, saying there have been instances in which companies were kept alive beyond their reasonable life span. He didn’t, however, specifically name any particular airlines. Lawmakers also distinguished their legislation from a pension proposal President Bush unveiled in January. “The administration’s proposal is focused solely on saving the PBGC. We have a broader vision of what we’re trying to accomplish,” Boehner said, referring to the House Republicans’ plan to roll up the pension bill in general retirement security legislation. Combining the matters “is much more realistic and much more appropriate,” he said. The pension bill introduced Thursday, known as the “Pension Protections Act,” would raise the premiums companies are required to pay the PBGC by 58 percent to $30 per year per employee participant in the pension plan, from $19.6. The premiums would be phased in over three years for most companies, and over five years for companies whose plans are at least 80 percent funded. The White House proposal would put the same increases in effect immediately. Under the pension bill just introduced, too, companies with shortfalls would have to fully fund their plans in seven years. Severely underfunded plans — defined as those that are less than 60 percent funded — would have to make larger payments to fund their plans fully in five years. Moreover, employers would be able to make additional contributions to their plan, which is presently prevented under current law. The bill also prohibits the funding of executive compensation arrangements, or so-called golden parachutes, when company pension plans are severely underfunded. Meanwhile, in the Senate, Sens. Michael B. Enzi, R-Wyo., and Charles E. Grassley, R-Iowa, chairmen of the Health, Education, Labor and Pensions Committee and the Finance Committee, respectively, said they intend to act on pension legislation this year. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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