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The distressed airline industry — specifically UAL Corp., the bankrupt parent of United Air Lines Inc. — overshadowed much of the debate Wednesday as a House committee began consideration of pension reform legislation. “Let’s not have another United,” became the clarion call among lawmakers as they offered amendment after amendment in an attempt to deter other companies from defaulting on their pension obligations. One Republican lawmaker, Rep. Tom Price of Georgia, even offered an amendment that would allow airlines to craft customized plans with the Pension Benefit Guaranty Corp., the federal insurer of corporate pensions, to help them avoid off-loading their pensions on the agency. But Price withdrew the amendment at the behest of the House Education and the Workforce Committee Chairman Rep. John A. Boehner, R-Ohio. “The last thing I want to do is have the situation where these plans are moved into the PBGC, similarly to what has happened with United,” Boehner said at Wednesday’s markup of the bill. “But frankly, I’d like to continue avoiding industry-specific relief.” To further demonstrate their displeasure with United, House lawmakers voted June 24 to prevent the PBGC from taking over $6.6 billion in United’s pension obligations. The airline’s default on four of its pension plans represents the largest default in U.S. history. “It’s a surprise to no one when I say our worker pension system is broken and in need of significant reform,” Boehner said. “The outdated rules in place today, which have led directly to the pension terminations at airlines and other struggling U.S. industries, need comprehensive reform, and the bill before us offers comprehensive solutions.” Many corporate pension plans are currently underfunded, and when they are terminated — most often through a bankruptcy filing — it falls to the PBGC to pay workers’ pensions. But the PBGC is running a record deficit of $23 billion. Specifically, the “Pension Protection Act,” which was introduced in the House on June 9, requires employers to meet a 100 percent funding target for their pension plans in five to seven years, and it 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 $19.50. The bill also prohibits the funding of executive compensation arrangements, or so-called golden parachutes, when company pension plans are severely underfunded. However, Democratic lawmakers expressed concern that they’ve had very little time to review the legislation prior to Wednesday’s markup, and its effects on the bill’s constituents — companies, employers, the PBGC — are still ill-defined. Boehner tried to assuage Democrats, saying: “We’ll continue to work on many of these issues as we get to the various stops along the legislative process.” And then Republicans proceeded to beat back a bevy of amendments offered by Democratic lawmakers, including stricter termination rules and stricter limits on executive pension plans. Lawmakers said they intend for pension reform legislation to go through the House Education and the Workforce Committee by this week, 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 that also would include Social Security reform. Meanwhile, Democrats urged Republicans to keep the pension legislation as a standalone bill. “This bill is extremely important, needs to get on the [House] floor for a vote so it can help as many people as possible,” said Carolyn McCarthy, D-N.Y. Copyright �2005 TDD, LLC. All rights reserved.

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