CONGRESS Senate set to pass pension adjustment

WASHINGTON (AP) -- The Senate prepared to pass a bill that would relieve companies from contributing an extra $80 billion into their pension plans after Democrats signaled they were unable to stop it.
The bill reformulates an outdated equation that companies use to calculate pension contributions. The Pension Benefit Guaranty Corp. estimates it would save companies $80 billion during the two years the formula would be in place.
Struggling airlines and steel companies, along with Greyhound Lines buses, also get some temporary relief from payments needed to replenish underfunded pension plans.
Senate Minority Leader Tom Daschle, D-S.D., said he planned to vote against the bill because it offers little aid to multiemployer pension plans, managed jointly by management and unions in construction, trucking and other trades.
"It didn't have to leave out all of these pension plans that now have absolutely no hope and will be lost," he said. "We are going to see insolvencies, bankruptcies, incredible fallout economically as a result of this."
Unions' support
Democrats aren't united against the pension bill, however, because several large unions pushed for passage, including the United Auto Workers and the Airline Pilots Association.
The lower pension contributions will "free up money to invest in production and creating jobs and paying wages, benefits," said Alan Reuther, legislative director of the UAW.
Sen. Edward Kennedy, D-Mass., facing the prospect that multiemployer plans lose under the pension bill, plans to resurrect the issue when the Senate turns to a tax cut for American manufacturers.
The pension bill replaces a contribution formula based on the 30-year Treasury bond, which the government stopped issuing in 2001. Unable to agree to a long-term fix, lawmakers decided to replace the formula for two years with a calculation based on high-quality corporate bonds.
James Klein, president of the American Benefits Council, said the new formula relieves businesses from making larger contributions than necessary, but that businesses suffer from the "uncertainty that shrouds this issue." They would benefit as much from a permanent solution, he said.
Program under pressure
Some lawmakers worry that large pension plans might fail and increase the pressure on the Pension Benefit Guaranty Corp., the government agency that insures pension plans of some 44 million workers.
Federal auditors have tagged the program a "high risk" because of problems facing corporate pension plans. It compiled a record $11.2 billion deficit from covering failing plans through the end of 2003.