No companies would be put out of business if Congress enacted the Retirement Protection Act of 1993, Labor Secretary Robert Reich said at a mid-June Finance Committee hearing in Washington.
The legislation would put underfunded pension plans on a faster funding track and would increase federal pension insurance premium rates for these same plans.
Pension Benefit Guaranty Corp. Executive Director Martin Slate said that if the bill becomes law, all vested benefits in underfunded plans would be fully funded within 15 years and the PBGC's $2.9 billion deficit for single-employer plans would be eliminated within 10 years.
"There is simply too much latitude within the law right now" for companies to delay payments to their pension plans, Mr. Slate said.
"The legislation takes away this wiggle room," he added.
But several other witnesses at the hearing said companies that are in cyclical industries need the flexibility to vary funding based on economic conditions.
Curtis H. Barnette, chairman of the Bethlehem Steel Corp., Bethlehem, Pa., said the proposed legislation would be counterproductive and more costly. He also said the federal measure would hurt the company's opportunity to compete in the marketplace.
Mr. Barnette and others who testified at the Finance Committee hearing also noted the interest rate assumptions and mortality tables mandated in the legislation would be inconsistent with what actually happens in steel, automobile, defense, energy and metal industry companies.
Those companies make up the brunt of the underfunded pension plans.
"By requiring employers to use actuarial assumptions that overstate pension liabilities, the proposal directly imposes excessive funding costs on employers," Mr. Barnette said.