WASHINGTON — Although Congress is expected to pass legislation this year that would protect the solvency of many defined benefit pension plans, chances of a broader pension bill becoming law are almost nil.
Congress also may pass a provision letting United Airlines' parent UAL Corp. and other financially strapped companies waive about $30 billion in pension contributions over the next three years. United Airlines has a $6.4 billion pension fund shortfall. Company officials cited UAL's anticipated $4.2 billion in pension contributions over the next five years as a key reason for postponing its exit from bankruptcy until next year.
The comprehensive pension legislation — known as the National Employee Savings and Trust Equity Guarantee Act — cleared the Senate Finance Committee on Sept. 17. A similar version passed the House Ways and Means Committee on July 18, but that's as far as the bill will get this year, pundits predict. That's because lawmakers must attend to more pressing business in the remaining six weeks of Congress, such as Medicare reform.
(That bill, prompted by the collapse of Enron Corp., would, among other things, require employers to make it easier for 401(k) participants to sell their holdings of employer stock and receive independent investment advice. Participants in defined contribution plans would get quarterly benefit statements, and those in defined benefit plans would receive statements at least every three years. The legislation also would require employers to give employees a 30-day warning of "blackout periods." And, it would let workers who are older than 50 contribute more to their individual retirement accounts.)
But legislation allowing corporate plan sponsors to value pension liabilities using the interest rate tied to an index of high-grade long-term corporate bonds seems a shoo-in.
Corporations and labor unions — often on opposite sides of pension issues — both lobbied for passage.