Senate committee OKs bill to give companies' pension-funding relief

AP ^ | October 30, 2003 | LEIGH STROPE

[sarcasm]

WASHINGTON -- Relief for companies complaining of skyrocketing pension costs cleared another hurdle in Congress on Wednesday, with a Senate panel approving a three-year interest rate adjustment that would let businesses pay less into their workers' retirement plans.

The bill passed the Senate Health, Education, Labor and Pensions Committee after a compromise was brokered last week between committee Chairman Judd Gregg (R-N.H.) and the top Democrat, Sen. Edward M. Kennedy (D-Mass.).

Traditional pension plans have been hurt by a combination of low interest rates, the poor economy, stock market losses and an increase in retirees. Supporters fear that companies will stop offering the benefit if relief is not granted, putting labor unions on the rare same side as corporations.

The House passed a similar plan three weeks ago, but it would provide only a two-year change.

Underfunding for all pension plans is estimated at more than $350 billion.

Congress is facing a year-end deadline to enact a new measure for future pension plan obligations. The 30-year Treasury bond used to serve as the basis for calculating obligations. But the government stopped issuing new 30-year bonds in 2001. A temporary replacement will expire at year's end.

Unlike the House bill, the Senate plan would create a commission to review pension funding issues and report recommendations to Congress by December 2005. It requires Congress to act within 120 days of the report.

A study by the General Accounting Office, the investigating arm of Congress, found that the pension system faces severe structural problems and reform is needed. The report was issued Wednesday at a House hearing. Suggested remedies included providing better incentives for sponsors to keep their plans fully funded.

[sarcasm]

ping

[arete]

I figure that this pretty much spells the beginning of the end of the pensions plans. Anytime that the government steps in with a solution that basically says, "since your pension plans are so underfunded, you can now contribute less to then in the future", I'd say some retirees and taxpayers had better be ready to yet again to take it in the neck.

Richard W.

[arete]

Ping to the (un)usual suspects.

Richard W.

[meenie]

Defaulting on pension plans signals a default in the future on the biggest plan of all, social security. It was always maintained that the printing presses would crank out enough dollars to pay social security payments. When push comes to shove, however, default in order to save the overall economy will win. It will probably be futile in an effort to save the economy, but the politicians will use it as a last resort.

[Orangedog]

You might want to add guns, ammunition and fire extinguishers to the list of gold, silver and popcorn.

[arete]

Those determined less productive by the rulers and the puppet masters in corporate American will be pushed over the economic cliff. Times are changing.

Richard W.

[chainsaw]

What in the world is congress thinking? companies are reneging on their pension plans now, when they should have fully funded their plans years ago, but didn't.

[steve50]

What in the world is congress thinking?


Campaign donations would be my guess.