Legislation To Partly Renege Pension Funding Break

September 20, 2007 (PLANSPONSOR.com) - Legislation passed in a Senate committee on Friday threatens to take back some of the relief given to some companies, such as American Airlines and Continental Airlines, granted a pension funding break earlier this year.

The legislation proposed by Senate Finance Committee Chairman Max Baucus (D-Montana) will still afford these companies a funding break for pension benefits already earned, but the break would not reduce payments covering the cost of benefits accruing in the future, a Senate Finance Committee aid told Dow Jones.

The committee bill was approved in a 15-to-6 vote.

Alaska Airlines and some airline food service plans could also benefit from the pension funding break, though the bulk of the potential benefit would go to American, according to a source familiar with the legislation, Dow Jones said.

The Pension Benefit Guaranty Corporation has estimated the pension funding break could allow the affected companies to reduce their pension contributions by $2 billion over the next decade.

Baucus’ legislation is tacked on to a larger transportation bill being hammered out in the Senate Finance Committee.