Reuters reports that Senator Johnny Isakson (R-Georgia) confirmed the discussions of a broader application of the provision in the Senate bill that gives airlines twenty years to fully fund their pension plans. The House version had no provision giving special relief for airlines (See House and Senate Must Now Reconcile Reform Bills).
“As people focused on this they realized the dilemma is not industry-specific,” Isakson said, according to Reuters. “They were using the word ‘carve-out’ (for the airline relief) but there are more and more people who needed a more realistic amortization period.”
House Majority Leader Representative John Boehner (R-Ohio), who had been opposed to giving special relief for the airline industry, said Congress should not just legislate for one industry, but should assist industries with large numbers of retirees to help them keep the pension promises made to workers.
Senator Trent Lott (R-Mississippi) said the goal should be to give employers a way to freeze and then pay off the underfunding in defined benefit plans so they could move to defined contribution plans. “You’ve got to get away from defined benefit plans,” he said in the news report.
The Pension Benefit Guaranty Corporation (PBGC) has said that, beyond the airline industry, the agency faces big risk from the auto industry (See Auto Pensions Next Big PBGC Bomb? ). The agency also has taken on plans of more than 140 steel companies.
On a related provision, Lott said the committee was near an agreement concerning forcing companies with poor credit ratings to add money to their pension plans. The provision would affect General Motors Corp. and Ford Motor Co., whose debt ratings have been cut to ‘junk’ status. Lott said House members will have to concede that the credit rating provision will be part of the final bill, and meanwhile the Senate would compromise on a longer phase-in period for the provision.
As far as the overall progress in developing a final bill, Lott said the committee could come to a basic agreement on an outline of the bill before the week ends and staff could write the language of the legislation during the two-week recess that begins next week.