November Elections could be Pension Bill Monkey Wrench
Senator Charles Grassley (R-Iowa), chairman of the
Senate Finance Committee, told reporters that the closer
lawmakers get to November’s off-year elections, the
tougher it will be to find common ground on the sweeping
pension reform proposals, the Chicago Tribune
reported.
“The closer we get to Election Day, the harder
it’ll be to get a bipartisan agreement,” said
Grassley, according to the Tribune. “Congress needs to
dedicate itself to sending a [pension] bill to the
president before Memorial Day.”
Grassley said he had hoped to pass a bill at the end of
last year, but “unfortunately, political gamesmanship
and special-interest lobbying have interfered with
that.” Then lawmakers set April 15 as the goal for
reaching an agreement, but that passed with the Senate and
House members of a legislative conference committee far
apart on key issues.
House-Senate Differences
While members of both chambers have passed major
pension-overhaul bills, the Senate version is
significantly friendlier to workers and would impose
stronger restrictions on companies, while the House
version focuses on protecting businesses, according to
the news report.
Congressional staff members reported that progress had
been made on some issues since members left for their
Easter recess two weeks ago, but the outcome still is
considered highly uncertain.
Senator Mike Enzi (R-Wyoming), conference chairman, said
in a statement that “we are very close to an
agreement on the big issues,” but he added that the
conferees would be “fine-tuning” most aspects
of the legislation.
The Senate measure contains relief for airlines,
especially Northwest Airlines, which has threatened to
dump more than $3 billion in pension liabilities on the
Pension Benefit Guaranty Corp. (PBGC), the agency that
insures private pensions. House Representative
John Kline (R-Minnesota.), one of the conferees, said he
favors the airline relief because Northwest is in his
district and added he hopes to overcome opposition from
some conferees who do not like government bailouts of
companies that have over-promised their employees.
The House bill, pushed through by now-Majority Leader
John Boehner (R-Ohio), left out airline pension relief,
which many conservatives oppose.
Cash Balance Conversions
Perhaps the most controversial aspect of the
legislation is a Senate provision that would give workers
more financial protection when their pension plans are
converted to cash-balance plans, under which workers
receive an annual cash contribution that grows with
interest.
The Senate provision would prevent “wear-away”
of pension benefits of older workers when the conversion
is made. In effect, the Senate proposal would require
that cash-balance plans accumulate benefits to the same
degree that traditional pensions do.
Cash-balance plans have been in legal limbo since one
court held that they discriminate against older workers;
companies have pushed for Congress to legalize them and
declare that they are not discriminatory.
Both the House and Senate pointedly rejected business
lobbying and declared that the legalization would apply
only to new cash-balance plans, not retroactively to old
ones, such as a controversial conversion plan at IBM
Corp. cited in litigation, according to the news
report.