Senate Pension Reform Bill Slated for Vote

October 14, 2005 ( - Unnamed US Senate aides said Friday that a pension reform bill that would sharply increase pension insurance premiums and collect larger sums from companies who shed pensions in bankruptcy is scheduled for a vote next week.

Reuters reported that the proposal to raise premiums is due to come to a vote on Tuesday in the US Senate Health, Education, Labor and Pensions (HELP) Committee. It would raise annual insurance premiums per participant to $46.75 from the current $19, and much higher than the $30/participant that has been incorporated in prior proposals (see  Boehner Predicts House Pension Bill by October ).

HELP committee chairman Senator Mike Enzi (R-Wyoming) had earlier warned that a dramatic premium increase would be needed if business interests continued to block comprehensive pension legislation (see  Airline Pension Conflict Stalls Senate Reform Bill ).

The proposal would also force companies that give over their pension plans in bankruptcy to pay a special premium  – $1,250 per plan participant, in each of the first three years after emerging from bankruptcy, according to a summary of the proposal released by HELP committee aides.

The insurance premiums are paid to the Pension Benefit Guaranty Corp. (PBGC), which insures private-sector pension plans.  Based on current projections, the fund has a $23.3 billion deficit relative to the funding for those obligations. 

The proposal is part of the HELP committee’s recommendations for meeting federal budget targets.

Lawmakers representing business interests and unions prevented the pension reform bill from reaching the Senate floor last week, arguing that some of the proposed rules were too onerous. Senate leaders intend to turn to other legislation next week, leaving the future of pension reforms unclear.