Companies Ask Congress To End Impasse Over Pension

[orwell]

At the same time, some employers, including low-cost airlines, were recirculating earlier objections to provisions of the bill that give additional pension relief to certain plan operators, including airlines.

"We believe these airlines will use this cash windfall to continue to fund unprofitable flying in a concerted attempt to stifle low-cost competitors like America West," America West chief executive W. Douglas Parker wrote this month to Sen. Trent Lott (R-Miss.).

Translation: We don't wanna have to face the real competition that we'd face if the legacy carriers actually pulled off successful restructuring....



By Albert B. Crenshaw
Washington Post Staff Writer
Wednesday, March 31, 2004; Page E01


Corporations that operate traditional pension plans pleaded with Congress yesterday to resolve the dispute that has prevented passage of legislation that would reduce the amount of money most companies would have to pay into their pension funds.

Most pension plan operators have an April 15 deadline for funding their plans. A bill to rewrite the formula for contributions is stuck in a sharply divided House-Senate conference committee. The panel adjourned in anger Friday after Democrats rejected a Republican proposal to resolve a key sticking point, and Republicans refused to consider a Democratic counteroffer. Democrats have accused the White House of pressing House Republicans to take a hard line on the bill.

There have been talks between staffs since Friday, but no meetings of the committee members had been scheduled by late yesterday.

"We cannot stress enough the urgent need to act now on final legislation addressing this issue," more than half a dozen major business groups said in a letter to the conferees.

"This is both a jobs and a retirement security issue," the letter said. The big pension contributions that will be required if the law is not changed are "forcing employers to hold back important resources from continued investment and job creation," it said.

Among the letter's signers were the National Association of Manufacturers, the U.S. Chamber of Commerce, the American Benefits Council and the ERISA Industry Committee.

At the same time, some employers, including low-cost airlines, were recirculating earlier objections to provisions of the bill that give additional pension relief to certain plan operators, including airlines.

"We believe these airlines will use this cash windfall to continue to fund unprofitable flying in a concerted attempt to stifle low-cost competitors like America West," America West chief executive W. Douglas Parker wrote this month to Sen. Trent Lott (R-Miss.).

"Further, to a degree it does a disservice to the other airlines prudent enough to provide for employee retirement with [401(k)-type] plans as opposed to" traditional pensions, Parker wrote.

The bill would allow pensions to use an interest rate based on an index of corporate bonds, rather than the 30-year Treasury bond. Such a change would reduce the value of the plans' liabilities, cutting the amount of new cash they would require. The bill also would waive for two years special contributions required of troubled pension plans in the airline and steel industries.

Staff members from both parties have said the conferees are close to agreeing on the overall funding formula and on the special relief, but are hung up over how much to assist troubled multi-employer pensions, which are common in the trucking and construction industries.




© 2004 The Washington Post Company

 

[AAmech]

What Congress should be doing is pass a law REQUIRING these LCC's to actually provide a pension for their employees. And while they're at it provide some retiree health benifits too!

 

[WingNaPrayer]

The pension laws/rules that are IN place now should hold. They are effective and sound.

Airlines are doing nothing more than looking for a way to further fund their mis-management, and doing it on the backs of labor. What they pay off congress not to have to put in your pension fund today, won't be there on the day you retire either, and will effectively lower your overall monthly pension benefit.

Now, if airlines would just come right out and say . . . "We don't appreciate our employees and they can all just go to hell" well, a little honesty is something everyone can understand.

As to LCCs being forced by law to provide pension and retiree benefits . . .it will never happen. Companies don't have to provide private pension plans of any kind, it's basically used as job incentives. If you start making pension provisions mandatory by law, then you have to lift the financial burdon of paying both pension contributions AND social security, since you can't retire on both.

 

[MCI transplant]

:angry: As I said before:" Why should the Employees of the Airline Inustry be expected to subsidize low Fairs for he general Public, and incompatent Managers???" Maybe they should take from the Management's Pensions first!!!!!This is nothing but a attack on the vary people who built this countries transportation system, and an example of the worst kind of greed! :down:

 

[WingNaPrayer]

:angry: As I said before:" Why should the Employees of the Airline Inustry be expected to subsidize low Fairs for he general Public, and incompatent Managers???" Maybe they should take from the Management's Pensions first!!!!!This is nothing but a attack on the vary people who built this countries transportation system, and an example of the worst kind of greed! :down:

Remember that next time you get the urge to vote Republican!

 

[MCI transplant]

Wing------ That's what I like about you! You always come up with the obvious!!!

 

[FWAAA]

What Congress should be doing is pass a law REQUIRING these LCC's to actually provide a pension for their employees. And while they're at it provide some retiree health benifits too!

I think Congress should pass a law mandating free digital cable for everyone. Plus a free house (and Corvette to go with it).

And free food at all restaurants (plus all the alcohol you want).

And free internet porn.


Seriously, if the employees of LCCs want pensions, they'll demand them, just like millions of other workers have throughout history.

 

[FA Mikey]

I think Congress should pass a law mandating free digital cable for everyone. Plus a free house (and Corvette to go with it).

And free food at all restaurants (plus all the alcohol you want).

And free internet porn.


Seriously, if the employees of LCCs want pensions, they'll demand them, just like millions of other workers have throughout history.

Yea sure, thats why the vast majority of americans live and plan to live off social security. How many non union jobs offer a pension of retiree medical benefits? Cose to none.

 

[FWAAA]

Maybe Congress should just pass a law requiring that all LCCs carry 16 tons of bricks on each aircraft. That ought to hobble them and allow the dinosaur legacy carriers to compete.

 

[WingNaPrayer]

US Congress Republicans Reach Deal On Pension Bill


By John Godfrey, Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--Republicans will present to Congressional negotiators Thursday morning proposed pension legislation that lawmakers and aides say teeters between pushing the White House too far and alienating Democrats.

"We've made a good deal of progress on the pension bill today, and tomorrow we'll present what we think is a fair and responsible proposal," House Education and Workforce Chairman John Boehner, R-Ohio, said Wednesday night.

Democrats were dubious.

"This appears to be a serious step backward from what was discussed just last Friday," said Jim Manley, spokesman for Democrats on the Senate Health, Education, Labor and Pensions Committee.

"It is difficult to imagine anything like this getting through the Senate," Manley said. One Senate Republican aide agreed, guessing that the deal reached among Republicans did too little for Democrats.

Still, Boehner said he hoped the deal "can be the basis for a bipartisan conference agreement that all parties could accept." Congress could then turn its attention to long-term efforts to strengthen the nation's pension system, Boehner said.

The legislation would allow businesses to use a more generous benchmark when calculating their pension liabilities and could save them $80 billion in pension contributions over the next two years.

But the proposal also includes a White House opposed proposal to give a temporary reprieve from pension contributions to some union-sponsored pension plans.

It is the fight over this provision that threatens to derail the entire bill.

These plans, also called multiemployer plans, typically cover union workers who don't work for the same employer on a day-to-day basis - truckers and carpenters, for example. The pensions' terms are collectively bargained, employers make contributions on the employee's behalf, and the fund is jointly managed by the union and the employer.

Democrats estimate the proposal as written by Boehner would help fewer than 4% of multiemployer plans. Republicans and lobbyists say the White House has said unequivocally they could go no further.

Sen. Edward Kennedy, D-Mass., accused the White House of stonewalling. Kennedy said negotiators should keep working to ensure that the bill "helps pension plans at risk in all companies - not just those most favored by this White House."

Under Boehner's proposal the break in contributions would go to multiemployer pension plans that had suffered at least a 10% market loss in 2002 and which were projected to fall into funding deficiency in the next three years.

The break from contributions would be denied to plans that had failed to timely pay any excise tax imposed by the IRS or that had previously received a pension funding waiver from the IRS.

Boehner said the proposal resolves "the multiemployer issue specifically by targeting relief to those plans that are most in need."

Democrats say the proposal should be less short-sighted and apply to plans that are projected to fall into funding deficiency in the next five years.

Kennedy and other proponents - including some Republicans - argue that the payments necessary to make up funding deficiencies will drive some contributing employers into bankruptcy. That will leave remaining employers to take up the slack.

The White House argues that these multiemployer plans are underfunded and already subject to more generous funding requirements than pension plans sponsored by a single employer.

Ten union-sponsored plans covering more than 2.2 million workers are underfunded by at least $27.9 billion, according to the Pension Benefit Guaranty Corporation.

The Central States Teamsters plan has the single largest deficiency, $11.3 billion for a plan covering 459,947 participants. Also in the top 10 are the Sheet Metal Workers National Pension Fund, the New England Teamsters, the Plumbers and Pipefitters National Pension Fund, and the Central Pension Fund of the International Union of Operating Engineers.

A provision giving all multiemployer plans a break in their funding requirements passed the Senate.

With the White House and House GOP leaders opposed, most staff and lobyists had assumed that the provision would be killed quietly in House-Senate negotiations. But the decision by United Parcel Service (UPS) to endorse the proposal gave it new life. UPS is a large contributor to the Teamster pension plans.

Deal Sets New Pension Funding Benchmark

The underlying bill enjoys broad bipartisan support and would allow businesses to use the more generous index of long-term corporate bond rates, instead of the 30-year Treasury bond, as a benchmark in making pension funding calculations.

A temporary replacement of the 30-year Treasury bond - which the government stopped issuing in 2001 - expired in December and business will have to start making pension contributions based upon the now depressed 30-year bond rate on April 15.

With the U.S. House leaving Washington for a two-week recess Friday, negotiators had to reach a deal on the bill Wednesday to get it passed in time.

The bill already includes a break in the pension contributions required of the underfunded pension plans sponsored by airline and steel companies.

Under the agreement announced by Boehner, airline and steel companies would pay just 20% of the required accelerated pension contributions in 2004 and 2005.

The steel provision is expected to benefit Inland Steel, AK Steel Holding Corp.(NYSE:AKS) (AKS), and iron ore miner Cleveland-Cliffs Inc.(NYSE:CLF) (CLF). The airline provision will benefit UAL Corp.(NASDAQ-OTCBB:UALAQ) (UALAQ), parent of United Airlines(NASDAQ-OTCBB:UALAQ) , American Airlines' parent AMR Corp.(NYSE:AMR) (AMR), Delta Air Lines Inc.(NYSEAL) (DAL), Northwest Airlines Corp.(NASDAQ-NMS:NWAC) (NWAC), and Continental Airlines Inc.(NYSE:CAL) (CAL).

Negotiators also agreed to give Greyhound Lines Inc. - a wholly owned subsidiary of Laidlaw International Inc.(NYSE:LI) (LI) - a reprieve on pension contributions to the Amalgamated Transit Union Plan.

 

[Wretched Wrench]

The House has passed a modified version of the bill, allowing our underfunded pensions to be even more underfunded.

http://news.yahoo.com/news?tmpl=story&u=/a...ess_pensions_14

 

[goingboeing]

I think Congress should pass a law mandating free digital cable for everyone. Plus a free house (and Corvette to go with it).

And free food at all restaurants (plus all the alcohol you want).

And free internet porn.


Seriously, if the employees of LCCs want pensions, they'll demand them, just like millions of other workers have throughout history.

Yeah,Remember the now infamous 2003 SEC Filing where the top 42 AMR execs were going to make sure they had their pension if we wound up in Chapter 11.They sure were looking out for the best interests of all AMR employees wern't they? The companies shou;d be FORCED to keep their OBLIGATIONS to their current employees.If they want to drop the defined benefit retirement plan they should do it to all new incoming employees and inform them of that at hiring.Allowing them to change the rules in the middle of the game is immoral to the current employees. It has been proven a 1000 times over that the top management will rob the profits from the company and put the money in their pockets.Remember Enron-Tyco-World Com-ect.ect.--------Allowing the management to forego pension payments will just give them more money for their pockets.

 

[WingNaPrayer]

Its official. While you slept, the federal government bent you over big time!

US Senate Passes Pension Bill Worth $80B



By John Godfrey, OF DOW JONES NEWSWIRES


WASHINGTON (Dow Jones)--The U.S. Senate Thursday passed 78-19 legislation that will save businesses at least $80 billion in pension contributions over the next two years.

Airlines, steel companies, and Greyhound buslines would get an additional break from pension contributions of at least $1.6 billion under the bill.

The White House praised the measure as a "responsible package that will help protect the integrity of workers' pensions." The statement, released by the White House press office, said President George W. Bush plans to sign the bill promptly and one Congressional aide said that could happen as early as this weekend.

The House passed the bill 336-69 on April 2.

The House and Senate votes "demonstrate Congress' commitment to strengthening the retirement security of American workers," House Education and Workforce Committee Chairman John Boehner, R-Ohio, said.

The bill allows businesses to use - until 2006 - a blend of long-term corporate bonds as a benchmark in calculating future pension liabilities, instead of the lower rate set by the 30-year Treasury bond, which the government stopped issuing in 2001.

A temporary benchmark replacement expired in December, and on April 15 businesses will have to make quarterly contributions based upon the 30-year bond rate unless the bill is signed into law.

"I'm relieved we got this bill done," said Senate Finance Committee Chairman Charles Grassley, R-Iowa.

The new benchmark was made more generous than one originally proposed by the Senate by allowing upper-medium-grade bonds, instead of only high-grade bonds, in the index.

As of Wednesday, Moody's Investors Services' unweighted average of long-term corporate yields on AAA, AA and A bonds was 5.89%, compared to its unweighted average of long-term corporate yields on AAA and AA bonds of 5.78%.

The rate on the 30-year bond Wednesday was 5.01%.

Earlier this year, the Pension Benefit Guaranty Corporation estimated that allowing businesses to use an index of high-grade corporate bonds - instead of the 30-year Treasury bond - would save $80 billion in pension contributions over the next two years.

The Bush Administration and several key lawmakers would like businesses to use a more conservative benchmark in the long run, but agreed that the more generous benchmark was appropriate for the next two years given the uncertain state of the economy.

While a number of veto threats had loomed over the bill for the last seven months, the White House has said Bush will sign this version of the bill.

Senate Health, Education, Labor and Pensions Committee Chairman Judd Gregg, R- N.H., said the legislation will allow an extra $80 billion to be invested in new equipment, new hires, and the like instead of being "misallocated within the market place" into already adequately funded pension funds.

The legislation split Democrats. Some backed the bill, while others argued that it had done too little to help union-sponsored pension plans hit by sagging interest rates and market losses.

Union-sponsored, or multiemployer plans, are jointly managed by unions and employers and typically cover people who don't work for the same company on a day-to-day basis, such as carpenters and truckers.

Multiemployer plans are subject to different funding rules than single- employer plans and wouldn't benefit from the move away from the 30-year Treasury bond as a benchmark.

The bill would allow a small percentage of multiemployer plans to put off, for two years, increased contributions required to make up for market losses in 2002. But in the third year, they would be required to make up those foregone contributions with a lump sum payment.

According to the Segal Group Inc. (XSG.XX), less than 1% of the nation's 1,600 multiemployers would qualify for the break. Even fewer might decide the break is worth taking, said Judith Mazo, vice president of the pension consulting firm.

Democrats wanted the break to go to 20% of multiemployer plans, but the White House objected and Congressional Republicans used their majority control to override Democratic objections.

One of the bill's negotiators, Sen. Max Baucus, D-Mont., wanted more relief for multiemployer plans, but voted for the bill anyway.

"It is the best solution we can come up with that will pass by April 15," Baucus said.

Both single-employer and multiemployer pension plans are under pressure from the economy, said Sen. Edward Kennedy, D-Mass.

"The question is whether we are going to treat all employees equally," Kennedy said.

Kennedy and other Democrats accused the White House of having an anti-union bias.

"These are the workers you see on the top of the buildings...the workers you see working in the ditch," Sen. Mary Landrieu, D-La., said. She said they are the people the White House "doesn't like, doesn't want to help, or doesn't ( believe) needs help."

Gregg said union members are covered by many of the single-employer plans helped by changing the 30-year Treasury bond as a benchmark.

Gregg noted that the United Auto Workers and other many other unions are backing the bill.

Bill Includes Special Break For Airlines, Steel

The bill will also give added relief to the single-employer pension plans sponsored by the troubled airline and steel industries.

Those industries will be given a two-year holiday from the steeply accelerated pension contributions required of seriously underfunded pension plans.

Unlike the break for multi-employer plans, businesses who use the holiday wouldn't be required to make a lump sum payment of the foregone contributions.

The funding holiday is expected to benefit Inland Steel, AK Steel Holding Corp.(NYSE:AKS) (AKS) and iron ore miner Cleveland-Cliffs Inc.(NYSE:CLF) (CLF). The PBGC estimates the break will save the companies about $300 million over the next two years.

The airline provision will benefit UAL Corp.(NASDAQ-OTCBB:UALAQ) (UALAQ), parent of United Airlines(NASDAQ-OTCBB:UALAQ) , American Airlines parent AMR Corp.(NYSE:AMR) (AMR), Delta Air Lines Inc.(NYSEAL) (DAL), Northwest Airlines Corp.(NASDAQ-NMS:NWAC) (NWAC) and Continental Airlines Inc.(NYSE:CAL) (CAL). Those companies stand to save about $1.3 billion, PBGC estimates.

The bill would also give Greyhound Lines Inc., a wholly owned subsidiary of Laidlaw International Inc.(NYSE:LI) (LI), a reprieve on pension contributions to the Amalgamated Transit Union Plan.