Pension Funding Legislation Update
Author: Debbie Golombek, UAL MEC Government Affairs Committee
Although the U. S. Senate passed an amended version of H.R. 3108, the Pension Funding Equity bill, last month, by a vote of 86-9, there are still two obstacles to overcome. One, a conference committee (conference committees are formed to reconcile differences in legislation passed by the Senate and the House) and two, a threatened White House veto. As we are all aware, pension funding legislation is extremely important for United Airlines to update their business plan to emerge from bankruptcy.
Last week, the U.S. Senate approved three Republicans and two Democrats to negotiate a final version of pension funding legislation and asked the House to agree to a conference. The Senate conferees are Charles Grassley (R-IA), Judd Gregg (R-NH), Mitch McConnell (R-KY), Max Baucus (D-MT) and Edward Kennedy (D-MA).
House Ways and Means Committee Chairman, Bill Thomas (R-CA) suggested that he is not eager to hold a conference with Senate negotiators. Congressman Thomas’s position on the bill is significant because he is one of two House GOP leaders responsible for managing a conference. The other is Congressman John Boehner (R-OH) he is the original sponsor of H.R. 3108.
The House passed its pension bill, H.R. 3108, in October 2003, which temporarily replaces the 30-year Treasury rate with a rate based on long-term corporate bonds, for certain pension plan funding requirements. The current pension funding formula is tied to the 30-year Treasury bond, which has fallen below 5% recently, partly because the government no longer issues this security. The legislation would require the Treasury Department to put into place new pension funding rules for 2004 and 2005, tied to corporate bond yields.
The Senate amended the legislation and added special relief for airlines and steelmakers, to reduce deficit reduction contributions (DRC’s) by 80% the first year and 60% the second year.
The two-year limit to the bill is aimed at giving Congress time to come up with a longer term approach to pension funding and the problem of companies that under-fund or abandon their defined benefit pension plans, which currently cover more than 43 million workers.
House Speaker Hastert must now appoint House conferees to negotiate the final language for pension funding legislation. Greg Davidowitch, UAL MEC President, has written to Speaker Hastert urging the Speaker to appoint House conferees once the House returns from recess.
If you have any questions, please contact me legislative@unitedafa.org. Thank you.
