Pension Funding Legislation Signed Into Law
Author: Debbie Golombek, UAL MEC Government Affairs
The Pension Funding Equity Act of 2004, also known as the Pension Stability Act, was signed into law on April 10, 2004. This legislation was a top priority for us, as it was critical to United Airlines’ effort to emerge from Chapter 11 bankruptcy protection. The new funding formulas will now be used in calculating 2004 and 2005 scheduled pension plan contributions.
This legislation provides a temporary measure of economic stability for companies and employees while Congress works on longer-term comprehensive pension reform. The bill 1) temporarily replaces the 30-year Treasury bond interest rate that employers use to determine their defined benefit pension contributions, 2) provides applicable employers, including commercial passenger airlines, temporary relief from accelerated pension requirements known as deficit reduction contributions and 3) provides pension funding relief to a small percentage of multi-employer pension plans.
Passage of this legislation is welcome news for all us!
Unfortunately while this legislation was a significant victory for single employer defined-benefit pension plans, the final version of pension funding reform legislation contained little help for plans sponsored by more than one employer. Multi-employer plans are common in unionized industries such as construction and trucking and are also a critical source of pensions for employees of small businesses.
The Senate bill, which passed 86-9, provided 100 percent of single-employer plans and 20 percent of multi-employer plans with pension funding relief. The bill left the Senate and went to conference with a majority of Democrats and Republicans working together to provide relief to a larger number of plans. However, the Republican House leadership disregarded the will of the Senate and re-wrote a portion of the Senate passed legislation when the bill was in Conference Committee.
This was another example of the White House politicizing an issue. The Administration strongly opposed including relief for multi-employer plans in the legislation, so once in Conference Committee, the Senate passed bill was changed at the direction of the Administration. Less than 4 percent of the 1600 multi-employer plans, which cover more than 9 million workers, were included in the conference report. The White House had also opposed the amendment added in the Senate that granted additional help for airlines and steelmakers, but Congressional support on this provision was overwhelming, so the conference committee left these provisions alone.
The conference report on pension funding reform was approved in Conference Committee on a party-line vote and then scheduled for a vote in both chambers of Congress.
After a House vote to recommit with instructions to the conference committee failed (195-217) the U.S. House agreed to the conference report on pension funding (336-69). In the Senate, the conference report was agreed to 78-19.
When looking at the votes on the final version of the Pension Funding Equity Act of 2004, do not be surprised when you see many of our friends who voted NO. In most cases, this was not a vote against pension reform legislation or providing airlines with temporary relief from accelerated penalty payments – it was a vote against the conference report.
Many of our friends opposed the conference report because it pitted workers from larger companies against workers from smaller companies and unions with single-employer plans against unions with multi-employer plans.
We should take the time to thank the 86 U.S. Senators who supported the original Senate passed bill and those House members who supported our position on pension funding reform, especially any Member of Congress who responded favorably to your request to support pension funding reform.
The 9 Senators who voted against the original Senate-passed bill were: Chafee (RI), Ensign (NV), Fitzgerald (IL), Inhofe (OK), Kyl (AZ), McCain (AZ), Nickles (OK), Sessions (AL) and Thomas (WY). The Senate vote on the conference report has not been posted yet.
Another barometer of support would be those U.S. House members who co-sponsored H.R. 2719, the Airline Pension Act of 2003. The following U.S. House members, who voted NO on the H.R. 3108 Conference Report, were cosponsors of the Airline Pension Funding: Abercrombie (HI), Ballance (NC) Eshoo (CA), Filner (CA), Frank (MA), Green (TX), Grijalva (AZ), Kaptur (OH), Kennedy (RI), Kucinich (OH), Langevin (RI), Lofgren (CA), McCarthy (NY) McNulty (NY), Myrick (NC), Sanchez, Linda (CA), Watt (NC) and Wexler (FL).
Although the news on pension funding reform is wonderful for us, this is just another example of a bittersweet victory and a “good bill gone bad” in conference committee. Senator Edward Kennedy (MA) remains committed to fighting for fairness for all multi-employer plans.
