Bush Signs Corporate Pension Aid Bill Into Law

From Reuters

April 11, 2004

CRAWFORD, Texas — President Bush signed into law Saturday a measure aimed at saving U.S. companies more than $80 billion in pension contributions over two years, days before many firms make quarterly payments.

Businesses lobbied hard for the bill, which would provide about $80 billion in pension accounting relief through the end of 2005 for some 31,000 companies with traditional "defined benefit" pension plans. Those cover about 35 million workers and promise a specific payout based on salary and service.

Many traditional pension plans are underfunded because of the weak stock market the last few years and current low interest rates, and companies are struggling to keep up with the payments as profits have shrunk in part because of the struggling economy.

The relief comes from replacing a formula for calculating pension contributions. None of the aid comes from government payments.

The law goes into effect in time for the next round of payments, set for Thursday, and is intended as a temporary measure to help keep plans afloat while Congress works on longer-term pension reform.

There would also be $1.6 billion in extra relief through waivers of payments for a handful of steel companies and major U.S. commercial airlines particularly hard hit in recent years, such as bankrupt United Airlines, a unit of UAL Corp. These companies would receive waivers for payments.

Some Democrats were angered by the legislation because it contained little help for plans sponsored by more than one employer, which cover mostly union workers like in the construction and trucking industries.

Massachusetts Democratic Sen. Edward M. Kennedy said fewer than 4% of the 1,600 multi-employer plans, which cover more than 9 million workers, now qualify for help.