The freeze takes effect Aug. 31. Employees still will receive pension benefits they earned up to this year, but those benefits will not increase. Northwest will implement a defined contribution plan for salaried employees instead.

The fourth-largest U.S. airline wants to freeze all of its pension plans, which are under-funded by $3.8 billion. It is bargaining with unions to make those changes, but the unions have resisted. If Northwest is unable to cut costs, it might face Chapter 11 bankruptcy, which would enable the airline to turn over its pensions to the Pension Benefit Guarantee Corp., as United Airlines and US Airways have done.

Financial pressure on the PBGC has prompted Congress to act. The House Education and Workforce committee approved a bill that would substantially increase the annual pension insurance premiums that employers pay to the PBGC by 58%. The HR Policy Association (http://www.hrpolicy.org/memoranda/2005/05-92_HR2380_Premium_PB.pdf), which represents large employers, says the premium hikes will likely remain in any pension reform that Congress passes, but "it is critical that they not be increased further."