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To: pallmer who wrote (9252)	11/25/2003 1:29:34 PM
From: pallmer	Read Replies (1) \| Respond to of 29601

25 Nov 2003 13:27 ET =DJ US Senators Seek Last-Minute Pension Funding Bill By John Godfrey Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Key U.S. senators scrambled Tuesday to complete work on legislation that would give businesses a substantial break on their pension contributions in 2004 and 2005. The proposal would allow businesses over the next two years to use a rate based on investment-grade corporate bonds when making pension calculations. Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Senate Health, Education, Labor and Pension Committee Chairman Judd Gregg, R-N.H., have been working on a compromise for weeks. Grassley told reporters he is trying to get agreement from fellow senators to move the bill Tuesday. "It hasn't been worked out yet," Grassley said. "It may be worked out by this afternoon." If the bill were passed by the Senate on Tuesday, it could be approved by the House of Representatives when it returns briefly to work in December. The House's vote could then send the measure to the president for his possible signature. Passage of the bill Tuesday is critical because Senate party leaders have said the Senate will close its doors for the year at the end of the day. Failure to pass the bill might not be felt immediately by most companies, which make pension fund contributions on a quarterly basis, said one Senate aide. But the bill would be particularly important to UAL Corp. (UALAQ), parent of United Airlines, which is in the midst of bankruptcy proceedings where its pension liability is of key concern. United had hoped to emerge from bankruptcy sometime in mid-2004. In bankruptcy court proceedings Friday, United attorney James Sprayregen said United wants to meet its pension obligations and is pursuing several tracks - including the proposed legislation - to resolve the situation. "We are emphatically not seeking government aid or asking the government to take over our obligations," Sprayregen said. AMR Corp. (AMR), parent to American Airlines, Delta Air Lines Inc. (DAL), Northwest Airlines Corp. (NWAC), and Continental Airlines Inc. (CAL) have joined United in forming a coalition to ask for pension funding relief. Grassley and Gregg previously had been seeking a three-year version of the plan. A two-year version has been pushed by House Education and Workforce Committee Chairman John Boehner, R-Ohio, and House Ways and Means Committee Chairman Bill Thomas, R-Calif. The rate would replace the 30-year Treasury bond in pension liability calculations, saving businesses at least $16 billion in pension contributions in 2004, according to the Pension Benefit Guarantee Corporation. The 30-year Treasury bond is no longer issued and rates on the security have been steadily declining. A temporary replacement of the rate is set to expire at year's end. The proposal would also provide a two-year break on "deficit reduction contributions," or DRC, accelerated payments required of employers with substantially underfunded pension plans. The DRC proposal is a stricter version of a plan approved by the House last week, but unlike the House version would be available to all businesses, and not just airlines. Under the House plan, in 2004 and 2005 DRC payments would be reduced to 20% of the amount otherwise required by law for airlines. The Senate Finance Committee proposal would reduce payments to the greater of 20% of the current DRC or the expected increase in the pension's liability for the year. The proposal would prevent already underfunded pension plans from sinking further into financial ill health. The Bush Administration has adamantly opposed any DRC relief. The nation's pension plans are already dangerously underfunded and a DRC holiday would only make the situation worse, the White House says. Treasury Secretary John Snow, Commerce Secretary Don Evans and Labor Secretary Elaine Chao have written Congressional leaders to warn that the pension funding relief from a DRC holiday would be "concentrated in the very plans that pose the highest risk of termination." If a pension plan can no longer reasonably expect to meet its pension liabilities, it can terminate, leaving the Pension Benefit Guaranty Corporation to pay the plan's pension benefits. The Senate pension proposal would also give multi-employer pension plans a two-year break on catch-up payments. But it would also require those plans to provide plan participants with information about the pension plan's solvency. Multi-employer pension plan sponsors have strenuously opposed financial disclosure requirements in the past. -By John Godfrey, Dow Jones Newswires; 202-862-6601; John.Godfrey@dowjones.com (END) Dow Jones Newswires November 25, 2003 13:27 ET (18:27 GMT)