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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (Jan. 29, 2004)
ation HE BATTALION 9A Thursday, January 29, 2004 nati fl'TAll ien Is senate approves legislation for employer pensions ises "Pubic s has P iorolirrp 9 By Jim Abrams THE ASSOCIATED PRESS WASHINGTON — The Senate, act- ; with rare election-year concord, a bill Wednesday to reduce by 1)6 billion the payments companies will have to make into their pension ans this year and next. Sponsors said the measure, passed 86- will help preserve pension benefits for illions of workers by discouraging t|iancially strapped companies from ter- inating plans as no longer affordable. "Our pension plans are being battered |)\ a perfect storm of declining interest iltes, stock market declines and a weak J onomy,” said Sen. Edward Kennedy, D- llass. The bill, he said, “will help the lird-earned pensions of millions of I mericans to weather this storm.’’ The Senate must still work out dif- •rences with the House, which passed 'ate wii m ji ar legislation late last year, and answer administration objections to a collesi J ovision that would excuse airlines theyca lid steelmakers with chronic pension Fryv. I iderfunding problems from $16 bil- ents n I an in catch-up payments, degree'! For thousands of companies, speed onalojp cruc ' a *' They face huge increases in goti,n Payments to their pension funds if the acII as! ieasurc doesn't become law- by April, g-y ■ "A lot of companies have suffered" . co |i B ready as a result of congressional trove mftl a y, saK * Ly nn Dudley, vice president o the American Benefits Council, a business group representing employers "^“Tid retirement-plan providers. She said her group’s “members are withholding opening plants, not increasing new hires and avoiding improvements to their programs until they know what their liabilities are.” Unions have also lobbied for the leg islation. Although the legislation will result in smaller payments to pension funds over the short run, it gives some financial breathing space to companies that might otherwise go bankrupt, lay off workers, freeze their pension plans or renege on the promised benefits. Failed pension plans are turned over to the Pension Benefit Guaranty Corp., a government agency that insures pen sions for some 44 million people in more than 30,000 defined-benefit pen sion plans. The PBGC finances itself with pre miums it assesses pension plan spon sors, in much the same way the Federal Deposit Insurance Corp. collects pre miums from banks and thrift institu tions to insure their depositors. Last year the PBGC took over 152 bankrupt single-employer pension plans cover ing 206,000 people, and saw its deficit rise to a record $11.2 billion. Workers may lose a portion of their benefits when the PBGC becomes trustee of a plan. For example, the agency announced Wednesday it was taking over the plan of a bankrupt North Carolina construction company with 6,300 work ers, pension plan assets of $95 million and benefit promises totaling $215 mil lion. The PBGC estimated it will end up assuming $104 million of the $120 mil- Senates buys time for pension reform The Senate passed legislation Wednesday that is a short-term, two-year fix to protect employers from what could become artificially inflated pension contributions. Employees participating in defined benefit pension plans Total workers Private sector workers I L r>F 38.0 21.9 41.6 1 1981 •91 '93 ’95 97 SOURCE: Department of Labor AP lion shortfall, with the rest made up by lower retiree benefits. Pension plans are in crisis partly because contributions have been tied to the interest rate on 30-year Treasury bonds. But the Treasury Department stopped issuing the bonds in 2001 and interest rates fell precipitously, produc ing smaller returns on pension plan investments. Underfunding of pension plans is now estimated to total $350 bil lion nationwide. The Senate bill would establish a new formula that would myke contribu tions dependent on the investment return from a blend of corporate bond index rates. The PBGC says that will save companies $80 billion over the next two years while Congress and the administration work on long-term over haul of the pension system. The measure is particularly impor tant to mature industries such as auto mobiles, where retirees at some compa nies outnumber current employees. General Motors Corp., for example, has 25 retirees for every 10 active employ ees and will have to pay out $6 billion in pension benefits this year. The bill also gives relief and requires greater transparency for unions and others involved in multi-employer pension plans. Its most controversial provision sin gles out airlines and steelmakers, among others who have chronically underfunded plans, for special breaks. Currently, such companies must make deficit reduction contributions, above their normal payments, to reduce their underfunded amounts. The bill would allow these employers to pay only 20 percent of their required catch up pay in 2004, and 40 percent in 2005. The three Cabinet secretaries who make up the board of the PBGC, Elaine Chao of Labor, John Snow of Treasury and Donald Evans of Commerce, said last week they would recommend a presidential veto if this provision remained in the bill. NEWS IN BRIEF Leaders praise energy industry, encourage diversified sources AUSTIN (AP) — The state’s top politi cal leaders on Wednesday described their vision for a Texas where wind tur bines work alongside gas wells to cre ate clean and sustainable power for the state and the nation. Gov. Rick Perry and Lt. Gov. David Dewhurst opened the 54th annual Texas Railroad Commission's State of the Industry meeting with praise for what they called the backbone of the state’s economy. They also called on industry leaders to explore new ener gy sources. “Through our focus on the develop ment of clean energy, diversification of energy supplies and a greater emphasis on energy conservation, we can lower prices for consumers, we can create thousands of new jobs and we can make Texas and America less dependent on that foreign supply of oil," Perry said. Energy producers, distributors and government regulators met Wednesday amid a strong energy market buoyed by the worldwide stabilization of natural gas and crude oil prices and increasing demand for energy. “Overall, the energy industry is very bright for Texas,” said Ron Kitchens, exec utive director of the commission. "There’s also a lot of interest in new sources of energy, such as LNG (liquefied natural gas), wind power and fuel cells." Overcome Fear, Anxiety and Nervousness Speak with More Confidence and Power Learn Proven Effective Tips & Techniques 3 Hr. How-to Seminar for College Students ■stss/Tlass a Special Bates irennuu $39 «0’ COLLEGE STATION CONFERENCE CENTER 1300 GEORGE BUSH OR 313 S. 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