Reforms of pension funding rules pass House & Senate -spring conference

is next, although House and Senate policymakers can begin once Congress returns in January.

On November 15, the U.S. House of Representatives passed, by a vote of 294-132, the Pension Protection Act of 2005 (H.R. 2830), a bill that reforms the pension funding rules. The bill would tighten the rules governing how companies fund their pension plans, including requiring the use of a modified yield curve to measure pension liabilities, designating a seven-year amortization period, and requiring employers to fund up to 100 percent of their pension liabilities. The United Auto Workers (UAW) agreed to support the measure after the chairmen agreed to change provisions of the bill that had concerned the labor group. Namely, the agreement would phase in over five years, a rule preventing companies with plans that are less than 80 percent funded from increasing benefits promised to plan participants. Under the previous version of the bill, the rule would have taken effect right away. Additionally, the agreement would allow companies to pay so-called shutdown benefits from pension plan assets if the plan is at least 80 percent funded. The bill would also create a premium for employers who terminate their pension plans on an involuntary basis.

The Senate passed its pension legislation (S 1783) on November 16 by a vote of 97-2.

Both the House and Senate measures would force companies to better fund their pension plans, by adjusting the way they determine plan liabilities and the amount of time companies would have to make up plan under-funding. Both measures also call for an increase in plan funding and strengthening the financial condition of the Pension Benefit Guaranty Corporation (PBGC); the premium requirements differ slightly between the two bills. The measures contain many additional elements that will have to be reconciled, including (but not limited to):

▪ Airline-specific pension relief, which is included in the Senate bill but not in the House bill;
▪ The timeframe of the “smoothing” period for valuing plan assets and liabilities, which varies between the House (3 years) and Senate (1 year) bills;
▪ Language that would tie a company’s adverse credit rating to whether its pension plan is “at-risk,” which is included in the Senate bill but not in the House bill, and
▪ Language regarding the use of credit balances, which varies between the two bills. The House requires a sponsor to burn the credit balance in order to count it as assets for various threshold rules; mandatory if under 60 percent.

The text of H.R. 2830 can be found at (edworkforce.house.gov/hr2830.PDF) and the text of S. 1783 is available at (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s1783pcs.txt.pdf)

what does tht mean? they will be exempt from protecting their pensions or their pensions will be better protected?
Airlines have become a peculiar peeve with me recently, namely the big dinosaur airlines.