Pension Agency Puts Pressure on Congress

THE WALL STREET JOURNAL ^ | January 7, 2005 | MICHAEL SCHROEDER

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WASHINGTON -- With five U.S. airlines in bankruptcy court, financial turbulence is buffeting the federal agency that guarantees workers' pensions...

Yesterday, a bankruptcy court paved the way for US Airways Group Inc. to turn over three employee pension plans to the Pension Benefit Guaranty Corp., at a cost of $2.3 billion to the federal insurance fund.

Also, the PBGC last week took steps to immediately take over the pilots' pension plan at UAL Corp... The takeover is likely to cost the PBGC a total of $1.4 billion...

The agency's growing liabilities...are fueling fears that a taxpayer-funded bailout of the agency is inevitable unless Congress overhauls the pension-insurance system...

To shore up agency revenue, the Bush administration is likely to propose increased premiums for all participating companies... To curb payouts, the administration wants to limit weak companies' ability to make new pension promises. It also may propose making it easier for companies to contribute more to their plans during flush times.

Getting the changes through Congress won't be easy... business groups and labor unions are raising concerns about how far the changes should go. Employer groups and unions say that imposing higher premiums or stiffer rules could prompt some companies to freeze or eliminate pension plans.

"You don't want rules so onerous that they compel" companies to terminate plans, says James Klein, president of the American Benefits Council... He says drastic changes aren't needed because the PBGC has enough money to cover promised benefits for the next several years.

Labor unions want an immediate government bailout. "At the end of the day, the proper course is to have an infusion of general revenues to cover the airline and steel liabilities that the PBGC is going to be taking over," says Alan Reuther, legislative director of the United Auto Workers...

[Brilliant]

Another good example of Congress' incompetence.

[2banana]

Labor unions want an immediate government bailout. "

One day the leadership of labor unions will want well run companies that make a profit as this is the surest course for pensions and health care and jobs for their membership...