After years of debate over a complex pension overhaul bill, the Senate on Thursday overwhelmingly passed a final version --- in time to help financially struggling airlines preserve their pension plans.
The legislation, already approved by the House, is designed to strengthen the insurance system that protects the private pension plans of 44 million workers and retirees, as well as streamline the use of tax-advantaged 401(k) retirement savings plans. President Bush is expected to sign it.
The bill, passed 93-5, will help financially troubled Delta Air Lines and Northwest Airlines by allowing them to stretch out payments to their underfunded pension plans over 17 years, a decade longer than most other companies will get.
"Democrats and Republicans have come together to do what's right," Sen. Johnny Isakson (R-Ga.) said shortly before the vote.
"The winners are tens of thousands of employees in the airline industry."
Delta Chief Executive Gerald Grinstein has said completion of the bill means his company will be more likely to keep its pension promises to 91,000 workers and retirees. Delta's plans, which include a larger one for most employees and a separate one for pilots, were underfunded by $6.4 billion last year.
Earlier this summer, Delta moved to terminate the pilots' plan, saying it was unaffordable.
To preserve its main pension plan, the company had warned, Congress would have to act by early August to lighten the payment burden.
More than two years ago, Congress set out to rewrite the nation's pension rules, especially those governing the Pension Benefit Guaranty Corp., the agency that insures traditional pension plans, which provide a monthly benefit to retirees based on their length of service. Lawmakers want to force companies to set aside enough money to meet all of their pension obligations.
The PBGC's financial stability has been undermined in recent years by a surge in pension defaults, especially among bankrupt steel companies and airlines.
Today, the agency has a $23 billion deficit.
Lawmakers fear that if the PBGC keeps having to absorb unfunded pension obligations, it will collapse, ultimately sticking taxpayers with massive bailout.
To head off that possibility, the bill requires companies to fund 100 percent of their pension promises, up from the current requirement of 90 percent.
On 401(k) plans, the bill makes it easier for workers to enroll as well as get investment advice.
As this week began, some senators were unhappy with the bill's provisions benefiting Delta and Northwest, both of which are in bankruptcy proceedings. The bill would allow airlines in that position to make up pension fund shortfalls over 17 years, but would require them to freeze pension plans to keep funding problems from getting worse over time.
Airlines that do not freeze their pension plans are given a decade to reach full funding, and must use a less generous interest rate assumption to calculate future benefits.
AMR Corp.'s American Airlines and Continental Airlines Inc. suggested the new rules would, in effect, reward weak companies that freeze pensions while imposing tougher rules on healthier companies.
Lawmakers sympathetic to American and Continental wanted to change the bill, but realized that any amendments would throw the package back to the House for final approval. Because the House already has left town for its August recess, it could not have taken action until after Labor Day, threatening the pensions of about 150,000 workers and retirees at Delta and Northwest.
So instead of filing amendments, senators agreed they will pass a "technical corrections" bill in September to tweak the rules enough to satisfy American and Continental, both based in Texas.