A pension system overhaul bill that Congress is on the verge of completing will close loopholes that have allowed employers to underfund their pension plans while protecting taxpayers from a multibillion-dollar bailout, House Majority Leader John Boehner said Thursday.
Boehner, a chief negotiator in House-Senate talks on the massive bill begun last March, said the goal was to send the bill to the president for his signature as early as next week.
"We don't have an agreement yet but we are very close," Boehner, R-Ohio, said at a news conference.
On Wednesday, after the latest of almost daily meetings on the bill in recent weeks, Senate Health, Education, Labor and Pensions Committee Chairman Michael Enzi, R-Wyo., said he thought that "everything's resolved, pending getting the exact wording."
Aides involved in the talks were more cautious, saying there still were a number of outstanding issues, including the extent of special relief that the Senate wants to give financially struggling airlines and efforts to attach various tax breaks to the bill.
Boehner stressed that the final product will strengthen the current system, under which employer-based defined benefit pension plans are underfunded by an estimated $450 billion and the Pension Benefit Guaranty Corp., the federal agency that insures these plans, is running a $22.8 billion deficit.
The difficulty is how to force companies with underfunded plans to meet their obligations to their workers without driving them to eliminate their plans, shifting the financial burden to the PBGC and, if the situation deteriorates, to taxpayers.
"We have to walk a very fine line if we are going to meet all those goals," Boehner said.
Sen. Max Baucus, D-Mont., the top Democrat on the Senate Finance Committee, said he was generally pleased with the bill. "It's needed protection for workers, for retirees, especially in the wake of Enron. It will help retirement security for employees and that's good."
According to documents supplied by GOP aides, the final bill is expected to require all plans to be 100 percent funded in seven years. Under current law 90 percent funding is regarded as full funding.
A new interest rate is adopted as the means to more accurately measure pension liabilities, and plans that are funded below 80 percent are barred from using credit balances, past contributions to the plans that may have overstated value because of stock market losses.
The bill is also expected to give people with 401(K) and IRA investments greater access to investment advice, a controversial issue because of concerns that some Wall Street companies offering advice might have conflict-of-interest problems.
The legislation encourages savings by including automatic enrollment for 401(K) programs.
It would also restrict the practices of companies giving deferred-compensation payouts to executives of financially troubled companies with at-risk pension plans.
Lynn Dudley, vice president of the American Benefits Council, which represents companies with pension plans, said she still hoped changes would be made in one of the central facets of the legislation, determining the formula for what plans are "at risk" and must increase contributions until they are fully funded.
The concern, she said, is that the proposed formula might capture some plans that are essentially healthy, forcing them to freeze benefits or opt out of their defined-benefit plans. "You don't want to push companies out, particularly companies with a lot of employees close to retirement," she said.
One unresolved issue was whether to give a special break for financially struggling airlines.
Congress has struggled to enact a pension bill for more than a year.
The House could possibly formally approve the legislations Friday, before it departs for its August recess.
The 279-131 vote came only hours before the House was expected to begin a five-week summer break.