PENSION BILL PASSES SENATE 86-9; BUSH THREATENS TO VETO IT.

By a vote of 86-9, the Senate Jan. 28 passed a bill allowing pension plans to temporarily replace the 30-year Treasury bond rate with a rate based on long-term corporate bonds to determine the amounts they have to set aside for traditional plans. A similar measure passed the House Oct. 8 397 to 2, but the Senate amended the bill to provide special relief for some hard-hit industries and the President is opposed to the Senate changes.

Under the Senate bill, single-employer plans of the airlines and steel industries could qualify for up to 80 percent of relief on the amount they were to pay in 2004 and up to 60 percent in 2005 when their funding for their plans falls below 90 percent of their liabilities, called deficit reduction contributions.

The Senate also would give multiemployer plans common in the trucking and construction industries a two-year delay in amortizing their losses after the Sept. 11 terrorist attacks.

The White House is opposed to the additional relief on grounds it will encourage corporations to underfund their plans and force a taxpayer bailout by dumping the plans on the Pension Benefit Guaranty Corp.

Rep. John Boehner (R-OH), chairman of the House Education and the Workforce Committee, called on Congress "to move quickly to complete action" on the measure" and said he was "pleased that after months of debate, the Senate has approved a key pension interest rate change that the House approved last October."

He said he was committed to producing a final bill that contained "limited and responsible" short-term pension relief "while Congress looks at comprehensive reforms that will strengthen the defined benefit pension system for workers and employers over the long term."

Given the wide margin of support in the Senate for the additional relief, the conferees are expected to maintain the Senate language in the final bill.

If the president vetoed the measure, it would be the first veto of his administration.

But given the broad support from businesses and unions, the president is not expected to carry out his threat to exercise his veto power - and, if he does, the Senate is likely to override it.

There is pressure on both Congress and the White House to get the measure signed into law quickly because, as of Jan. 1, the 30-year rate was reinstated as the rate corporations have to use in determining their mandatory pension-plan contributions. The temporary two-year corporate bond rate expired Dec. 31.

Corporations must make their contributions to their plans by April, and if they are forced to use the 30-year rate they will be required to make much larger contributions than they would under the corporate bond rate.