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Pension Legislation Gaining Momentum

With pension reform proposals gaining steam in both houses of Congress, lobbyists whose clients have a stake in the matter — particularly airlines — are working hard to get industry-specific measures included in those bills.

The focus on pension reform has intensified recently with the news that United Airlines, a major carrier operating in bankruptcy, has terminated its defined-benefit pension plan, leaving retirees to collect a fraction of what they were promised from a federal government insurance program known as the Pension Benefits Guaranty Corporation.

But while House Education and the Workforce Chairman John Boehner (R-Ohio) and other lawmakers have taken up pension reform as a way of stabilizing employer-sponsored pensions and shoring up the PBGC, lobbyists who are seeking particular fixes for individual sectors could face an uphill battle.

Carlos Bonilla, a senior vice president at the Washington Group who served as the White House’s liaison to the PBGC, handles his firm’s aviation and pension portfolios. Bonilla said that Boehner made it clear that he didn’t want industry-specific measures in his pension bill, though he has indicated that he might be willing to accept some proposals in conference.

The Boehner bill, free of industry-specific measures, has been approved by the committee and will likely be taken up shortly by the Ways and Means Committee, where it could become one part of a larger retirement-security package pushed by Chairman Bill Thomas.

A spokesman for the House Education and the Workforce Committee said that Boehner has publicly expressed his support for including the pension measure in a larger retirement package to be sponsored by Thomas. But, he added, Boehner has also said the bill could move as a stand-alone measure, if needed.

Sen. Chuck Grassley (R-Iowa), who heads Senate Finance Committee, has indicated that he would consider industry-specific relief in his final bill.

“I think the focus for most everyone right now is to get” that industry-specific relief into either the House or Senate version, Bonilla said, in hopes that it will then make it into the final law.

The airlines in particular are looking for legislation that would deal specifically with their pension woes. Air carriers are drawing on United’s pension collapse to urge lawmakers to give them more time to pay into their pensions.

Scott Yohe, an in-house lobbyist for Delta Air Lines, said that “what we’re looking to do is try to get a transition rule that would allow us to deal with the very large funding requirements we’ve got in the near term … and prevent the tragedy that occurred at United and USAirways.”

But, he added, “We’re not looking for a bailout or a dime from the government.”

A lobbyist at the Air Line Pilots Association, a union, said that his group supports identical bills in the House and Senate that would give the airlines a longer period of time to pay off the unfunded liabilities they have in their pension plans. The bill is sponsored by Sen. Johnny Isakson (R-Ga.) in the Senate and by Rep. Tom Price (R-Ga.) in the House.

“The Boehner bill doesn’t have anything in there that would benefit the airline industry,” said the Air Line Pilots Association lobbyist, who requested anonymity.

His union, which is working hand-in-hand with the airlines on the issue, plans to push hard for such airline-specific measures in a final retirement security bill.

In most cases, union groups and the employers they work for have taken the same position on pension legislation: Neither wants the pension plans to bankrupt the companies.

“A lot of the debate has focused around the fact that these are still voluntary programs, so there’s this tension between strengthening the funding rules to protect the pensions [and] at the same time not making them so onerous that it discourages employers from offering defined benefit pension plans,” said a lobbyist for a major company.

Stephanie Silverman, a principal with Venn Strategies, represents a group of companies owned by employee stock ownership plans.

Her client wants to make sure that if Congress were to mandate diversification for employee stock plans, it doesn’t accidentally force the privately held ESOP employees to sell their shares.

Otherwise, Silverman said, “effectively you could bankrupt the company.”

Silverman said that one of the major challenges with pension reform is the delicate balance between enforcing strong pension plans and allowing the companies to stay financially healthy. “The risk is that they run the companies out of business,” she said.

Chris Preuss, a spokesman in the Washington office of General Motors Corp., said his company has been vocal about the need for pension reform.

But, “unfortunately, many of the prescriptive approaches to save pensions are in the long-term likely to do more damage. Companies like GM that are acting responsibly, who have funded their pensions, are being asked essentially to pay for the companies that have dumped their pension plans.”

One of the key things that employers such as GM would like is increased flexibility in how much money they can pay into their pensions, and on what schedule.

Tita Freeman, a spokeswoman for the Business Roundtable, said, “We need a bill that allows companies to strike a balance between maintaining their defined-benefit programs and being able to fuel the economy.”

Freeman added that the BRT finds Boehner’s bill a “step in the right direction.”

BRT lobbyists, Freeman said, have met with Members and staffers on the Senate Finance and Health, Education, Labor and Pensions committees and with House Ways and Means and Education and the Workforce committees as well as with the Labor and Treasury departments.

“There are 23 million retired people that rely on pensions,” she said. “That’s a major driver of the economy. What we’re looking at here is a comprehensive overhaul of the pension system, and it has to be done collaboratively with the administration, Congress and the business community.”