Business leaders urged to back Bush pension reform

Labor secretary sees costs climbing for companies

Marilyn Adams USA TODAY Labor Secretary Elaine Chao says U.S. companies with de D ned-bene D t pension plans face sharply higher pension costs next year unless Congress passes “responsible” pension reform by the end of this year. In an interview with USA TODAY, Chao said it “ behooves” the business community to get behind the Bush administration’s tough pension reform proposal that has bogged down in Congress.

Workplace

Unless Congress acts before yearend, the D nancial consequences for companies with pension plans could be “ very bad,” she said. “ It’s imperative that pension reform pass this year,” she said. Private de D ned-bene D t pension plans, which pay retirees a set amount each month, cover 34 million Americans, but many plans are at risk because they are so deeply underfunded. The government’s pension guaranty program, which partially insures pension plans that companies no longer can afford, is running a de D cit in excess of $23 billion. The administration’s pension reform proposal would modestly raise insurance premiums to bolster the insurance program, force companies to accurately report plan assets to the government and employees, and close current loopholes that let employers reduce or skip pension plan payments. The proposal has not been endorsed by a single business organization. Business groups say the ruleswould D nancially hurt some companies or force some employers to stop offering pension plans. Two less rigorous pension reform bills in Congress would worsen the de D cit of the Pension Bene D t Guaranty Corp., according to a PBGC analysis. Movement on those bills has stalled in recent weeks. Chao says the administration opposes Chao: any pension measure that would be weaker than current law and make the deDcit worse. She also said the administration won’t support any move to extend the upcoming expiration of pension relief. Two years ago, Congress gave companies temporary pension relief in the form of a favorable interest rate, the corporate bond rate, for use in calculating pension costs. That relief is set to expire Dec. 31, at which time the rate would revert to that of the 30- year Treasury bond, which returns in February. Using that rate to calculate pension costs would increase the size of total pension liabilities. Exhorts Congress to act

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