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Agreement reached on pension legislation

But bailout for airlines threatens to ground deal

WASHINGTON -- Congressional negotiators said yesterday they had agreed on legislation to restore health to the nation's enfeebled employer-based pension system and ensure the retirement benefits of tens of millions of people.

``I think everything's resolved, pending getting the exact wording," Senator Michael Enzi, a Wyoming Republican and chairman of the Health, Education, Labor and Pensions Committee, said.

However, aides familiar with the negotiations cautioned that they still hadn't reached agreement on all aspects of the bill, although they should be able to nail down a deal this week. One still-hanging issue was the Senate-backed proposal to give special relief to financially troubled airlines.

The tentative deal, a product of months of slow-moving talks between the two chambers, would impose stricter rules on companies that fall behind in contributions to defined-benefit plans, a key source of retirement income for 44 million Americans.

The challenge has been how to bring more discipline into a single-employer pension system now underfunded by an estimated $450 billion, without driving companies to declare bankruptcy and dump their future obligations on the Pension Benefit Guaranty Corp., which insures such plans.

Lawmakers negotiating the bill released few details, saying they would meet again today to ensure there were no discrepancies in their agreement.

But it was expected to give specific relief to airline companies that are on the verge of defaulting and unloading their plans on the PBGC, which is already running a $22.8 billion deficit. These airlines would be given more time to put their pension plans on a sound footing.

The chief executives of Northwest Airlines Corp. and Delta Air Lines Inc. earlier yesterday urged Congress to pass the long-stalled legislation, warning that they could be forced to terminate their pension plans without congressional action.

``A further delay is a functional equivalent of no," Douglas Steenland, president and CEO of Northwest, said at a Capitol Hill news conference.

The White House issued veto threats, saying President Bush would not accept any bill that weakened the long-term financial status of the retirement plans. Negotiators gave assurances that they had answered the administration's concerns.

Among the issues were how to determine when a company is at risk of underfunding its pension plan, triggering a process where the company must increase its contributions until the plan is fully funded.

Other topics included how to give legal status to cash-balance plans, hybrids of defined-benefit and 401(K)-type plans that have been challenged in court over age discrimination issues, and how to strengthen multiemployer plans sponsored by companies and labor unions.

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