Washington The Senate approved and sent to the White House pension legislation to give millions of Americans a better chance of getting the retirement benefits they've earned while sparing taxpayers from possibly paying for failed pension plans.
The legislation, passed 93-5 late Thursday, also provides new incentives for young workers to enroll in 401(k) plans, reflecting the trend away from traditional employer-based pensions.
"There is little doubt this bill will be the foundation on which the future of our retirement system rests," said Sen. Mike Enzi, R-Wyo., chairman of the Health, Education, Labor and Pensions Committee.
The vote was the last before the Senate leaves for a four-week summer break and gives lawmakers a major accomplishment to speak of when they meet their constituents back home.
"This bill says to millions of Americans who fear their pensions will disappear that help is on the way," said Sen. Edward Kennedy, D-Mass. He noted that in the past five years, some $8 billion in pension savings have been lost as companies terminate their plans, shifting benefit responsibilities onto the federal agency that insures such plans, the Pension Benefit Guaranty Corp.
A vote on the pension bill became possible after leaders from the two parties agreed to put off final action on a $469 billion spending package for the military until September. It followed a vote on the other outstanding issue, an unsuccessful attempt to simultaneously raise the minimum wage and cut inheritance taxes for multimillionaires.
The bill sets new funding rules for employers with defined-benefit pension plans and clamps down on companies that have fallen in arrears in meeting their funding obligations. In order to make a dent in underfunding now estimated at $450 billion, the bill requires plans to be 100 percent funded, up from the current 90 percent level, giving companies seven years to reach that goal.
Plans that are seriously underfunded face restrictions, such as a ban on increasing benefits, and must make accelerated catch-up contributions.