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House OK's revamp of pension funding rules

WASHINGTON -- Legislation aimed at reinforcing the creaking system of traditional pensions was passed yesterday by the House, but the White House warned it wanted a tougher bill or it might cast a veto.

The measure overhauls funding rules for employer-provided pensions, a fading feature of old-economy firms, and raises premiums companies pay to the federal agency that insures them, the Pension Benefit Guaranty Corp.

Supporters said the bill was needed to fix traditional ''defined benefit" pensions, which as a group are $450 billion underfunded and prevent a taxpayer bailout of the PBGC.

The agency's $22.8 billion deficit already has been swelled by bankruptcy filings in the airline and steel industries. Analysts say more pension plans from the struggling auto industry are likely to land in the PBGC's lap.

The bill imposes penalties on companies shedding pension obligations in bankruptcy.

But Democratic critics said they feared the bill did not do enough to protect workers or save the defined benefit system, which provides a stable monthly paycheck at retirement. It will ''actually worsen the crisis," said California's George Miller.

Still, dozens of Democrats joined majority Republicans in backing the bill after a major union, the United Auto Workers, endorsed it earlier this week. The House vote was 294-132.

The Senate version of the legislation includes special aid for distressed airlines that is not in the House bill. But the House bill sponsor, Ohio Republican John Boehner, said he was committed to dealing with the airline issue during the House-Senate negotiations. Aides said those talks would likely start early next year.

Boehner said the House bill walked a fine line between those who wanted ''suffocating pension funding rules" that would drive employers out of the system and others who favored the status quo that had led to massive pension underfunding. His first goal was to ''make sure that companies that offer defined benefit pension plans continue to keep them."

Both the House and Senate bills phase in the new funding requirements and premium rises over time. The White House seeks a stricter regime of pension funding rules starting next year and said the House bill was too weak.

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