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Pension Bill Would Assume Shorter Life Expectancies

May 07, 2003|From Bloomberg News

WASHINGTON — The House of Representatives is considering a bill that would help companies reduce their pension obligations by assuming shorter life expectancies among blue-collar workers.

The bill is likely to be a boon to automakers such as General Motors Corp. by reducing the amount needed to invest for employee retirements.

The lawmakers who wrote the bill have said they want to preserve traditional pensions by preventing companies and unions from being forced to overpay into their systems.

"We want to make sure plans are properly funded," said Rep. Ben Cardin, a Maryland Democrat and co-author of the bill.

Stock market declines in the last three years caused pension funds of companies in the Standard & Poor's 500 index to lose more than $200 billion in value, according to studies by actuaries and investment banks including Credit Suisse First Boston and UBS Warburg. Some companies that assumed investment gains in their pension plans actually realized losses.

Companies with under-funded pension liabilities can be forced to restate earnings or expose their employees to retirement losses.

The House Committee on Ways and Means is likely to act as soon as next week on a draft of the legislation, sought by the United Auto Workers union, allowing pension funds to assume that blue-collar workers live shorter lifetimes.

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