PENSION PROBLEMS

House and Senate negotiators have been trying for months to find agreement on a complicated bill to strengthen the quasi-governmental agency that ensures pension plans and pays out benefits when plans default. The airlines’ ability to fund their pensions has been one sticking point; this week, when agreement seemed close, Senate negotiators found another by trying to include estate-tax provisions as a last-minute add on. Sen. Olympia Snowe properly concluded the amendment would wreck the bill in addition to increasing the deficit.

Her vote was crucial, and by standing up to Senate leadership she demonstrated she was willing to put the good of the process ahead of a quick vote on estate taxes, an issue that stalled in Congress earlier this year. The senator deserves credit for stopping a flawed procedural maneuver that voters generally were not watching and to which they likely would not have reacted had she simply gone along.

The pension bill, however, has plenty of people watching. The Pension Benefit Guaranty Corp. is $23 billion in debt; pensions are underfunded by $450 billion. Whatever version of reform comes out of Congress, it will likely demand that companies put more aside, perhaps a full dollar put in trust for every dollar they have promised employees, up from 90 cents now. And those companies that are underfunding pensions no longer will have 30 years to make up the difference but seven. Employees could receive more detailed information about the status of their plan under the bills being considered.

Critics of the legislation worry that the tougher standards will discourage companies from offering pensions at all or that it will send them into bankruptcy to avoid payment of current obligations. The Pension Benefit Guaranty Corp. itself this week concluded the legislation would cost the corporation about $2 billion more than the current rules between 2007 and 2016.

Those are understandable and potentially costly concerns, issues that Congress has tried with partial success to address as its members have worked on the bill. More important, they are balanced against closing loopholes on the way businesses fund or fail to fund pensions, ensuring employees receive their promised pensions and proving greater protections to taxpayers.

The airline industry, which has lobbied Congress like no other on this issue, may have gotten all it could. Instead of seven years to be meet their pension debt, they may get 20, extracted from Congress under the threat that a refusal would cause them to cancel their benefit plans for all employees, as already has been done in parts of the industry. This is a poor way to construct legislation.

Legislation as far-reaching as the pension bill, which also includes standards for deferred compensation and how to regard obligations under those 401(k)s, is certain to have flaws, and this is no exception. But even if the bill is not yet ready to pass Congress, Congress is ready to pass a bill. And then they and everyone else will hope the good parts of the bill will outweigh what are some clear deficiencies.