WASHINGTON, Jan 20 (Reuters) - U.S. senators hope to vote soon on a plan giving a special two-year break to airlines and other companies with large pension burdens, the chairman of the Senate Finance Committee said on Tuesday.
Despite opposition from the White House, Sen. Charles Grassley said the proposal under discussion would add the special help to a pension bill by House Rep. John Boehner, which is expected to debated on the Senate floor within a few days.
Already passed by the House, the Boehner measure would provide all U.S. companies offering traditional pensions with $25.5 billion in funding relief over two years. Senators want to amend it to include extra relief for companies with severely underfunded pensions, Grassley, an Iowa Republican, said.
The proposal would let the companies pay 20 percent of what they would otherwise owe in "catch-up contributions" to their pension funds in the first year, and 40 percent of what they would otherwise owe in the second year, he said.
"That's the latest offer," Grassley said, stressing the proposal was still under discussion. "I think it does cover some other companies," not just airlines, he added, although he did not name the other companies, or give a figure for the overall amount of proposed relief.
Speaking outside the Senate, Grassley said the administration of President George W. Bush opposed the extra pension relief, but: "I think we can convince them that we gotta do something, and maybe moderate to some extent what some members would want to do."
Senate Commerce Committee Chairman John McCain on Tuesday said he opposed the special pension for airlines but wanted hearings on the overall state of the airline industry.
Although an extra break for airlines and other companies was not part of Boehner's bill, the House has passed another bill with similar relief, and the idea has influential backers in both chambers of Congress. Disagreements among senators prevented it from coming to the floor last year.
Low interest rates and often lackluster stock prices have combined to increase the liabilities of traditional "defined benefit" pension plans with a fixed payout at retirement.
Nationwide these pensions are underfunded by about $350 billion, the government estimates. Older airlines are among the hardest hit.
The head of the federal agency that insures pensions warned lawmakers last week not to give special breaks to companies with badly underfunded pensions, saying this makes the pension crunch worse and threatens the agency's future. The Pension Benefit Guaranty Corporation already has a deficit of $11.2 billion.