WASHINGTON, D.C. - The U.S. House on Dec. 14 approved legislation to reduce the deficit of the federal government's pension insurer and to pressure companies into fully funding their pension obligations.

The Senate approved a similar bill in November, and Congress hopes to send a final version of the bill to President Bush this month. The bill passed the House 294-132, a vote which reflects a desire to fix the nation's broken pension system - but a lack of a consensus as to how to do it.

Rep. Sander Levin of Michigan, a senior Democrat on the House Ways and Means Committee, told USA Today that he believed the bill would impact negatively on manufacturers, "both in terms of the short-term competitiveness of companies and the long-term terminations of worker pensions."

The Republican-sponsored bill would set fiscal milestones to allow companies with underfunded pension plans to catch up. The plans would have to be 100 percent funded during a five-year phase-in program that would start in 2007. Accounting procedures would also be tightened to prevent future shortfalls. Defined-benefit plans are now underfunded by an estimated $450 billion.

The federal agency which insures pension plans for 44 million workers, the Pension Benefit Guaranty Corporation (PBGC), currently has a deficit of $22.8 billion. A premium increase for employers would help lower that deficit. The shortfall has led to fears that taxpayers would have to bail out the PBGC, a la the savings and loan fiasco.

Rep. John Boehner (R-Ohio), who sponsored the bill, said "for too long, outdated pension laws have allowed companies to under-fund their employees' plans, often as they've promised more extravagant benefits. The Pension Protection Act closes loopholes in the law and ensures that employers fully fund the benefits they promise workers."

John Tesija, a funds attorney for a dozen Michigan-based building trades pension plans, said the great majority of this legislation is aimed at shoring up single-employer plans for companies like bankrupt steelmakers, or GM.

"I'm not saying there aren't problems, but the multi-employer plans that cover the building trades unions are much more conservatively managed, and are in much better shape, than single-employer pension plans," Tesija said.

A portion of this legislation that would affect multi-employer pensions would set mileposts for how funds are managed. Tesija said if a pension plan is less than 80 percent funded, benefits could not be increased. If a plan falls under 60 percent funding, "all kinds of bad things would happen," he said, most of them involving tightening up of the bookkeeping of plans. Tesija said most building trades pension plans are funded over 90 percent.

The UAW offered its approval of the plan. But Rep. George Miller (D-Calif.), the ranking member on the House Education and Workforce Committee, said, "I know that some businesses and some labor unions managed to get things in this bill that were important to them. But this bill affects all Americans, not just those organizations, and the majority of Americans with pensions or the hopes of having a pension are going to be seriously harmed if this bill becomes law."

"This bill makes pensions less secure," he added. "It increases the chances that more companies will freeze their pension plans and does nothing about companies that plan to dump their pension plans onto the federal government at the expense of taxpayers and employees."

The Bush Administration has threatened to veto the measure, said the Wall Street Journal, claiming it does not sufficiently pressure companies to keep their pension obligations funded.