President Bush is threatening to veto a long, complicated pension reform bill approved by the Senate Wednesday because he believes it will give certain airlines too much time to make up pension plan shortfalls.
Lobbyists are not sure whether the current bill or a revised version has much chance of passing before the end of the year, but they have been studying the text of the Senate bill, S. 1783, closely.
The current version of S. 1783 would:
- Prohibit employers from using corporate-owned life insurance to benefit from the deaths of rank-and-file employees who have left long ago.
- Encourage employers to provide "the safest available annuity."
- Encourage employers to enroll employees in
401(k)s automatically.
- Create the "DB(k)," a new pension arrangement combining features of traditional defined benefit plans and 401(k) defined contribution plans.
Insurance groups are supporting the S. 1783 COLI provision.
Employers buy COLI both to protect against the cost of losing key employees and to generate streams of death benefits that can be used to fund employee benefit plans.
The S. 1783 COLI provision would limit employers to insuring current employees and to insuring former employees who were directors or highly compensated employees or highly compensated individuals when the COLI policies were issued.
The S. 1783 COLI provision also would:
- Define "highly compensated employees" as employees who earn at least $90,000 per year.
- Define "highly compensated individuals" as individuals who rank among the top 35% of a company's employees in terms of compensation.
