US - The House of Representatives may have passed the long-awaited Pension Protection Bill of 2006, but the issue of airline pensions could yet prove a bone of contention as it affords a more generous grace period to certain airlines, some senators have warned.
The House passed the bill on Friday, which was described by House majority leader John Boehner as the most sweeping overhaul to US pension laws in more than 30 years”. He added that conferees had worked out contentious issues like funding, investment advice, and airline relief.
According to the bill, which has been delivered to the Senate, funding relief would be included for the airlines in the form of a longer amortisation period and a higher amortisation interest rate.
Somewhat different rules would apply for airlines that freeze their plans and those that do not, said Boehner - an area that could arguably lead to some conflict.
Under the bill, Northwest Airlines (NWA) and Delta Air Lines would have 17 years to make up the pension deficits because they intend to freeze their plans. But American Airlines and Continental Airlines, who could choose not to freeze their plans, would only have 10 years to reach their targets.
Some senators have thus claimed Delta and NWA would gain an unfair advantage over the others. Senator Charles Grassley told reporters there was a tremendous concern from certain senators, and said the issue still had to be dealt with.
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