Snow will head Treasury, vows to study pension rule

WASHINGTON -- The Senate approved President Bush's nomination of John Snow as treasury secretary Thursday night after the railroad executive gave assurances he would review a department rule on pensions that opponents contend discriminates against older workers.

The nomination of the administration's top economic spokesman was approved by voice vote after many senators had already left the Capitol to begin a long three-day weekend.

Snow, the head of railroad giant CSX Corp. for the past 14 years, was picked by Bush last month to be his new treasury secretary after the ouster of Paul O'Neill in a shakeup of the administration's economic team.

The administration had pushed for a quick Senate vote, hoping to have Snow on the job by Monday, when Bush will send Congress his new budget.

Snow's nomination won approval after the CSX executive held a 40-minute meeting with Sens. Tom Harkin, D-Iowa, and Dick Durbin, D-Ill., who had blocked the nomination from being taken up by the full Senate until they had a chance to air their grievances with Snow over the pension issue.

The two want the government to implement a rule that would prohibit companies from forcing workers out of so-called defined benefit plans into "cash balance" pension plans. Many companies have been adopting the new type of pension to cut costs.

The two senators said Snow gave no assurances on what shape the final Treasury rule would take but did pledge to keep the current moratorium on forced conversions in place until a final rule is implemented.

Treasury Department spokesman Robert Nichols said that Snow "agreed that it was an important issue and said he would treat it with an open mind and be objective and fair."

Durbin said he was satisfied with Snow's assurances, saying Snow had recounted in the meeting that CSX employees had been given the choice of sticking with their current plans or switching to the new cash benefit programs and that the same options were offered at other companies where Snow served on the board of directors.

Harkin, in a speech on the Senate floor explaining why he had delayed the vote, said that more than 200 members of the House and Senate had signed a letter to Bush urging the administration to withdraw the Treasury rule and replace it with one that is more fair.

Many large companies have moved in recent years to adopt cash balance pension program as a way to save money. While the plans offer better benefits for younger and shorter-tenured workers, they can penalize older workers.

Opponents contend that forcing workers to convert to the new plans violates federal age discrimination laws. Late last year, however, the Treasury Department issued proposed regulations that would state specifically that such conversions are not discriminatory. Adoption of the Treasury rule would have ended a moratorium that has been in effect for more than two years that prevented companies from forcing employees out of current pension plans into the cash benefit programs.

The pension rules would guide companies when they convert traditional plans to cash balance plans, helping them avoid age-discrimination lawsuits. Plan conversions typically mean less money for workers close to retirement age and have led to lawsuits.

Workers in a cash balance plan traditionally get a percentage of their annual salary that can be paid out as a lump sum or as an annuity when they leave. Unlike a 401(k) plan, workers neither own the accounts nor make investment decisions. Unlike a traditional pension plan, the worker does not get annual benefits from the company after retiring.

Cash balance plans are cheaper to administer and attract younger workers because of their portability, pension experts say.

The Finance Committee, which approved the nomination only two days after Snow's confirmation hearing, also released more documents with Snow's replies to questions on policy issues.

Snow's net worth has been estimated at around $100-million, making him one of the wealthiest Cabinet members.

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