Legislation approved by Congress could help undermine the future of traditional pensions if companies balk at tougher rules for maintaining them, financial and other experts say.

Airlines, autos and other big manufacturers are the industries most affected by the first overhaul of pension funding rules in 30 years, approved by the Senate on Thursday and sent to President George W. Bush for his signature.

Dorothy Coleman, vice president of tax and domestic economic policy for the National Association of Manufacturers, called the changes a mixed bag.

The new law, interpreted by many as a savior for traditional defined benefit plans and the 34 million people they cover, would make companies fully fund them in seven years, beginning in 2008. Expensive employer-sponsored plans offer fixed and secure payouts in retirement.

Nationally the government says defined benefit plans are underfunded by $450 billion. The American Academy of Actuaries says the figure is outdated and estimates it at less than $200 billion.

For businesses where pension liabilities outpace assets, stricter cash contribution requirements could be burdensome unless interest rates and investments that also nourish pension accounts provide strong, consistent returns.

Coleman said the dust has to settle but the new pension law will likely increase costs for business, which she noted would not make sense for some.

Rep. Earl Pomeroy, a North Dakota Democrat and former state insurance commissioner who opposed the pension bill, agreed. He said the funding demands will be too stringent and unpredictable.

I felt what was needed was a balanced approach that addressed solvency concerns and do it in a way that focused on keeping pensions in the work place, Pomeroy said. I think this balance is lacking.

He and others expect the response to pension changes and new accounting rules later this year will be more companies ending pensions by halting accruals of new benefits. IBM, Sears and other brand name businesses have taken this step and sweetened 401 (k) and other options, which are generally less expensive and less risky for employers.

I believe we will witness an unprecedented number of companies closing their well-funded, defined benefit pension plans to new employees, said James Klein, president of the American Benefits Council.

DELPHI LEFT OUT

One company that sought help from Congress and did not get it was Delphi Corp. The bankrupt auto parts supplier sought permission to amortize roughly $2.7 billion in future obligations equal to more than half its pension liability.

John Anderson, Delphi's legislative affairs director, said the company was reviewing the potential impact of the pension bill and exploring alternatives to ease funding pressures and maintain plans covering 64,000 employees and retirees.

Two that got help, Northwest Airlines and Delta Air Lines, can amortize liabilities over 17 years. The two say can now save plans that are billions in the red.

Lawmakers were eager to assist bankrupt airlines because they had threatened to terminate plans without congressional action, meaning the government agency that insures pensions - the Pension Benefit Guaranty Corporation - would assume the debt and participants would get reduced benefits.

Ron Gebhardtsbauer, a former PBGC actuary and senior pension fellow at the American Academy of Actuaries, believes the PBGC included the Northwest and Delta liabilities in its latest deficit projection for the agency of $22.8 billion. If so, the agency can probably remove several billion from its books once the companies emerge from bankruptcy.

The PBGC would not comment on that prospect or even say which companies are included on its list of plans at risk for termination.

An analysis by the Center on Federal Financial Institutions says airline relief is not a sure thing, especially if Northwest and Delta step out of court protection next year and then fall back in. US Airways was in bankruptcy twice - the second time dumping its remaining pensions.

This buys them some time. The combination of time and favorable performance for the investments might allow them to survive without taking further steps to completely terminate the plans. That remains to be seen, said Mark Kiefer of CRA International consultants in Boston.

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