The final bill could limit the smoothing of liabilities and assets, force companies with bad credit ratings to make higher pension payments and restrict the use of payment credits. Separate legislation has already raised Pension Benefit Guaranty Corp. premiums from $19 to $30 per participant.

The new rules will force businesses to change pension practices they’ve used since the mid-1970s. Congress likely will try to pass a final bill before mid-April, when companies must make pension payments. But for the most part, employers are oblivious to what’s taking place in Washington.

"I know there are companies out there that don’t have a clue about what’s going on," says Janice Gregory, senior vice president of the ERISA Industry Committee, a Washington organization that represents about 100 large companies on employee benefits law. "If they’re not running their numbers, they will wake up with a hangover."

Pension reform was passed by the House in December and by the Senate in November. Now the bills have to be melded before each chamber votes again and sends the legislation to President Bush.

The issue is coming to a head because several large companies in recent years have terminated pension plans, dumping them on the PBGC. The agency, which has a $22.8 billion deficit, estimates total pension underfunding of $450 billion.

The Bush administration wants to force companies to fund 100 percent of their pension promises to avert a potential taxpayer bailout of the PBGC. The White House has threatened to veto pension reform it deems too weak.

Businesses say the new rules would increase pension costs and volatility. "It reduces flexibility and provides less ability to predict what your (pension liability) results will be," says Jon Waite, lead actuary at SEI Investments, a provider of outsourced pension management services.

Reform proposals could increase pension liability by 3 percent to 20 percent, depending on a plan’s characteristics, Waite says. A company with a $100 million pension program whose costs go up 3 percent would have to pay about $500,000 more per year for each of the seven years that companies would have to amortize funding gaps.

Conference negotiations will revolve around choosing language from each bill for the final version. The House measure, for instance, does not impose higher "at risk" pension payments based on a company’s credit rating; it does so if a pension plan is less than 60 percent funded. But the Senate bill allows a more generous calculation of the size of the payment.

Differences also exist in provisions on smoothing, the transition period to new rules and airline relief. More so than most conferences, this one is fraught with complexity and nuance. "You can’t boil this sucker down to two or three issues," Gregory says. "This is huge."

Policy toward cash-balance pension plans may be the wild card. Both the House and Senate versions declare they are not age discriminatory. But that applies only to future plans, not to those already covering about 8.5 million workers.

"That is likely to be the most difficult issue in the conference," says Rep. John Boehner, chairman of the House Education and the Workforce Committee.

—Mark Schoeff Jr.