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Check out the gimmick in the federal jobless benefits bill

Congress took a big step forward in restoring jobless benefits for people who have been out of work for more than six months. But the bill could represent a step backward for workers counting on retiring on a private pension: It allows employers to slow down contributions to pension funds.

Under a deal worked out by a bipartisan group of senators Thursday, checks would go out again to more than 2 million Americans who were cut off at the end of last year, when Congress let the extended benefits program expire.

In this Wednesday, Jan. 22, 2014, photo, job seekers sign in before meeting prospective employers during a career fair at a hotel in Dallas.
LM Otero | AP
In this Wednesday, Jan. 22, 2014, photo, job seekers sign in before meeting prospective employers during a career fair at a hotel in Dallas.

But the twist in the bill regarding pension funding is likely to raise concerns about more burden on taxpayers. The Committee for a Responsible Federal Budget notes that "underfunding pensions makes it more likely that a company will need a bailout from the federally funded Pension Benefit Guaranty Corporation."

Meanwhile, opponents of the emergency jobless benefits program, which pays long-term jobless workers about $300 a month, argued that extended benefits should be phased out now that the job market has improved and the unemployment rate has fallen to 6.7 percent.

But the deal to restore benefits, which still faces a vote by the full Senate and an uncertain fate in the House, can't come soon enough for C.J. Mitchell, 27, of Tri-Cities. Wash., who has been looking for work as a chemical engineer since May, when she lost her job with a government contractor.

She recently applied for a $10-an-hour cashier job at Home Depot. Having spent down about half of her savings, she figures she has two or three more months left to pay the bills, including mortgage payments on a condo she's been unable to sell.

(Read more: US jobless claims fall to new 3-month low, raising economy hopes)

"I'm stretching every thing as tight as I can," she said. "I've been down to the food bank, and it's such an awful experience to be down there. You see the people who are down there and think, 'I wasn't supposed to be here.'"

The latest deal would extend benefits to Mitchell and other long-term jobless workers for five months and restore payments that were suspended when the program expired.

The measure would also ban payments to anyone who earned at least $1 million last year. More than 3,000 households reporting more than $1 million income collected jobless benefits in 2010, according to a report last year by the Congressional Research Service.

(Read more: Chart: What's the real unemployment rate?)

"There are a lot of good people looking for work, and I am pleased we're finally able to reach a strong, bipartisan consensus to get them some help," said Sen. Jack Reed, D-R.I., one of the chief sponsors of the legislation.

While the bill would provide an important lifeline to jobless workers, it could weaken the financial security of millions of retirees who rely on employer-sponsored private pensions.

That's because the bill proposes to pay for the roughly $10 billion cost of restoring jobless benefits by allowing companies to use an accounting gimmick called "smoothing" that would let them make lower contributions to pension funds. Moving less money into pension funds would boost corporate profits, or salaries, which would generate higher taxes, which would pay for the cost of extending jobless benefits.

This is not the first time Congress has raided the private pension fund cookie jar to raise some quick cash. A provision attached to the 2012 federal highway bill, known as MAP-21, cut required minimum pension contributions by $147.5 billion, according to an analysis by benefits consultant Towers Watson.

Critics of the pension funding plan argue that, while it may raise money for the federal government in the short run, it loses money over the long run because companies will have to make up payment shortfalls later.

Giving companies a break on pension funding doesn't mean they'll make the minimum required; they still face the same liability as aging workers retire and begin collecting benefits. And they're still making up for record deficits created by the 2008 financial collapse and the resulting drop in interest rates.

(Read more: White House forecasts more economic growth in 2014, 2015)

Lower rates hit pension funds two ways. They lower the return on invested assets and they raise the cost of providing future benefits because the plan has to set aside more cash to generate the same amount of income to pay beneficiaries. So even as the economy and stock market recovered from the 2008 financial crisis, the gap between assets and liabilities continued to widen. As of the end of 2012, the 100 largest pension plans tracked by benefits consultant Milliman faced a combined deficit of $389 billion.

Rising interest rates and a booming stock market have helped reduce that gap to $131 billion as of the start of the year. Those gains have also prompted companies to ease up on pension plan contributions, according to John Ehrhardt, a Milliman consultant.

"They contributed more than the minimum in 2010, 2011 and 2012," he said. "But they cut down in 2013 by a third,"

Funding ratios—the percent of future pension liabilities covered by fund assets—have bounced back from a low of 77.2 percent at the end of 2012 to a little under 90 percent today, according to Ehrhardrt.

But if Congress approves the bill extending jobless benefits, that progress toward fully funding plans will likely be slowed.

"I wouldn't be surprised if this goes through that companies will be taking a contribution holiday," he said.

By CNBC's John Schoen. Follow him on Twitter @johnwschoen or email him.

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