PENSION GUARANTOR FEELING PINCH
With more airlines expected to jettison their pensions, the
federal program is seeing a deficit of nearly $23 billion.
By Marcy Gordon, The Associated Press
Wednesday, November 16, 2005
The federal agency that insures the private pensions of 44
million workers is having big problems of its own, hitting a
deficit of nearly $23 billion as big airlines in bankruptcy
With billions flying out the door of the Pension Benefit
Guaranty Corp., concern has been mounting over its financial
footing. The agency disclosed Tuesday in an annual report
that as of Sept. 30 it had $56.5 billion in assets to cover
$79.2 billion in pension liabilities.
Without a legislative overhaul of the private pension
system, the PBGC eventually will run out of money to pay the
pension claims of the retirees of companies whose plans it
has assumed, the head of the agency warned. That would
raise the possibility of a taxpayer bailout.
Traditional employer-paid pension plans, giving retirees a
fixed monthly amount based on salary and years of
employment, are now estimated to be underfunded by some $450
billion. That could jeopardize the retirement security of
millions of Americans, lawmakers say.
There has been an explosion in recent years in the number of
big, ailing companies - especially in such industries as
airlines and steel -- shifting their pension liabilities to
"Unfortunately, the financial health of the PBGC is not
improving," the agency's executive director, Bradley D.
Belt, said in a statement. "The money available to pay
benefits is eventually going to run out unless Congress
enacts comprehensive pension reform to get plans better
funded and provide the insurance program with additional
The PBGC's deficit for fiscal 2005 takes into account both
the pension liabilities the agency has assumed and those it
expects to take over in the future.