AUSWR
The Association of U S West Retirees
 

 

 

2 Senators Want Pension Agency to Get a Checkup
By THE ASSOCIATED PRESS
New York Times
Wednesday, October 4, 2006


WASHINGTON, Oct. 3 (AP) — Two senators asked Tuesday that Congress find out whether the federal agency that insures private pension plans for millions of Americans has enough money and the right approach to do its job.

Charles E. Grassley, Republican of Iowa, and Max Baucus, Democrat of Montana, said that they wanted the Government Accountability Office to report back by early next year with preliminary information on the Pension Benefit Guaranty Corporation, which insures traditional defined-benefit pension plans.

Mr. Grassley is chairman of the Senate Finance Committee and Mr. Baucus is its ranking Democrat.

Bankrupt steel and airline companies that have transferred pension responsibilities to the agency have been a major factor in contributing to its rising debt.

At the end of 2005, the agency recorded a deficit of $22.8 billion.

In their letter to the Government Accountability Office, the senators said that 80 percent of all claims against the agency had come since 2000.  In 2000, the agency paid benefits of $900 million to 243,000 people.  Five years later, it was paying $3.7 billion in benefits to 698,000 people, the senators wrote.

“This rapid increase in participants, benefit payments and investments would be a challenge to any organization,” the senators wrote.  “We are particularly concerned in how P.B.G.C. is handling this challenge and whether legislative changes are needed in P.B.G.C’s structure, appropriations or law.”

President Bush in August signed a bill to help the pension system by shoring up funding for traditional pensions.  Supporters hope the changes will prevent a costly taxpayer bailout of the agency.

The pension agency’s operations are financed by insurance premiums paid by companies that sponsor traditional pension plans.  It also earns money from investments and receives funds from pension plans it takes over.  The agency is not financed through tax revenue.

The fear, however, has been that a taxpayer-paid bailout could happen at some point if the private pension system is not overhauled by Congress.

On Tuesday, the pension agency said that it had taken responsibility for a pension plan covering more than 1,600 workers and retirees of Levitz Home Furnishings of Woodbury, N.Y.  The agency said that the takeover of the plan would have no material effect on its balance sheet.

http://www.nytimes.com/2006/10/04/washington/04pension.html?_r=1&oref=slogin