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
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
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.