WASHINGTON -- The federal agency that insures the private pensions of 44 million workers is having big problems of its own, hitting a deficit of $22.8 billion for fiscal 2005 as big airlines in bankruptcy dump liabilities.
With billions flying out the door of the Pension Benefit Guaranty Corp., concern has been mounting over its financial footing. The agency disclosed yesterday 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 the PBGC.
''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 resources."
How theboardworksCompanies pay insurance premiums to the agency, and if an employer can no longer support its pension plan, the agency takes over the assets and liabilities and pays promised benefits to retirees up to certain limits.