And in addition to giving those WITH MONEY....MORE MONEY.....those actually depending ON RETIREMENTS are being ignored by BUSH AND THE SEC.......
Pension Shortfalls at U.S. Firms Double
By John Crawley
Reuters
Thursday 04 September 2003
WASHINGTON (Reuters) - Pension underfunding at "troubled" U.S. companies has doubled this
fiscal year and could exceed $80 billion, with airlines accounting for nearly a third of the shortfall, the
government said on Thursday.
The Pension Benefit Guaranty Corp., which bails out corporate retirement plans, told Congress its
own deficit grew to a record $5.7 billion as of July 31, $2 billion higher than the shortfall for all of fiscal
2002.
PBGC Executive Director Steven Kandarian called for reforms to pension rules, telling the House
Education and the Workforce Committee that the cost of current pension problems would otherwise
have to be met through reduced benefits, higher premium payments by companies to the agency or a
taxpayer bailout.
Underfunding at "troubled" companies -- defined as those whose debt is rated below investment
grade or are otherwise at risk -- could exceed $80 billion by the time the current fiscal year ends Sept.
30, Kandarian said, up from $35 billion last year.
A sluggish economy, falling stock prices and low interest rates have all contributed to the
underfunding of traditional pension plans that promise a fixed amount at retirement based on salary
and years of service.
Airlines, including bankrupt United Airlines Corp. , have underfunded liabilities of $26 billion, he said.
Steel companies and the U.S. auto industry were also identified as pockets of particularly severe
pension underfunding.
Overall underfunded pension liabilities in 2002 were more than $400 billion, but an agency official
said that figure would likely be lower this year as recent increases in interest rates and stock prices
continued to bolster pension funds.
The benefit guaranty corporation protects the pensions of nearly 44 million workers and retirees in
more than 32,000 private plans. The agency will be responsible for paying benefits to nearly 1 million
people this year.
Kandarian said the record agency deficit has been caused by "the failure of a significant number" of
highly underfunded plans of financially troubled or bankrupt firms.
"Pension claims against (the agency) for 2002 alone were greater than the total claims for all
previous years combined. At current premium levels, it would take about 12 years of premiums (the
pension agency charges companies) to cover just the claims from 2002," Kandarian said.
Kandarian said the PBGC was working with the Departments of Labor, Treasury and Commerce to
devise proposals that would eliminate rules that have encouraged companies to shift risk onto the
government or delay contributions to plans.
Funding rules presently allow "contribution holidays" in hard economic times for even seriously
underfunded plans. The rules also make it difficult to build a surplus in good times.
"We are examining how to eliminate some of the risk shifting and moral hazard in the current
system," Kandarian said.
CC |
