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Strategies & Market Trends : Guidance and Visibility -- Ignore unavailable to you. Want to Upgrade?

To: stevenallen who wrote (79764)	10/27/2002 12:59:07 PM
From: X Y Zebra	Respond to of 208838

Thanks for posting that e-letter Steven... I think he has an accurate and balanced view of the situation. Here is a letter from Congressman George Miller to Secretary O'Neill addressing the issue and asking specific questions about unfunded pension liabilities. While I realize that once the issue becomes part of the political landscape, things tend to be somehow muddled. However, for me the important point will be how will the government address this problem and how will the additional focus (and cost) of possible regulation impact corporations in this situation. The questions placed by the senator, is a good starting point. ___________ Thursday, July 25, 2002 The Honorable Paul H. O’Neill Secretary of the Treasury 1500 Pennsylvania Avenue, NW Washington, DC 20220 The Honorable Elaine Chao Secretary of Labor 200 Constitution Avenue, NW Washington, DC 20210 Dear Secretary O’Neill and Secretary Chao: I was shocked to learn Tuesday night from the Pension Benefit Guaranty Corporation (PBGC) that the unfunded pension liabilities for private companies has skyrocketed from $26 billion last year to a staggering $111 billion this year. It is my understanding that this 425% jump in unfunded liabilities is unprecedented, and the figure represents the highest amount of unfunded pension liabilities ever reported to the PBGC on the Corporation’s 4010 forms. <snip> I would appreciate your prompt response to the following questions: (1) What factors, in your view, account for the unprecedented increase in unfunded pension liabilities, as reported by the PBGC? (2) What specific actions are your Departments taking to ensure that such plans continue to be adequately funded? (3) Do your Departments receive adequate and timely financial information from pension plans and companies to provide a high level of oversight, and do you have adequate agency resources to properly monitor defined benefit plans? (4) Are the rules for estimating investment returns and calculating contributions adequate? Do they need revision in order to ensure that pension plan assumptions are reasonable and plans are adequately funded? (5) Why does the PBGC report in its data book only the vested unfunded liabilities, which understates by more than $79 billion dollars, the amount of under- funding by private pension plans? (6) What safeguards are in place to ensure that companies properly report the status of their pension plans, and that they (the companies) are using reasonable methodology and economic assumptions, especially in light of changes in investment returns and stock values, to fund adequately? (7) Do you estimate that the PBGC will experience an increased number of claims, or claim amounts made as a result of changes in the economy, and if so, to what degree? (8) Do you support the repeated, urgent recommendations of the Department of Labor’s Inspector General (IG) to require pension plans to undertake full scope audits (rather than limited audits that permit the auditor to take the word of others to vouch for accuracy of certain financial information); and do you support the IG’s recommendations to require that pension auditors who find evidence of fraud report directly to the Secretary of Labor rather than back to the pension plan, as is currently the practice? I look forward to hearing from you on these urgent and critical issues affecting the economic security of millions of Americans. Sincerely, GEORGE MILLER Senior Democratic Member House Education and the Workforce Committee edworkforce.house.gov