U.S. Pension Insurer Says Its Deficit Doubled

[Robbien]

The federal pension insurance program, already struggling with the biggest deficit in its history, said today that the situation had worsened further still, with the old record deficit doubling over the last fiscal year, to $23.3 billion.

Much of the past fiscal year's big losses were the result of pension failures in the airline industry. United Airlines recently announced that it would terminate all four of its pension plans as part of its efforts to cut costs and emerge from bankruptcy. Taking over United's pensions alone will cost the agency an estimated $6.3 billion. In disclosing the pension agency's ballooning deficit, its executive director, Bradley D. Belt, called on Congress to address the situation quickly, "so the problem doesn't spiral out of control."

<snip>

But experts warn that the federal system that regulates and insures pensions is looking disturbingly similar to the system that insured the savings and loan industry two decades ago. Congress failed to correct that system's problems for a number of years and ended up having to provide a federal bailout that cost about $200 billion.

<snip>

Unless the agency finds a way to close the gap between the $39 billion that it has and the $62 billion that it owes, it will run out of money at some point. In that case, either retirees would be denied their benefits or else Congress would have to appropriate the money for a bailout.

Even before today's announcement, analysts had been warning that the pension agency needed help. Douglas J. Elliott, president of the Center on Federal Financial Institutions, said that if Congress took corrective actions quickly, the cost would be small relative to the cost of a bailout of the pension agency some time in the future. The center is a nonpartisan research institute that looks at government lending and insurance programs.


http://www.nytimes.com/2004/11/15/national/15cnd-pens.html?ei=5094&en=7b972a80d8e36f41&hp=&ex=110058&adxnnl=1&oref=login&adxnnlx=1100565371-PTuDpk0h0NgZj5+9AJ2r9g

[gratuitous]

1. And you know the best thing about this?

That is, from the Republican point of view? After the bailout, Congress will enact stringent new rules on company pensions, so stringent that companies will no longer offer them anymore, the agency that guarantees pension payments will go bust and be dissolved, pensions won't be paid to retirees, and the executives who looted the pension funds to line their own pockets (along with their brokers, accountants and other retainers) will all walk away scot-free.

This is a sneak preview of what will happen with privatization of Social Security. Enjoy the show. Hope you all don't mind working until you're dead.

[KayLaw]

2. Frightening scenario

How can anyone be happy with all that's going on?

[The Zanti Regent]

3. Millions are brainwashed by Jesus TV

They believe the worse it gets, the sooner the rapture...

[struggle4progress]

6. I'm sorry to say that I completely agree with your analysis. eom

[UpInArms]

4. U.S. pension agency posts $23.3B deficit

http://seattlepi.nwsource.com/business/apbiz_story.asp?category=1310&slug=Pensions%20Shortfall

of 44.4 million workers said Monday that its deficit more than doubled in 2004 to a record $23.3 billion, prompting both Republicans and Democrats in Congress to renew calls for action to shore up the system.

The Pension Benefit Guaranty Corp. said that as of Sept. 30, it had $39 billion in assets to cover $62.3 billion in pension liabilities.

The $23.3 billion deficit was more than twice the $11.2 billion long-term shortfall the agency reported a year ago and reflected continuing economic troubles in such industries as airlines and steel.

The PBGC was created in 1974 as a government insurance program for traditional "defined benefit" pension plans. Employers 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 up to certain limits.

The trouble in recent years has been an explosion in the number of ailing companies dumping their pension liabilities onto the PBGC.

<snip>

"With more than $62 billion in liabilities, it is imperative that Congress act expeditiously so that the problem doesn't spiral out of control," Belt said.

Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee, said he wanted to move pension reform legislation through his committee next year.

...more...

[aquart]

5. How many pensions could be saved

by having upper management pay and bonuses?

[annabanana]

7. this is EVERYBODY'S pension........

right?

So, the whole friggin ponzi scheme is about to collapse right on the whole fixed income population......nice

[FLSurfer]

8. Exactly what I was thinking.

How are we gonna get fixed income seniors out of this mess?