Reply #113: PBGC Agency that protects pension plans may be in jeopardy

[DemReadingDU]

12/14/08 Agency that protects pension plans may be in jeopardy
Federal agency may need a bailout, too
BY SUSAN TOMPOR

As the Detroit Three wrestle with survival, the odds are good that the federal agency that protects pension plans at auto companies and elsewhere could one day need billions in taxpayer dollars to bail it out, too.

The Pension Benefit Guaranty Corp. was already in the hole before the stock market meltdown and the credit freeze shut down U.S. economic growth this fall.

More public companies are expected to file for bankruptcy next year. And who knows how many pension plans will fail?

"There's tremendous uncertainty as to what the PBGC might get hit with," said Frank Todisco, senior pension fellow for the American Academy of Actuaries in Washington.

Disaster is not right around the corner. So, retirees don't need to worry if they're collecting a pension check from Michigan's long-gone companies, such as Hughes & Hatcher stores, McLouth Steel Corp. or Diamond Reo Trucks. Since the 1970s, the pension agency has taken over about 310 defined benefit plans for companies based in Michigan.

About 43,000 people covered by all plans nationwide that were turned over to the PBGC have Michigan addresses, including about 22,000 retirees collecting benefits now. The rest can apply for benefits when they reach their plan's retirement age.

Last year, auto supplier Collins & Aikman Corp. had its plan taken over by the PBGC.

Ultimately, though, the PBGC could see more troubles.

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http://www.freep.com/article/20081214/COL07/812140472/1002/BUSINESS