Agency that protects pension plans (PBGC) may be in jeopardy --Susan Tompor, DFP

[Bozita]

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

Agency that protects pension plans may be in jeopardy
Federal agency may need a bailout, too
BY SUSAN TOMPOR • FREE PRESS COLUMNIST • DECEMBER 14, 2008


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.

"It's hard to imagine how the PBGC could get out of this in the long run without a taxpayer bailout," said Jeffrey R. Brown, finance professor at the University of Illinois.

Brown estimates that another $50 billion to $100 billion or more of taxpayer money might be needed in the next decade or later to bail out the PBGC.

The agency reported a shortfall of $10.7 billion for single-employer plans for the fiscal year ending Sept. 30. The deficit for multiemployer plans was $473 million.

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[LiberalFighter]

1. Former Reagan budget director, David Stockman was CEO of Collins & Aikman

Trial set for former Collins & Aikman CEO Stockman, others
Aug 26 2008

Former Collins & Aikman Corp. Chief Executive David Stockman, once President Ronald Reagan’s budget director, will stand trial with three other former executives of the auto-parts manufacturer May 4, a judge said.

The fraud case has been stalled for almost 11/2 years, and some of the defendants have complained that insurance money covering their legal fees has run out.

U.S. District Judge Barbara Jones in New York set the trial date Monday.

Stockman, 61, and his three co-defendants are charged with defrauding investors. Prosecutors charge they issued false financial reports and engaged in a phony rebate scheme to raise capital and keep from defaulting on credit agreements.

Collins & Aikman sought bankruptcy protection five days after Stockman left in May 2005. The Southfield, Mich.-based company won court approval July 12 for its liquidation plan.