Government Pension Agency Threatened by Recession

[Purveyor]

Source: Associated Press

WASHINGTON -- The deepening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees.

The Pension Benefit Guaranty Corp. already has an $11 billion deficit that seems sure to grow larger as corporate America suffers through the worst economic crisis since the Great Depression.

With companies reporting shortfalls in their pension funds, it's all but certain that the PBGC will be forced to take over the pension plans of a rising number of bankrupt businesses.

That means more red ink at the corporation before things possibly can improve.

The future financial health of the agency is hard to forecast. It is hinged on interest rates, the length of the recession and the PBGC's own luck in playing the market, where it has billions invested.

Read more: http://www.foxnews.com/politics/2009/02/16/government-pension-agency-threatened-recession/

[biopowertoday]

1. so, even gov pensions are on the chopping block.

[Nickster]

2. No, this is the dept that handles pensions for companies that have gone bankrupt.

[biopowertoday]

4. yes, but if they go

bankrupt, the pensioners are not going to get their pensions. right?

[biopowertoday]

6. oops, I got it now. took a bit.

[Nickster]

7. Yup, you got it now.

[GoesTo11]

3. No, this is the gov't agency that secures private pensions

This is an insurance fund for pensions for companies that go bankrupt. It's already been intentionally raided by airlines and others, who declare bankruptcy so that this agency pays out the pensions they owe. After one airline did it, the others said they had to do it to "stay competitive".

[biopowertoday]

5. thanks, i did not pick up the private aspect.

The PBGC quietly operates in a brick office building a few blocks from the White House. Its fate is important to the workers covered by the more than 29,000 employer-sponsored benefit pension plans it insures, and to all taxpayers who could be asked to foot the bill if its financial picture worsens down the road.

Congress created the PBGC in 1974 to guarantee the retirement security of workers covered by defined benefit pension plans. These traditional plans, which pay a specified monthly benefit at retirement, are being phased out as companies turn to 401(k)-style programs that require workers to make contributions and shoulder investment risks. The PBGC, which receives no tax dollars, gets its money from premiums paid by companies that sponsor the pension plans, along with revenue from its investments.

[nbsmom]

9. For Ex., UAL pensioners had to settle for $.42 on the dollar

They can no doubt live very large on that...

:-(

[byeya]

8. When Studebaker went belly up and the pension fund

had been looted leaving the workers with nothing, Congress passed this law which created an agency to guarantee the pensions.