- WASHINGTON --Shortfalls in
private companies' pension plans soared to $111 billion last year, the
highest level ever reported by the Pension Benefit Guaranty Corp.
-
- That was four times the $26 billion shortfall that companies
reported for 2000, according to the PBGC, the government's insurance program
for private workers' pensions. A shortfall is the amount of money that
would be owed to pension participants if a plan was terminated.
-
- The disclosure of record pension shortfalls comes at
a time when corporate scandals, from Enron to WorldCom, are rocking Wall
Street, shattering investors' confidence. Congress sent legislation to
President Bush on Thursday creating stiff penalties for corporate fraud
and document shredding in hopes of easing the economic jitters.
-
- "The implications of such massive shortfalls in
pension funds are staggering," said Rep. George Miller of California,
the top Democrat on the House Education and Workforce Committee. Miller
urged the Bush administration to investigate and ensure that workers' retirement
savings are not in danger. But PBGC spokesman Jeffrey Speicher said the
shortfall is "not as dire an indicator that you might think. "All
companies with employer-sponsored pension plans are required to file a
report with the government when a plan's unfunded liability hits $50 million
or more. But in reality, those plans, on average, are still at least 80
percent funded or more, Speicher said. "It's a volatile number and
it fluctuates due to various factors, such as interest rates and the performance
of plan assets in equities markets," he said. "These plans on
average are still well-funded. "Also last year, the PBGC paid more
than $1 billion in total benefits to almost 269,000 people, the first year
ever that payouts topped that amount. The government corporation in 2001
took over 104 terminated single-employer plans covering almost 89,000 people.
So far this year, PBGC has taken over plans covering 140,000 participants.
In March, PBGC had its largest pension takeover ever, assuming control
of three underfunded retirement plans covering 82,000 workers and retirees
of bankrupt steel company LTV Corp., whose pension plans were about $2.2
billion in the red. PBGC protects the benefits of about 44 million participants
and beneficiaries in slightly more than 35,000 ongoing defined benefit
pension plans. PBGC was created in 1974 to insure payment of basic pension
benefits of more than 44 million American workers and retirees. It is financed
largely by insurance premiums paid by companies that sponsor pension plans
and by PBGC's investment returns. Participants of a plan taken over by
the PBGC receive, on average, about 94 percent of the benefits they had
earned. ###
-
- http://www.washingtonpost.com/wp-dyn/articles/A5423-2002Jul26.html
|
