GOVERNMENT PENSION SYSTEM TO GO BANKRUPT BY 2020
September 22, 2004
An independent analysis of the Pension Benefit Guaranty Corporation -- the government agency that insures private corporate pension plans -- suggests it will go broke in 2020 if current financial conditions persist.
According to the researchers:
- Even if conditions improve, so that fewer pension funds fail than in recent years, the agency is still expected to run out of money by 2023.
- The agency currently pays benefits to more than a million people whose pension plans have collapsed.
- It guarantees benefits promised to an additional 43 million people.
The analysis comes at a time of mounting concern about the pension plans of some of the biggest airlines, particularly United, which is in bankruptcy and has announced that it has suspended contributions to its four pension plans.
The pension insurance program is only one of many such promises by the government. Altogether, Washington insures some $6 trillion in risks ranging from crop failures to nuclear meltdowns.
Source: Mary Williams Walsh, "An Outsider's Grim Prognosis for Pension Agency," New York Times, September 14, 2004; and Douglas J. Elliott, "PBGC: When Will the Money Run Out?" Center on Federal Financial Institutions, September 13, 2004.
For NYT text (subscription required) http://www.nytimes.com/2004/09/14/business/14pension.html
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