TAXPAYERS MAY PAY THE PRICE FOR AIRLINE PENSION TERMINATIONS
November 19, 2004
The Pension Benefit Guaranty Corp., the federal agency that insures the private pensions of 44 million workers, say its long-term deficit more than doubled in 2004, under pressure from failing airline plans.
For the first time, the number of people whose pension benefits are paid by the PBGC passed 1 million -- up from 934,000 last year -- while annual payments hit the $3 billion mark:
- The PBGC says its long-term deficit expanded to about $23.3 billion in fiscal 2004, from about $11.2 billion in 2003.
- In fiscal 2004, the PBGC took over some 192 pension plans, up from 155 in 2003.
- The agency faces $62 billion in long-term liabilities, but has $39 billion in assets.
Analysts say much of the increase in the deficit was due to anticipated losses from just two airlines, U.S. Airways Group, Inc. and UAL Corp.'s United Airlines, which have announced their intention to terminate their plans, observers say.
The financial health of the PBGC is important because it is the safety net for millions of American's pensions. Some experts say pension problems run so deep, taxpayers might have to fund a bailout similar to the 1980s savings and loan rescue, which cost hundreds of billions.
Source: John D. McKinnon, "Pension Guarantor's Deficit Widens." Wall Street Journal, November 16, 2004; and Sue Kirchhoff and Marilyn Adams, "Pension Insurer Goes Deep in Red." USA Today, November 16, 2004.
For WSJ text (subscription required) http://online.wsj.com/article/0,,SB110054027357774292-search,00.html
For USA Today text (subscription required) http://www.usatoday.com/money/economy/2004-11-15-pension_x.htm
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