Is the Pension Benefit Guaranty Corporation the Next Bailout? Archives

Is the Pension Benefit Guaranty Corporation the Next Bailout?

The [Pension Benefit Guaranty Corportion (PBGC)] cannot confirm investment revenue figures reported by the independent contractors hired to lend securities on its behalf. The result is the PBGC often gives erroneous information to Congress. Though the agency is self-financing through insurance premiums paid by the companies that operate defined benefit plans, the PBGC is in deficit for $21.9 billion. At the same time the PBGC’s potential obligations to cover pensions in faltering companies tripled last year to $168 billion. It’s an ongoing problem. In 2006 the agency had a deficit of $23 billion. As GMU finance professor Anthony Sanders notes, the PBGC is a model that cannot be sustained. Another reminder that the ultimate guarantor of government guarantees is the taxpayer.

Underfunded Pensions, Pension Dumping, and Retirement Security

Underfunded Pensions, Pension Dumping, and Retirement Security:
Pension Funds, the Pension Benefit Guarantee Corporation (PBGC), Bailout Risks, Impact on the Federal Budget, and the Pension Protection Act of 2006

Compiled by TheCapitol.Net
Authors: Patrick Purcell, Jennifer Staman, Kelly Kinneen, William J. Klunk, Peter Orszag, and Bradley D. Belt

Although the PBGC's liabilities are not explicitly backed by the full faith and credit of the federal government, Congress could face political pressure to bail out the PBGC at taxpayer expense should the agency become financially insolvent.

2009, 319 pages
ISBN: 1587331535 ISBN 13: 978-1-58733-153-4
Softcover book: $19.95

For more information, see 1534Pensions.com

RL34443, RS22650, R40171, RL34656, GAO-09-207, RL33937

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May 10, 2010 09:37 PM Caught Our Eye