By JIM ABRAMS
The Associated Press
Tuesday, October 11,
2005; 4:17 PM
WASHINGTON -- The federal agency that insures private pension plans has
concluded that its financial problems could get worse under House and Senate
bills intended to strengthen the nation's traditional pension system. The chairman of the House Education and the Workforce Committee, Rep. John
Boehner, said Tuesday that the Pension Benefit Guaranty Corp.'s analysis was
"misleading and inaccurate" and that his bill would bring the system needed
relief. The Democratic leader on the committee, Rep. George Miller, said the analysis
showed that Democrats were right to oppose the legislation. The PBGC, taking a mean of 500 random scenarios, predicted that over the next
decade its claims would be $2.5 billion higher under the House-proposed bill
than under current law. Its claims would increase $3.3 billion under the Senate
bill. The PBGC insures some 44 million employees and retirees in 31,000
defined-benefit pension plans. It operates on premiums paid by employers and
investment earnings, but there's growing concern it may one day require a
massive taxpayer bailout as it takes over the obligations of more collapsed
plans, particularly in the airline and steel industries. Last year the PBGC reported liabilities of more than $23 billion. Legislation being considered in Congress would tighten rules to discourage
companies from underfunding their plans while increasing the premiums they pay
to the PBGC. Under a PBGC-prepared chart, the agency's aggregate claims over the next
decade would be $14.8 billion under current law, $17.3 billion under a bill
sponsored by Boehner, and $18.1 billion under legislation backed by two Senate
committees. Boehner, R-Ohio, said the PBGC calculation was inaccurate because it "fails
to take into account a number of key provisions that strengthen overall pension
plan funding." In particular, he said, it ignores the House bill's formula for more
accurately measuring pension liabilities and requiring employers to
progressively make more contributions to plans as employees get older. Miller, D-Calif., said the PBGC analysis "shows that neither the House nor
the Senate has come up with legislation to stop the erosion of Americans'
retirement security and prevent a taxpayer bailout of the private pension
system." The Senate was on the verge of passing its legislation last week, before
leaving for a one-week recess. Then action stalled when several senators, backed
by manufacturing and labor groups, protested a provision in the bill requiring
companies with poor credit ratings to pay more into their pension funds. Opponents of the provision said the higher payments could force companies to
declare bankruptcy or abandon their pension plans. ___ On the Net: PBGC: http://www.pbgc.gov/