Bush Administration: No Crisis for PBGC

February 2, 2004 (PLANSPONSOR.com)-- The US Pension Benefit Guaranty Corp. (PBGC) "is not in crisis" according to the Bush Administration's fiscal 2005 budget.

>However, although the PBGC “has sufficient assets to meet its obligations for a number of years into the future,” according to the administration. However, in light of the several underfunded plans, the administration admitted that the financial integrity of the federal private pension insurance system “is at risk,” Dow Jones reported.

>The revised 2005 budget looks to reform the pension system by simplifying and reinforcing regulations to help ease the funding issues for companies while making certain the PBGC can continue to safeguard pension benefits.   It is said there are additional proposals to make changes to restrict promises of added benefits to workers, as well as requiring increased information for workers, retirees, and stockholders.

>Current pension contribution rates are currently linked with 30-year Treasury bond interest and a new legislative proposal will maintain that link while providing employers with two years of relief from current pension contribution requirements.   After that, the proposal uses a yield curve to link funding requirements with payout needs for retiree benefits, according to Dow Jones.