New Report Predicts PBGC to Run Out of Funds by 2020
>The report, by the Center On Federal Financial Institutions, asserts that without a taxpayer bailout, the PBGC, which pays benefits to one million Americans and insures another 43 million pensions, would not have enough cash to cover its required payouts.
>The report gives three possible solutions to the impending crisis: a one-time $14 billion rescue package now, carve out $720 million out of premiums annually, or raise target investment returns from 5% to 7.8%. None of the options seem like perfect solutions, the report concluded, as rising premiums, huge tax bailouts, and increased risk in the PBGC’s portfolio all have large downsides to consider.
>The report is being released amid fears that both United Airlines and US Airways will default on their pension obligations, which would then have to be covered by the PBGC. Because of the possible default by these two large companies, there are some worries that other companies will attempt to dump their pension onto the PBGC, creating a savings-and-loans-type bailout, according to the Wall Street Journal. However, the WSJ concludes that this is unlikely, since there are strict restrictions on what the PBGC will take over. The WSJ asserts that any impending crisis is overblown, and that the PBGC, although running a $10 billion deficit, is far from insolvent.
>The report is at PBGC: When Will the Cash Run Out?
« Multinats Moving Toward Central Plan Admin