US House Education & the Workforce Committee Chairman John Boehner (R-Ohio) and Employer-Employee Relations Chairman Sam Johnson (R-Texas) said PBGC’s financial condition drew their attention because of the agency’s assumption of a string of large steel industry plans. The likelihood of having to take over airline industry pensions as well also played a part in the decision to examine the agency, Boehner and Johnson said.
The two lawmakers may have a lot to look at. The New York Times reported this week that the PBGC is expected to announce it now has a $1 billion to $2 billion deficit – down from an $8-billion surplus a year ago (See PBGC Bottom Line Buffeted by “Perfect Storm”).
Boehner and Johnson said the study by Johnson’s subcommittee would also examine the current requirements for pension plan funding as well as the state of US defined benefit pension plans in general. “Providing greater pension security also means we must ensure that the Pension Benefit Guaranty Corporation is on sound financial footing,” Boehner said in a statement.
Created by ERISA, PBGC steps in to make pension payments when a company can’t meet its obligations because of bankruptcy or other financial problems. The agency currently guarantees payment of basic pension benefits earned by about 44 million American workers and retirees participating in over 35,000 private sector defined benefit pension plans.