PBGC Surplus Dwindles as Pension Plans Fail

June 21, 2002 (PLANSPONSOR.com) - The slew of ailing private sector pension plans that the Pension Benefit Guaranty Corp., (PBGC) has had to take over, has taken a huge chunk out of its surplus stock of cash, officials say.

The surplus, which reached $7.7 billion at the end of the 2001 fiscal year, has fallen to $5 billion as of April 30. “I’m concerned that our surplus may decline even further,” said PBGC executive director Steven Kandarian.

The agency, which guarantees beneficiary payments for ailing private sector pension plans when companies can no longer afford the payments, became responsible for 89,000 participants last year and has already taken on 140,000 new participants so far in the 2002 fiscal year, Kandarian told a House Ways and Means subcommittee.

By year end, the agency could have as many as 200,000 new participants under its wing, he said. “Little relief is in sight,” he added.

Kandarian said officials are particularly concerned about the potential termination of pension plans by ailing airline and steel companies that could drive up the new participant figure even higher in 2003.