Report: PBGC Liabilities Could Top $120 Billion Over 10 Years

May 20, 2005 ( - A new Capitol Hill report estimates that the nation's private pension insurer could be stuck with a $120 billion bill to cover pension losses over the next 10 years, BusinessWeek reported.

The $120 billion figure far outpaces the $23 billion the Pension Benefit Guaranty Corporation (PBGC) has estimated that it needs to pay promised benefits to workers and retirees (See  PBGC Posts Record Deficit in FY2004 ) – including the $6.6 billion tab for the obligations the agency assumed when it took over United Airlines’ pension plans earlier this month (See  United, PBGC Hammer Out Plan Takeover Pact ).

According to BusinessWeek, Congressional staff members relied on the market value of PBGC’s future liabilities by pricing the risk of default by all companies that offer pensions – not just corporations saddled with below-investment-grade credit ratings.

The report said that the new estimate could turn up the heat for additional premiums and stricter funding rules to shore up pensions and the PBGC. The White House is pushing its own menus of pension reforms ( Chao Releases Administration DB Reform Proposal ).

Critics of the reform proposals say that the PBGC has enough assets to cover its current pension obligations and that a market rebound in the future could help rescue currently ailing plans from a potential PBGC takeover, the report said.