US Senators Demand PBGC Underfunding Data

June 14, 2005 ( - Two key US Senators have asked the Pension Benefit Guaranty Corporation (PBGC) for more information about hundreds of underfunded pension plans, which the lawmakers say they need to help craft pension reform measures.

>Senator Charles Grassley (R-Iowa) and Senator Max Baucus (D-Montana), chairman and ranking minority member respectively of the Senate Finance Committee, said they are seeking more information about the health of defined benefit plans as reported to the PBGC in 2003 and 2004, according to a Reuters report. The PBGC insures the nation’s private-sector pension plans.

“You can’t fix a problem until you understand it,” Grassley said in the joint statement with Baucus, according to Reuters. “Unfortunately, we often don’t hear about a pension fund’s collapse until it’s too late…. Getting information about the companies with the worst problems will inform our work.”

>US House Education and Workforce Committee Chairman Representative John Boehner (R-Ohio) and the panel’s ranking Democrat, Representative George Miller ofCalifornia, made a similar request of the PBGC in April. They asked for information about pension plans that are 75% funded or less.

>Boehner introduced a pension reform plan in the House last week requiring companies to fully fund their pensions in seven years and pay higher insurance premiums to the PBGC, which has a $23.3 billion deficit (See    Latest GOP Pension Reform Bill Includes Advice ).

>Miller said last week that when he reviewed the confidential data from the PBGC about underfunded pensions, it was dramatic compared to statements companies make about their pensions in annual reports to the Securities and Exchange Commission (SEC). Some companies, Miller said, were making public reports that were “billions of dollars” more optimistic about the pension funds than their confidential reports to the PBGC.

>The PBGC’s Director Bradley Belt testified last week that in 2004, there were 1,108 pension plans that were underfunded by $353.7 billion, a 27% increase over the previous year (See    PBGC: Underfunding Totals Skyrocket 27% in 2004 ). The auto sector accounted for at least $55 billion of plan underfunding and airlines more than $30 billion, Belt said.