Deficit in PBGC's Main Pension Insurance Program Stands at $9.7 Billion as of Midyear
FOR IMMEDIATE RELEASE
May 21, 2004
The Pension Benefit Guaranty Corporation's insurance program for pension plans sponsored by a single employer reported an unaudited deficit of $9.7 billion as of March 31, 2004, the midpoint of the agency's fiscal year. The program's 2003 fiscal year end deficit was $11.2 billion.
For most of its history the agency has released the net position of its insurance programs only once a year. Under newly appointed Executive Director Brad Belt, the agency will more frequently disclose key information about the financial health of its own insurance programs as well as the defined benefit pension system that it insures.
"One of the Administration's core pension principles is greater transparency in the defined benefit system," Belt said. "The PBGC will further that goal by providing more information to workers, retirees and the capital markets."
The PBGC's single-employer program insures the pensions of 34.5 million Americans in 29,500 plans. The modest improvement in the program's net position occurs against a backdrop of significant risk. As of the end of fiscal year 2003, the program had approximately $85.5 billion in "reasonably possible" exposure, defined as the amount of unfunded vested pension benefits promised by financially weak employers. Underfunding in the air transportation sector accounted for $23.4 billion, or 27 percent, of the total.
"Comprehensive reforms are crucial to ensure the PBGC's ability to protect pensions in the future," Belt said.
The financial position of PBGC's separate insurance program for multiemployer pension plans improved in the first half of the fiscal year. The multiemployer deficit now stands at $150 million, down from $261 million at the end of fiscal year 2003. The multiemployer program covers 9.7 million participants in more than 1,600 plans.
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PBGC No. 04-47