PBGC Works to Preserve Pensions, Not Just Replace Them, Gotbaum Tells Senate Panel
FOR IMMEDIATE RELEASE
December 01, 2010
WASHINGTON-Josh Gotbaum, director of the Pension Benefit Guaranty Corporation (PBGC), told a Senate committee today that the agency has been aggressive in its efforts to preserve pension plans sponsored by troubled companies.
"Most people know that the PBGC pays benefits when plans fail, but we work just as hard to keep plans from failing in the first place," said Gotbaum during a hearing by the Committee on Health, Education, Labor, & Pensions. "Every plan retained by its sponsor is a victory both for the plan's participants and for the PBGC."
In FY 2010, the PBGC worked with debtors and creditors to help 38 companies emerge from bankruptcy protection with their plans intact. The payoff: about 250,000 workers and retirees continue to receive their full pension benefits, and about $4 billion in obligations were kept off the agency's books.
Gotbaum said the agency's $80 billion in assets provide ample resources to protect and insure the nation's defined benefit plans for the foreseeable future.
In FY 2010, the PBGC took responsibility for an additional 109,000 workers, retirees and beneficiaries. For the past 36 years, the agency has stepped in to pay benefits, on time, every month without interruption when companies couldn't fulfill their pension promises. Last year, the PBGC paid nearly $5.6 billion to about 800,000 retirees. The PBGC will also pay benefits to 700,000 workers when they retire.
Gotbaum also said the PBGC works to shore up plans before they get into financial trouble. Over FY 2010, the agency monitored more than 1,000 companies to identify transactions that could interfere with plan funding, and secured protections for the plans. Under pension law, when layoffs or plant closures threaten a plan's funding status, the agency can move to obtain protection for the plans with a guarantee, posting of collateral or contribution to the plan. Over the past year, the PBGC secured an additional $250 million for participants in 20 pension plans.
The PBGC is a federal agency that guarantees payment of private pension benefits when companies and pension plans fail. It protects some 44 million Americans in over 27,500 private defined benefit pension plans. The PBGC pays benefits using insurance premiums and assets and other recoveries from failed plans and their sponsors; it receives no taxpayer funds.
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PBGC No. 11-14