Letter to the Editor: PBGC Needs Reforms, Not a Taxpayer Bailout
By Joshua Gotbaum
Source: The Washington Times
August 26, 2011
The Washington Times wants PBGC reforms to avoid a taxpayer bailout ("The Coming Pension Earthquake," August 23). I couldn't agree more.
PBGC has never taken a dime from taxpayers -- and we want to keep it that way. That's why the Administration proposed reforming PBGC's premiums. If Congress agrees, these reforms would both strengthen PBGC's finances and encourage companies to preserve sound pensions.
Under current law, most companies' premiums are being raised to pay for the mistakes of others. They know it, and they don't like it. It would be better and fairer to follow the practices of private insurance companies and the FDIC: base a company's premium on its own financial condition and that of its pension plan. If a company is healthy and doesn't pose a risk to its pensioners and PBGC, it shouldn't be paying for those who are. Of course, there's opposition to the proposal: companies would rather have "someone else" pay their pension insurance costs. If they succeed, that "someone else" might end up being the taxpayers.
The Washington Times is not alone in recognizing that the status quo is unacceptable: PBGC premium reforms have been endorsed by the major bipartisan budget commissions, by Chairman Ryan's House budget resolution, by officials from both this and the prior Bush Administration, by CBO and GAO, by major industry publications, and by The Washington Post and The Boston Globe.
The ball is in Congress' court. Let's hope they make the right moves.
Joshua Gotbaum is director of the Pension Benefit Guaranty Corp., Washington.
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