Pension plan shortfall four times that of 2002

By Leigh Strope
Associated Press

WASHINGTON — Shortfalls in private companies' pension plans soared to $111 billion last year, the highest level ever reported by the Pension Benefit Guaranty Corp.

That was four times the $26 billion shortfall that companies reported for 2000, according to the PBGC, the government's insurance program for private workers' pensions. A shortfall is the amount of money that would be owed to pension participants if a plan was terminated.

"The implications of such massive shortfalls in pension funds are staggering," said Rep. George Miller of California, the top Democrat on the House Education and Workforce Committee. Miller urged the Bush administration to investigate and ensure that workers' retirement savings are not in danger.

But PBGC spokesman Jeffrey Speicher said the shortfall is "not as dire an indicator that you might think."

All companies with employer-sponsored pension plans are required to file a report with the government when a plan's unfunded liability hits $50 million or more. But in reality, those plans, on average, are still at least 80 percent funded or more, Speicher said.

"It's a volatile number and it fluctuates due to various factors, such as interest rates and the performance of plan assets in equities markets," he said. "These plans on average are still well-funded."

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