Posted on: Friday, September 5, 2003

Pension liabilities may double

By Jeff Bliss
Bloomberg News Service

Underfunded pension liabilities at financially strained U.S. companies may double to more than $80 billion this year, increasing the burden on the Pension Benefit Guarantee Corp. and the risk to taxpayers, said the head of the federal program, which insures workers' retirement plans.

Unfunded benefits at companies that meet the agency's criteria for financial difficulty, half of which are in the airline and steel industries, totaled $35 billion last year, said Steven Kandarian, executive director of the pension agency. It has been forced to step in and pay employees' pensions in some cases, widening its deficit to $5.7 billion as of July 31 from $3.6 billion last year, he said.

"If companies do not fund the pension promises they make, someone else will have to pay," Kandarian told the House Education and Workforce Committee yesterday. That means U.S. taxpayers, who pay the agency's bills.

In July, the General Accounting Office, a congressional investigative agency, put the pension insurer on a "high-risk" list of government programs that need to be overhauled. If the pension-backup system isn't fixed and companies don't put more into retirement plans, taxpayers will end up footing the bill, lawmakers said.

"Companies have been permitted to publish in their annual reports rosy financial pictures about their pensions, while at the same time running the plan into the ground through reductions and freezes in pension contributions," said Rep. George Miller, the House panel's senior Democrat.