Pension group sees rising deficit

WASHINGTON – The federal agency that insures private pensions could see its deficit balloon to $71 billion during the next decade, Congress’ top budget analyst said Thursday.

The Pension Benefit Guaranty Corp., which already has a $23.3 billion deficit, could face a threefold increase because companies are shedding their pension obligations in bankruptcy court and premiums for the insurance it provides have not kept pace with claims.

Lawmakers are writing legislation they hope would help alleviate the problem, both by helping companies avoid defaulting on their pensions and by increasing premium payments. Testimony on Capitol Hill highlighted the challenge.

Two House committee chairmen announced Thursday they were supporting a bill to shore up defined-benefit pensions. It’s likely to end up as part of a broader bill that would include changes to Social Security.

The bill, co-sponsored by Rep. John Boehner, R-Ohio, and Rep. Bill Thomas, R-Calif., would:

• Require employers to eliminate pension underfunding within seven years;

• Prohibit unions from negotiating more lucrative pension packages if their plan is already less than 80 percent funded;

• Increase corporate pension insurance payments from the current $19 to $30 per employee;

• Allow employees to view the same reports about their plan that their employer files with the federal Pension Benefit Guaranty Corp., the agency that insures the plans.

Currently employees can see only more favorable reports filed with the IRS, which meant that not only airline employees but also previous workers in the steel and automotive supply industries were caught off-guard when their plans were terminated.