US - Reforms strengthening the funding rules, improving disclosure to workers, and shoring up the federal insurance system must be enacted to ensure pension promises made by employers to workers are kept, a government official has warned.
Ann Combs (pictured), US assistant secretary of Labor, told members of the American Society of Pension Professionals and Actuaries (ASPPA) that president George Bush had made it clear he would not sign legislation that was weaker than the existing law.
“We want real reforms that strengthen the private pension system,” she said.
Combs was referring to the Bush administration’s plans to reform the single-employer, defined benefit pension system, which presently covers 34 million Americans.
The administration has said the current system does not ensure pension plans are adequately funded, and that the termination of underfunded plans is a threat to workers’ retirement security.
It has also placed an increasing strain on the pension insurance system. According to government figures, claims from terminations of significantly underfunded pension plans have resulted in a record deficit in the single-employer insurance fund of the Pension Benefit Guaranty Corporation (PBGC).
For the fiscal year ending September 30, 2004, the deficit in that fund increased from $11.2bn to $23.3bn.
The administration has diagnosed the high levels of plan underfunding as symptomatic of serious structural problems in the private DB system.
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