GLOBAL - US tax payers will be forced to pick up the tab for collapsed defined benefit schemes, if legislative reforms are not enacted to improve the sickly financial position of the Pensions Benefit Guaranty Corporation.
The PBGC’s total deficit hit a record $11.5bn in 2003 as its liabilities ballooned to $46.5bn from $29.8bn in 2002. The trusteeship of Bethlehem Steel’s $3.6bn pension plan in 2003 dealt a further blow by offloading its obligations at a time when the corporation simply cannot afford it.
The PBGC calculates that it is exposed to some $85.5bn of unfunded vested benefits in pension plans sponsored by financially weak employers. This is up from $35.4bn in 2002.
On the back of such damning results, the education and workforce committee has demanded legislative changes to strengthen the defined benefit system, on which 44 million Americans rely.
“Companies that are severely underfunded need to get their plans back to a secure level of funding and stop asking for relief that only further undermines the PBGC, thus taxpayers and retirees,” said employee-employer relations subcommittee chairman Sam Johnson.
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