US - Some 70% of the US$20.6bn in total claims to the Pension Benefit Guaranty Corporation (PBGC) since its inception in 1974 were incurred during the last five years.
Reporting “unprecedented losses” over the period between 2000 and 2004, the PBGC said claims from failed single-employer pension plans totalled US$14.3bn.
The total is 18 times larger than the US$738m in claims booked between 1995 and 1999. During the period of 1990-1994, claims totalled US$2.8bn, less than twice the US$1.7bn incurred during 1985-1989.
Commenting on statistics from its latest pension insurance data book, the PBGC said historically, the pension insurance programme has absorbed large losses during economic downturns, but the most recent surge “dwarfs anything in the agency’s history”.
“These data highlight the unprecedented challenges facing the defined benefit system and the pension insurance programme,” said Bradley Belt, executive director of the PBGC. “While most companies should be able to honour their promises to workers and retirees, far too many are reneging on those promises and shifting costs to the pension insurance programme.”
Belt added: “Congress needs to act on the Administration’s proposal to strengthen the defined benefit system and put the pension insurance programme on a sound financial footing.”
The PBGC’s single-employer pension programme insures about 29,600 pension plans, compared to 112,000 plans in 1985.
The pension insurance data book is an annually updated statistical reference that tracks the experience of the PBGC’s insurance programmes.
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