Pension Agency May Ask Firms to Kick In More : Benefits: The Pension Benefit Guaranty Corp. wants large companies with underfunded plans to boost their contributions by up to $15 billion over five years.

The federal agency that guarantees corporate pensions wants companies with financially weak pension plans to increase their contributions by $10 billion to $15 billion over five years, an Administration official said Thursday.

The step would shore up the Pension Benefit Guaranty Corp., whose assets have been stretched by a slew of major company failures. It would also intensify financial pressures on auto, steel and other industrial firms with large pension obligations.

“We must stem the increase in pension underfunding before we have a crisis,” James Lockhart, executive director of the PBGC, said in a briefing on President Bush’s proposed 1993 budget.

The Administration will ask Congress to change the pension law to force companies to accelerate their contributions to make pension plans fully funded. The increase in payments would begin in 1994.

“Auto companies, airlines, tire companies and steel companies will bear the brunt of this,” Lockhart said. “We’re reasonably sure (companies) can afford to make the payments.”

He warned that companies with weak pension funds may have to cancel plans to make acquisitions or create subsidiaries. Instead, they would be forced to use the cash to make expanded contributions to the pension funds.

The agency has a list of 17,000 underfunded pension funds--those that do not have the money to meet future pension obligations for retirees. The shortage is $40 billion.

But the potential deficit is concentrated in a handful of big companies with large numbers of retirees and older workers nearing retirement. The PBGC’s list of the 50 firms with the biggest liabilities covers $21.5 billion of the $40-billion shortfall.

The list includes General Motors ($7.1 billion in unfunded liability), Chrysler ($3.3 billion), Bethlehem Steel ($1.3 billion), Sharon Steel ($150 million), Westinghouse Electric ($692 million), Uniroyal-Goodrich ($434 million) and Trans World Airlines ($190 million).

The PBGC, which guarantees individual pensions up to $2,352 a month if a corporate retirement plan collapses, is under severe financial strain. The agency “already is short some $2.5 billion of the amount needed to take care of the pension benefits owed the 350,000 participants of those plans” under its control, Lockhart said.

The PBGC, which protects retirement plans covering 40 million workers, has positive cash flow because the dues it collects from companies with pension plans, and the earnings from its investments, provide enough money to make monthly payments to retirees from seized plans. But the long-range deficit is growing, raising fears about the possibility of a taxpayer bailout.

The Administration proposal, which requires congressional approval, would force companies to increase their annual contributions to assure that their retirement plans are fully funded within 10 to 20 years. The law now provides a more leisurely 30-year pace.

The new schedule would force companies with underfunded plans to contribute an additional $10 billion to $15 billion between 1994 and 1999, according to the PBGC.

By forcing companies with troubled plans to pay more, the agency hopes to avoid a premium increase for the 65,000 fully funded pension programs, Lockhart said.