Pension Insurance Agency’s Solvency at Risk, Chief Says

The longer-term solvency of the U.S. agency that insures pensions is at risk, threatened by troubled airlines and other companies failing to fund their retirement plans, the agency’s director said Thursday.

Pension Benefit Guaranty Corp. Director Bradley D. Belt said he expected to report a significantly increased deficit for fiscal 2004, which ended Sept. 30, eclipsing 2003’s record $11.2-billion deficit for the agency’s single-employer insurance fund.

“The longer-term solvency of the pension insurance program ... is at risk,” Belt told lawmakers in a Senate Commerce Committee hearing.

The pension agency slipped into a deficit in 2002 after having to bail out failed pension plans in the steel industry.

Since then, troubled airlines have been straining the safety net for traditional pensions that guarantee a set payout at retirement.

US Airways Group Inc. told a federal judge Thursday that it would probably try to terminate or freeze plans currently held by mechanics, flight attendants and other workers as a condition of exiting Chapter 11 this time.

US Airways saddled the PBGC with $2.2 billion in liabilities from its previous bankruptcy, when it terminated its pilots’ plan in 2003, and would add about the same amount if it dropped long-standing accounts covering 24,000 flight attendants and members of the International Assn. of Machinists.

As in the case of the pilots, replacement benefits for other employees would be far less generous.

UAL Corp., parent of United Airlines, also has said it is weighing terminating its pension plans.