U.S. Pension Agency Warns on Liabilities

The federal agency that insures the private pensions of 44 million workers said Tuesday that its deficit was $22.8 billion in fiscal 2005, as big airlines in bankruptcy protection dumped their pension liabilities.

The Pension Benefit Guaranty Corp. said in its annual report that it had $56.5 billion in assets as of Sept. 30 to cover $79.2 billion in pension liabilities.

There has been an explosion in recent years in the number of big, ailing companies -- including UAL Corp., parent of United Airlines, US Airways Group Inc. and some former giants in heavy industry -- transferring their pension liabilities to the PBGC. With billions of dollars flying out of the agency’s door, concern has been mounting in Congress over its financial footing.

“Unfortunately, the financial health of the PBGC is not improving,” the agency’s executive director, Bradley D. Belt, said. “The money available to pay benefits is eventually going to run out unless Congress enacts comprehensive pension reform to get plans better funded and provide the insurance program with additional resources.”

For the year, the pension insurer had $4 billion in losses from pension liabilities while it collected $1.5 billion in premiums from companies. It earned $3.9 billion on investments.

Without a federal overhaul of the private pension system, the pension agency eventually will have nothing left to pay the claims of the retirees of companies whose plans it has assumed, some experts predict. That would mean that people retiring from troubled companies would have nowhere to turn for promised pension payments.

Traditional employer-paid pension plans, giving retirees a fixed monthly amount based on salary and years of employment, are estimated to be underfunded by as much as $450 billion. That could jeopardize the retirement security of millions of Americans, experts have warned.

Tuesday’s disclosure by the agency “serves as yet another troubling reminder that Congress needs to act on comprehensive reforms to our nation’s traditional pension system this year,” said Rep. John A. Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce.

For months, lawmakers have been grappling with an overhaul of the rules governing pension plans to tighten controls over employers with underfunded plans and shore up the finances of the pension insurer, which Congress created in 1974. Legislation cleared a key House committee last week; the full House could take up the bill as early as this week.