<nobr>Dec 9, 2005</nobr>

PBGC Issues “Fact Sheet” on Agency’s Deficit

The Pension Benefit Guaranty Corporation has released information that addresses questions about the PBGC deficit and measures of pension underfunding in the defined benefit system.

The release, dated December 9, 2005, is entitled “PBGC Fact Sheet on Condition of Pension Insurance Program”. The release addresses questions including: “How is the PBGC’s financial condition calculated?”, “Why does the PBGC include probables in its deficit?”, “What are ‘reasonably possible’ termination claims?”, and “How does the PBGC measure pension underfunding?”. The release estimated that total underfunding in the single-employer defined benefit system on a termination basis exceeded $450 billion as of September 30.

Employer Impact: The PBGC’s reporting of an ongoing pension benefit funding “crisis” has been used to lay the foundation for excessive premium increases and inflexible funding rules in current pension reform legislation. ERIC has worked tirelessly to ensure that the facts concerning the PBGC’s financial condition are fully understood by plan sponsors and participants. In its Consensus Proposals on Pension Funding, PBGC Reform, and Hybrid Plans, ERIC points to PBGC’s 2004 Annual Report, which states that in 2004 the PBGC received approximately $4.6 billion dollars in premiums and investment earnings on assets, but only paid approximately $3 billion in benefits.

Text Files:

PBGC Fact Sheet

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