WASHINGTON - The government agency that insures the pensions of 44 million Americans has amassed a record $33.5 billion deficit - triple what it was just six months ago.
The bleak financial snapshot, in a report obtained by the Associated Press, raises new fears that the Pension Benefit Guaranty Corp. will need a federal bailout eventually.
The agency is being saddled with the underfunded pension plans of companies going bankrupt in the worst economic slump since the Great Depression.
A rare midyear financial update requested by Congress shows the $11.1 billion deficit the agency posted at the end of its fiscal year on Sept. 30 has swelled by $22.5 billion to its highest level in the agency's 35-year history.
The agency's acting director said, however, that the more than 640,000 people who currently receive checks from the agency need not worry about the deficit.
"We have plenty of money to make those monthly payments promised to them for the near future," Vince Snowbarger said yesterday. "We're comfortable that for the time being we've got a way to make sure those payments are going to be there. Long term there is going to have to be some resolution of that deficit. I think at some point in time it's going to require congressional attention."
The agency does not insure 401(k) plans, but its fate is important not only to the workers covered by more than 29,000 employer-sponsored benefit pension plans but also to all taxpayers who could be asked to foot the bill on a bailout.
The agency's balance sheet has taken heavy hits in recent years. Nine of the 10 largest pension plan terminations in its history, including United Airlines, Bethlehem Steel, and Kaiser Aluminum, have occurred since 2001.
Yesterday, the PBGC announced that it has assumed responsibility for two pension plans covering about 4,300 workers and retirees of Lenox Group Inc., a bankrupt maker of tableware, giftware and collectibles in Eden Prairie, Minn.
Created by Congress in 1974, the agency takes over and pays benefits to the retired workers covered by the plan - although retirees don't always get 100 percent of what their employer promised.
The maximum guaranteed amount currently is $54,000 a year for a person retiring at age 65.
The agency estimates that pension underfunding in the auto sector alone is $77 billion.
"Participants in auto sector pension plans and the other stakeholders of the pension insurance program are at substantial risk of loss if these plans are terminated," Mr. Snowbarger said.