Deficit Grows at Agency That Backs Pensions
Washington Post (05/01/03) Vol. 13, No. 5 p.E2; Crenshaw, Albert B.

The Pension Benefit Guaranty Corp. (PBGC) has reached a deficit of approximately $5.4 billion in the last six months, but says it will have no problem supporting retirees. Only 18 months ago the federal agency had a $7.7 billion surplus, but shrinking stock market returns and lower interest rates have depressed pension plan asset values while pushing up payment obligations. According to PBGC executive director Steven A. Kandarian, the 32,000 traditional pension plans in the United States are significantly underfunded. Companies have struggled as the result of a federal requirement that has them base liabilities on the 30-year Treasury bond's interest rate, which is extremely low at present. A temporary relief provision will not extend into next year and employers are requesting clarification on funding standards as well as a more market-based alternative to the Treasury bond rate. Peter Fisher, undersecretary of the Treasury for domestic finance, has recommended the relief provision extend two more years to allow for further evaluation.

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