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Compliance January 25, 2005
GAO: PBGC Still in "High Risk" Status
January 25, 2005 (PLANSPONSOR.com) - The federal
government's watchdog agency has decided to keep the federal
private pension insurance single-employer program on its list
of "high risk" items that require more Washington
oversight.
Reported by Fred Schneyer
>The Government Accountability Office (GAO) made the designation about the Pension Benefit Guaranty Corporation (PBGC) in a report issued Tuesday.
“While PBGC likely has enough assets to pay promised benefits for a number of years, the long-term health of the single-employer program will be threatened unless the Congress takes action soon,” GAO researchers wrote. “The possible termination of additional large underfunded airline pension plans has the potential to worsen the program’s finances significantly, increasing the urgency of reform. The Congress may then face a choice of drastic reductions in pension benefits or authorizing federal assistance.”
>Department of Labor Secretary Elaine Chao used the occasion of Tuesday’s GAO report release to reiterate the Bush Administration’s recently announced reforms of the DB system that call for stepped up pension insurance funding and simplified plan funding target rules among other things ( Chao Releases Administration DB Reform Proposal ).
“The announcement from the Government Accountability Office (GAO) confirms the need for reform of the nation’s single-employer, defined benefit system so that America’s workers can continue to have secure retirement futures,” Chao said in her statement. “Although the federal pension insurance system is not in imminent danger of collapse, it is clear that the financial integrity of this system will be compromised if nothing is done. “
>A prominent lawmaker involved in pension debates also released a statement Tuesday after the GAO action.
“Today’s announcement underscores the need to reform outdated pension laws that are threatening the retirement security of millions of workers who rely on defined benefit plans,” said US Representative John Boehner (R-Ohio), chairman of the House Education & the Workforce Committee. ” Providing workers with greater pension security means we must ensure both the financial integrity of America’s defined benefit plans and the PBGC itself. Reforming our outdated pension laws to ensure that worker pension plans are adequately and consistently funded will bolster the PBGC and protect the interests of workers, retirees, and taxpayers.”
GAO researchers first gave the PBGC the high risk label in July 2003 (See GAO Designates PBGC ‘High Risk’ ).