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July 29, 2002
Private Pension Plan Shortfalls Soar
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According to the PBGC, the government's insurance program for private workers' pensions, that number far surpasses the $26 billion in shortfalls reported in 2000. A shortfall is defined as the amount of money that would be owed to pension participants if a plan was terminated.
"The implications of such massive shortfalls in pension funds are staggering," Rep. George Miller, D-Calif., the ranking Democrat on the House Education and Workforce Committee, told the AP. Miller encouraged the Bush administration to investigate and ensure that workers' retirement savings are not in danger.
But PBGC spokesman Jeffrey Speicher told the AP the shortfall is "not as dire an indicator that you might think."
All companies with employer-sponsored pension plans must file a report with the government when a plan's unfunded liability meets or exceeds $50 million. But Speicher said most of those plans are still 80 percent funded or more.
"It's a volatile number and it fluctuates due to various factors, such as interest rates and the performance of plan assets in equities markets," he told the AP. "These plans on average are still well-funded."
According to the AP, last year, the PBGC paid more than $1 billion in total benefits to almost 269,000 people, the first year that payouts ever exceeded that amount. PBGC, a government corporation, protects the benefits of about 44 million participants and beneficiaries in over 35,000 ongoing defined benefit pension plans.
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