A $350 billion pension shortfall among
U.S. companies may force the federal agency that insures
retirement plans to seek a taxpayer bailout similar to the one
during the savings and loan crisis, according to the Cato
Institute, a Washington-based policy research group.
The Pension Benefit Guaranty Corp. had a record deficit of
$11.2 billion last year after taking over plans for 152 companies
such as Bethlehem Steel Corp. and US Airways Group Inc., Bloomberg Newsreports.
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Without
changes to funding and premium rules, the PBGC’s deficit is likely
to swell to $18 billion in the next 10 years, and may reach more
than $50 billion, reports Richard A. Ippolito, who wrote the Cato
study and is a former PBGC chief economist.
“If exposures create claims that reach catastrophic levels,
taxpayers will be called upon to provide a bailout,” Ippolito
said in the study released Tuesday.
Groups such as the Pension Rights Center,
a Washington-based workers’ advocacy group, have reportedly dismissed the
likelihood of a bailout, saying the PBGC is well funded over the
long term.
The study doesn’t account for a market upsurge, which
would boost pension assets, said John Hotz, the center’s deputy
director.
Bloomberg News
