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.
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
