NU Online News Service, Jan. 19, 2004, 10:46 a.m. EST – U.S. House Republicans are developing a major legislative proposal for strengthening the defined benefit pension system.[@@]
Rep. John Boehner, R-Ohio, chairman of the House Committee on Education and the Workforce, put out a release suggesting Republicans will focus on limiting employers’ abilities to promise pension benefits and resist efforts to funnel public support to the Pension Benefit Guaranty Corp.
The PBGC, the government-sponsored company that backs U.S. defined benefit pensions, last week announced it had suffered a $7.6 billion net loss in fiscal year 2003.
The agency ended the year with a deficit of $11.2 billion, which is 3 times larger than any previously recorded PBGC deficit. The PBGC also estimated it has about $85.5 billion in exposure to possible losses related to unfunded, vested benefits in pension plans sponsored by struggling employers.
The PBGC funds its operations by collecting premiums from sponsors of single-employer and multi-employer pension plans.
Rep. Sam Johnson, R-Texas, chairman of the Workforce Committee’s subcommittee on Employer-Employee Relations, is attacking efforts by some employers and labor groups to get the government to shore up the PBGC benefits insurance program.
“Companies that are severely underfunded — those making deficit reduction contributions — need to get their plans back to a secure level of funding and stop asking for relief that only further undermines the PBGC, thus taxpayers and retirees,” Johnson says in a statement included in a release put out by Boehner’s office. “If companies cannot afford to make good on their promises, then they should stop making them instead of trying to shift additional risk to taxpayers.”