The recession has accelerated the terminations of single-employer defined benefit pension plans, a federal official testified to a Senate committee yesterday.
From its beginning in 1974 through the end of fiscal year 2008, the Pension Benefit Guaranty Corp. has terminated almost 4,000 single-employer defined benefit plans covering some 1.2 million workers and retirees, noted Barbara D. Bovbjerg, director of education, workforce, and income security for the U.S. General Accounting Office.
“Since 2008, the economic downturn has brought a new influx of pension plan terminations to PBGC, and more are expected to follow,” Bovbjerg told members of the U.S. Senate Committee on Health, Education, Labor, and Pensions.
Through second quarter of fiscal year 2009, the PBGC’s deficit had tripled since the end of FY 2008, from about $11 billion to about $33.5 billion, Bovbjerg said. Since then, the influx of large plan terminations has continued.
She noted, for example, PBGC assumed responsibility in August for 6 pension plans of auto parts supplier Delphi Inc., Troy, Mich., covering about 70,000 workers and retirees and underfunded by a total of about $7 billion. “PBGC estimated that it would be liable for about $6.7 billion of this underfunding,” she testified.