The leaders of the Senate Finance Committee have asked the Government Accountability Office to take a closer look at the Pension Benefit Guaranty Corp., which insures the private pension plans for millions of workers.
Committee Chairman Charles Grassley, R-Iowa, and ranking member Max Baucus, D-Mont., said they are specifically looking for assurance that the federal agency has enough money -- and is taking the right approach -- to doing its job. The senators asked that the GAO return a report with at least preliminary information early next year.
The pension agency insures traditional defined-benefit pension plans and has taken on the pension responsibilities for a handful of bankrupted steel and airline companies in recent years. At the close of last year, the agency reported a deficit of more than $22 billion.
According to the letter the men sent to the Government Accountability Office, 80 percent of all claims against the agency had come since 2000 -- a year in which the agency paid benefits of $900 million to 243,000 people. Just five years later, the agency was paying $3.7 billion in benefits to nearly 700,000 people.
This summer, Congress and President Bush approved a bill to help the pension system by shoring up funding for traditional pensions, and, just last week, the Financial Accounting Standards Board released new accounting standards that would force the costs of pension and defined benefit plans to be shifted to an organization’s balance sheets, instead of being submerged in the footnotes of a financial statement.
The pension agency’s operations are financed by insurance premiums paid by companies that sponsor traditional pension plans and it also earns money from investments and receives funds from pension plans it takes over. The concern is that the agency’s increasing obligations may one day have to be subsidized by taxpayer revenues.
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