After a wonderful three days at Chincoteague Island in Virginia with the family, it is great to be back! While we did not get to see the annual Pony Penning which apparently takes place next week, we were able to see the famous herds of ponies which make their home on Assateague Island and enjoy many of the other island attractions as well.
Here is today’s Federal Register. Since I have been unable to post here from July 22-24th, previous Federal Registers for July 22-24th can be accessed here.
The U.S. General Accounting Office has concluded that the single-employer pension insurance program of the Pension Benefit Guaranty Corporation (“PBGC”) is at “high risk” and has added it to the list of major federal programs that need “congressional and agency action.” You can access the report here. The report provides that the single employer insurance program has moved from a $9.7 billion accumulated surplus in 2000 to a $3.6 billion accumulated deficit in fiscal year 2002 and that, as of April 2003, the program’s unaudited deficit was an estimated $5.4 billion, the largest in PBGC history. The report cites terminations of large underfunded pension plans of bankrupt firms in troubled industries like the steel and airline industries, declines in the stock market, declines in interest rates, and certain weaknesses in the current funding rules, as contributing to the program’s weakened condition. Also, the report provides that these “factors mask broader trends that pose serious program risks”:
For example, the program’s insured participant base continues to shift away from active workers, falling from 78 percent of all participants in 1980 to 53 percent in 2000. In addition, the program’s risk pool has become concentrated in industries affected by global competition and the movement from an industrial to a knowledge based economy.
The Wall Street Journal carried this article by Ellen Schultz on the GAO report: “GAO Sees ‘High Risk’ At U.S. Pension Insurer.” (Subscription required.) The article quotes David Walker, the comptroller general of the GAO as saying that the office favors tougher rules requiring employers to increase minimum funding of their pension plans, and also favors increases in the premiums that employers pay to the PBGC, moves that are supported by the Treasury and the insurer. The article also reports that the House Committee on Education and the Workforce announced its intention to hold a hearing on the financial health of the PBGC during the first week of September.
Forbes also reports: “Agency backing U.S. pensions put on risk list.”