Pension Benefit Guaranty Corp Deficit Increases By $22.5 billion In 6 Months
There is actually a federal “corporation” that guarantees private sector pensions. Private sector employees with defined benefit pension plans pay an insurance premium to the PBGC which it invests and uses to pay pensions when private companies can’t do it.
According to The New York Times, it currently pays out about $4.3 billion to 640,000 people a year. But as more private companies fail or are unable to fully fund their pensions, the “corporation’s” liabilities are increasing. PGBC Acting Director Vince Snowbarger told the Senate Special Committee on Aging today that the PGBC’s defecit swelled $22.5 billion to $33.5 billion for the 6 months ending March 31 (PGBC Press Release).
Of course, that’s nothing compared to the $45 trillion deficit in Social Security and Medicare (see “Recession Making US Entitlement Crisis Worse”, Top Gun FP, May 13).
No wonder so many are starting to question’s the Federal Government’s fiscal position. For example, just today University of Maryland Business Professor Peter Morici wrote an op-ed: “Uncle Sam’s F-rated bonds”.