Washington The deficit for the government's pension insurance program ballooned to a record $11.2 billion last year, more than triple the previous year's total, and officials are warning that taxpayers could be called on for a bailout.
The Pension Benefit Guaranty Corp.'s financial woes are driven by an increasing number of bankrupt pension plans, from such companies as Bethlehem Steel and US Airways, and record-low interest rates, officials said.
Outgoing Executive Director Steven Kandarian said the agency could continue to pay pension benefits to retirees in bankrupt plans "for a number of years," but the growing deficit "puts at risk the agency's ability to continue to protect pensions in the future."
He urged Congress to act soon to reform the nation's private pension system, which also is being squeezed by low interest rates, a subdued stock market and laws that do not require employers to maintain full funding levels in their retirement plans.
Underfunding for all pension plans is estimated at more than $350 billion.
PBGC's single-employer program posted a $7.6 billion net loss for the financial year ending Sept. 30 on top of a $3.6 billion shortfall in 2002.
The agency took over 152 bankrupt single-employer pension plans last year covering 206,000 people. The majority of participants were in just two plans -- Bethlehem Steel and National Steel. In 2002, PBGC became trustee of 144 plans with 187,000 participants.
It paid a record $2.5 billion in benefits in 2003, an increase of nearly $1 billion from the previous year.
Just two industries -- airlines and steel -- account for about 40 percent of the $85.5 million in potential liabilities the agency faces in "reasonably possible" exposure from financially weak employers.