WASHINGTON – The federal agency that insures private pension plans has concluded that its financial problems could get worse under House and Senate bills intended to strengthen the nation's traditional pension system.
The chairman of the House Education and the Workforce Committee, Rep. John Boehner (search), said Tuesday that the analysis by Pension Benefit Guaranty Corp. was "misleading and inaccurate" and that his bill would bring the system needed relief.
The Democratic leader on the committee, Rep. George Miller (search), said the analysis showed that Democrats were right to oppose the legislation.
The PBGC, taking a mean of 500 random scenarios, predicted that over the next decade its claims would be $2.5 billion higher under the House-proposed bill than under current law. Its claims would increase $3.3 billion under the Senate bill.
The PBGC insures some 44 million employees and retirees in 31,000 defined-benefit pension plans. It operates on premiums paid by employers and investment earnings, but there's growing concern it may one day require a massive taxpayer bailout as it takes over the obligations of more collapsed plans, particularly in the airline and steel industries.
Last year the PBGC reported liabilities of more than $23 billion.
Legislation being considered in Congress would tighten rules to discourage companies from underfunding their plans while increasing the premiums they pay to the PBGC.
Under a PBGC-prepared chart, the agency's aggregate claims over the next decade would be $14.8 billion under current law, $17.3 billion under a bill sponsored by Boehner, and $18.1 billion under legislation backed by two Senate committees.
Boehner, R-Ohio, said the PBGC calculation was inaccurate because it "fails to take into account a number of key provisions that strengthen overall pension plan funding."
In particular, he said, it ignores the House bill's formula for more accurately measuring pension liabilities and requiring employers to progressively make more contributions to plans as employees get older.
Miller, D-Calif., said the PBGC analysis "shows that neither the House nor the Senate has come up with legislation to stop the erosion of Americans' retirement security and prevent a taxpayer bailout of the private pension system."
The Senate was on the verge of passing its legislation last week, before leaving for a one-week recess. Then action stalled when several senators, backed by manufacturing and labor groups, protested a provision in the bill requiring companies with poor credit ratings to pay more into their pension funds.
Opponents of the provision said the higher payments could force companies to declare bankruptcy or abandon their pension plans.