The recent collapse of LTV Steel and Enron, among others, have placed incredible strains on the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures defined-benefit pensions for U.S. workers. The LTV pension shortfall is the largest in PBGC history, more than $1 billion dollars. The Enron tab is estimated at more than $125 million dollars. The PBGC takes control of pension plans when companies declare bankruptcy, are grossly underfunded, or where mismanagement threatens the solvency of the plan.
Recent Congressional attention has been fixed on the lost 401(k) assets of the Enron workforce, with little time being spent looking at the corporate abuses of the PBGC system. While the defined-benefit pensions of Enron workers, and similar pensions of workers from other bankrupt companies are guaranteed, the PBGC system is in need of immediate Congressional attention. Congressional action is needed to reform the PBGC system to prevent companies from declaring bankruptcy merely to shed pension liabilities, to insure full and unreduced benefits to retirees, and to dramatically speed up the handling of bankrupt and terminated plans.
Let your member of Congress know that you demand real reform of PBGC rules; call the U.S. Capitol switchboard at (202) 224-3121 and ask for your Senators and Representative. Free publications explaining your rights as a pension participant may be obtained from the Pension and Welfare Benefit Administration, by calling (800) 998-7542 or at www.dol.gov/dol/pwba .
The Pension Benefit Guaranty Corporation (PBGC) was created by Congress nearly 30 years ago to insure the defined-benefit pensions of U.S. workers. The 1964 collapse of the Studebaker auto company was the trigger for Congressional creation of the PBGC, when tens of thousands of retirees were left penniless after Studebaker liquidated and their pension liabilities were un-insured.