Underfunded Pensions Double in U.S.; could exceed $80 billion

Reuters ^ | 09-04-03

[Brian S]

Thu September 4, 2003 11:15 AM ET

WASHINGTON (Reuters) - Underfunded pension liabilities at troubled U.S. companies doubled this fiscal year, and could exceed $80 billion with airlines accounting for nearly a third of the deficit, the government said on Thursday.

The Pension Benefit Guaranty Corp. also told Congress its deficit has grown to $5.7 billion as of July 31. The deficit for the entire fiscal year ending Sept. 30 last year was $3.6 billion. This gives the U.S. agency less money to bail out any troubled company retirement plans.

Airlines, including bankrupt United Airlines Corp. UALAQ.OB , have an underfunded liability of $26 billion, unchanged from April, the agency's executive director, Steven Kandarian, told a House of Representatives hearing.

Kandarian said the underfunded liabilities he cited represent companies that have serious financial problems, including poor investment ratings.

[VRW Conspirator]

It's just the begining.

[steve50]

there was some talk about changes to the law to allow more stock to back liabilities. Nothing like having stock at 100:1 P/E backing your golden years.

[varon]

buy gold

or, don't retire. Retirement is not a Constitutional right plus it will make your wife happier to have you out of the house ;-)

[saminfl]

When I retired from Hughes Aircraft Company in 1989, the pension fund was OVERfunded by a billion dollars. Did the retirees get any of it? Nope.

[lelio]

I had to laugh when I read a report about how things are improving as GM's pension has actually gained 7% of its value this year, compared to the 6% losses from the previous three years. What they don't tell you is that GM probably booked its growth at the maximum 8.5% growth for all three years.

So instead of being up 28% its really down 5%, or 35% difference. For GM's pension to reach the same amount after 10 years at that 8.5% billed rate GM will have to make 11.5% on its investment. That's not going to happen any time soon.