The Pension Benefit Guaranty Corp. is the government based organization whose responsibility has been to protect your pension. they do this through the insistence that companies carry insurance against possible loss of your private defined pension plan. Trouble is that the mandatory insurance is limited at $40,000 a year in annual benefits.

Government tax regulations over the years have forced companies to count the balance in these plans as revenue. This works fine as long as times are good. In bad times, these count as losses weighing on the corporate bottom line. Reserve funds to cover these plans have become less than adequate to cover outstanding obligations. Underfunded plans are more the norm lately than ever before.

Are there ways to remedy this problem? Absolutely, but companies are slow to react and deaf to their employees. Pension law could be reformed allowing companies to overfund their plans without counting that funding as profit, and therefore taxable. On the other hand, underfunded plans should be able to freeze any increase in benefits until the plan meets some sort of actuarial balance that both the company and the employes can agree upon. It is also possible to force companies to rely less on the somewhat anemic PBGC and insure the plan outside the government agency.

[ Close Window ]