At least 30,000 pension plans exist at U.S. companies, though it is hard to say how many of them will remain secure.
“The most recent snapshot taken by the PBGC finds that corporate America’s single-employer pension promises are underfunded by more than $450 billion,” warned Bradley Belt, executive director of the Pension Benefit Guaranty Corp., during congressional testimony on the crisis. His organization is buried under a record number of bankruptcy cases.
One lesson made clear from United’s case is that laws did not prevent the airline from allowing its plans to become so underfunded that a crisis developed.
Over time, pension problems probably will affect a smaller percentage of workers. Employers are rapidly moving away from defined-benefit pension plans, which put retirement-payment burdens on employers, and toward 401(k) plans, which shift much of the responsibility of saving for retirement to workers.
The number of workers covered by a company pension plan insured by the PBGC declined from a high of 22.2 million in 1988 to 17.2 million in 2003, according to the Employee Benefit Research Institute.
In the short term, however, there remain those millions of Americans who are still counting on their pension plans to come through.
Many United retirees hope for changes in pension laws that could help fix the problem.
Some have been writing and calling members of Congress asking for moves to overturn the bankruptcy- court-approved deal allowing the termination of the United pension plans, hoping for action once Congress returns from recess after Labor Day.
Others hope ongoing litigation regarding how United’s pension plans are terminated will preserve more of their benefits. Additionally, Congress will have to address the failing PBGC.
Court rulings and new regulations could change the way companies get out of pension debt and workers get their cash.
“Taxpayers are at risk of being called upon to bail out the pension-insurance program if losses continue to mount,” Belt told Congress.
Pension laws must be reformed, he said: “At stake is the viability of one of the principal means of predictable retirement income for millions of Americans. The time to act is now.”
