WASHINGTON — The deepening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees.
The Pension Benefit Guaranty Corp. already has an $11 billion deficit that seems sure to grow larger as Corporate America suffers through the worst economic crisis since the Great Depression.
With companies reporting shortfalls in their pension funds, it’s all but certain that the PBGC will be forced to take over the pension plans of a rising number of bankrupt businesses. That means more red ink at the corporation before things possibly can improve.
The future financial health of the agency is hard to forecast. It is hinged on interest rates, the length of the recession and the PBGC’s own luck in playing the market, where it has billions invested.
The agency has $63 billion in assets. But it is obligated to spend $74 billion on pension benefits in the coming years. The PBGC might have time to rebound, but over the long term it might become insolvent and require a bailout.
“Someday — probably more than 20 years from now — there’s a significant chance that somebody is going to have to pay the piper,” said former PBGC Director Charles E.F. Millard, a Bush administration appointee who stepped down on Jan. 20 when Barack Obama became president.
