2005-1-20
I'm Phoebe Zimmermann with the VOA Special English Economics
Report.
The Bush administration is seeking changes to strengthen the
Pension Benefit Guaranty Corporation. This federal agency protects
the retirement plans of millions of Americans. It takes over pension
plans when employers can no longer guarantee payments. But some
recent failures of pension plans have raised questions about its
long-term financial health.
Congress created the Pension Benefit Guaranty Corporation in
nineteen seventy-four. The agency protects plans that define the
amount that workers will receive each month when they retire from a
job. Such plans are required to have enough money to pay workers who
have already retired and those who will retire in the future.
The agency does not receive government money. Instead, employers
pay the agency in the same way that insurance companies collect
payments to protect against financial loss.
Currently, big pensions that are supervised by many employers pay
two dollars and sixty cents per worker per year. This program
insures the pensions of ten million Americans. Plans offered by a
single employer pay nineteen dollars. Almost thirty-five million
people have their pensions insured by this program.
When the corporation takes over a plan, it invests the money to
meet future demands. On December thirtieth, for example, the agency
announced that it was moving to take control of the pension for
pilots at United Airlines. This will increase the amount of money
the agency has, but also the amount it must pay out in the future.
In November the agency reported that its deficit had reached
twenty-three thousand million dollars. That was up from eleven
thousand million dollars a year earlier. The agency said the number
of people owed payments went over one million for the first time.
There are limits on how much the agency can pay retirees, even if
their employer guaranteed a higher amount.
Some experts think the Pension Benefit Guaranty Corporation will
run out of money by two thousand twenty.
The administration says the current system needs reform. It wants
Congress to raise the insurance rates for the first time since
nineteen ninety-one. Under the proposed changes, employers would pay
thirty dollars per employee instead of nineteen. And financially
troubled pension plans would pay more into the program than healthy
ones.
This VOA Special English Economics Report was written by Mario
Ritter. I'm Phoebe Zimmermann.