Pension System Faces Variety of Challenges

First page Back Continue Last page Overview Graphics

Pension System Faces Variety of Challenges

  • Significant coverage gaps and pre-retirement leakage

  • Long term decline in the number of DB plans and active participants and change in the nature of DB plans

  • Recent and prospective large plan terminations by bankrupt sponsors have placed Pension Benefit Guaranty Corporation (PBGC), the federal agency insuring benefits, in financial jeopardy

    • Stock market, interest rate declines this decade have worsened overall plan funding
    • Demographics, global competition (Steel, auto) industry deregulation restructuring (airlines) have contributed to both plan and corporate weakness

  • Plan funding rules have proven to be inadequate

  • Certain PBGC premium insurance issues need to be reviewed

  • Selected other issues also require attention (e.g., lump sums, bankruptcy laws)