Pension Restoration Act

Pursuant to a congressional request, GAO reviewed the impact of proposed legislation which would pay annuities to plan participants or their surviving spouses whose pension plans terminated before the enactment of the Employee Retirement Income Security Act, focusing on: (1) the number of pension losers or their surviving spouses; (2) the amount of annuities and administrative costs; (3) the impact on the Pension Benefit Guaranty Corporation's (PBGC) solvency; and (4) implementation difficulties. GAO found that: (1) the precise number of pension losers and their surviving spouses was unknown, but a 1979 Department of Labor study estimated that 67,000 participants were fully vested and survived to 1979; (2) in 1992, there were 47,000 to 52,000 surviving pension losers and spouses, with 38,000 to 39,000 participants immediately eligible for benefits; (3) present value annuity costs would range from $305 million to $406 million, and first-year administrative costs from $42 million to $44 million, with additional administrative costs to find and certify surviving participants and spouses having a present benefit value of $60 million; (5) PBGC liabilities would increase by $406 million under the proposed legislation, but its net cash flow would cover annuities through the end of the century; (6) the PBGC deficit would increase to $5.7 billion instead of $4.7 billion by 2001; and (7) the implementation would be difficult due to lack of documentation, since PBGC has no accurate information on individual pension losers or eligible participants.