GAO: Rules Worsen Private Pension Problem

[steve2470]

http://news.yahoo.com/s/ap/20050601/ap_on_go_co/pension_problems


By BEN FELLER, Associated Press Writer
Tue May 31, 8:28 PM ET



WASHINGTON - The federal rules designed to ensure that millions of people receive their private pension benefits are flawed, making it easier for retirement plans to have risky financial shortfalls, congressional investigators have found.


"Our work shows that although the current system permits flexibility, it also permits reported plan funding to be inadequate, misleading and opaque," says a new report by the Government Accountability Office. Such federal oversight, the GAO said, does not appear to serve the interest of any stakeholder of a private, guaranteed-benefit pension plans.

The Pension Benefit Guaranty Corp., a federal agency that insures the private pensions of millions of workers, saw its deficit more than double to $23.3 billion last year with the collapse of underfunded pension plans at large companies. The underfunding of pension plans grew from $39 billion in 2000 to more than $450 billion by September 2004, the GAO says.

The government's own rules are contributing to that problem, the GAO found, because of leeway in the way companies can count assets and liabilities. As one example, the GAO faulted rules that allow companies to avoid making cash contributions to their plans by counting "credit" instead, which can mask problems and cause volatility in financial standing.

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