As Payouts Rise, New Tactics by the U.S. Pension Insurer (NYT)

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By MARY WILLIAMS WALSH
Published: November 15, 2010

Even though the government pension agency made sharply higher payments to retirees of bankrupt companies last year, it is using new legal tools to make hobbled companies carry more of the burden and protect itself.

The Pension Benefit Guaranty Corporation, which insures corporate pension plans, disclosed on Monday that it paid about $5.6 billion to retirees in its last fiscal year, about 22 percent more than in 2009. The number of retirees it pays each month rose to more than 800,000, as 172 more pension plans collapsed, including those at Crucible Materials, Fraser Papers, Hartmarx and Saint Vincent Catholic Medical Centers.

But the program’s long-term deficit held steady at $23 billion, mainly because the rising payouts were offset by good investment returns on assets in its trust fund.

“We are now climbing out of the worst recession in generations, and the financial situation of the P.B.G.C. has remained the same,” said Joshua Gotbaum, who became director of the guarantee agency four months ago. He said that staying in place under these conditions was a kind of victory.

On one hand, the program began paying benefits to 109,000 more retirees over the past year, he said, but on the other, it negotiated with dozens of bankrupt companies to keep their pension plans when they emerged from Chapter 11. Had the government taken over all those ailing pension plans, he said, it would be paying benefits to another 250,000 people.
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more: http://www.nytimes.com/2010/11/16/business/16pension.html?src=busln