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Friday, May 13, 2005

Who Pays for Pensions?

Washington Post editorial:

"Who Pays for Pensions?

EVERY TIME a company promises a pension benefit, taxpayers are potentially on the hook. The company is supposed to put aside money to back its promise, but if it goes bust without doing so, a government agency, the Pension Benefit Guaranty Corp., shoulders its obligations to workers. By the end of 2004, this government backstop had taken over pension plans whose liabilities exceeded assets by $23 billion, and the current trouble in the airline industry seems likely to inflate that total. Somebody has to pay for this, and Congress appears to think you should.
the proposals to limit additional liabilities being dumped on the government have been countered by business lobbyists, whose clients want to keep forcing taxpayers to underwrite their pension promises. A requirement that companies should fund such promises within seven years is regarded as impossibly draconian; the idea that risky companies should pay higher insurance premiums is regarded as unfair. If the lobbyists get their way, the deficit at the Pension Benefit Guaranty Corp. is likely to grow. And if it's not going to be plugged by adequate premiums, it will have to be plugged by taxpayers."