Pension Problem Looks for Resolution in Congress

  • Playlist
  • Download
  • Embed
    <iframe src="http://www.npr.org/player/embed/5572474/5572475" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Millions of Americans rely on traditional pensions that pay retirees a fixed amount of money every month. The government agency that insures those pensions is struggling because too many businesses have been defaulting on their pension responsibilities. After months of negotiation, Congress is finally close to passing a bill that would fix the problem.


On Friday, we focus on your money. Today, retirement funds.

More than 44 million Americans have traditional pensions, but the government agency that insures those pensions is deep in the red. After months of wrangling, Congress is close to passing a bill to fix the problem.

NPR's Frank Langfitt reports.


Traditional pensions are in trouble. Bankrupt companies in struggling sectors like steel and airlines have dumped their obligations on the government's insurance agency. The agency, known as the Pension Benefit Guarantee Corporation, now faces a $23 billion deficit.

What's more, altogether companies have under funded their pension plans by $450 billion. Agency officials have warned that if Congress doesn't do something, taxpayers might have to pay for a bailout, as they did after the savings and loan crisis in the 1980s.

Lawmakers have already agreed on several ways to fix the system. The bill they're working on would increase the premiums companies pay to support the pension insurance agency. It would also tighten what one congressman has called gaping loopholes in accounting standards that allowed companies to underfund their pensions in the first place. And the government would require companies to fully fund their pension programs within seven years.

But some businesses say that if the funding requirements are too onerous, they may drop their pension programs, which are voluntary to begin with. One sticking point among lawmakers is how to treat struggling airlines. Delta and Northwest, both bankrupt, have asked for 20 years to fully fund their pensions. The carriers say if they don't get enough extra time, they might have to dump their pensions on the government insurance agency, pushing its deficit even higher.

But some lawmakers only want to give them 14 years. They worry the airlines will keep underfunding their pensions and the problem will only grow worse over time.

Lawmakers hope to send the legislation to the president next week for his signature.

Frank Langfitt, NPR News, Washington.

Copyright © 2006 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.



Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

NPR thanks our sponsors

Become an NPR sponsor

Support comes from